A single consumer regulator should be created to cover all the essential service utilities, according to a new report co-authored by a government adviser.
The report, “ReDesigning Regulation: Powering from the Future”, recommends wide-ranging reforms that are designed to help the utility regulatory system adapt to a more decentralised and digitised energy market in which customers have increasing opportunities to buy and sell power.
The report’s authors include former Conservative MP Laura Sandys, who left parliament in 2015 to set up her own consultancy Challenging Ideas and was recently appointed by the Department for Business, Energy and Industrial Strategy to chair a taskforce looking at energy data.
The report recommends the creation of a single “essential service consumer regulator”.
Under the report’s blueprint, the consumer facing parts of the existing utility regulators would be merged into the single regulator for essential services.
As part of this shake-up, a common essential service ombudsman regime should be developed.
It recommends replacing the requirements for licensing retailers with a risk assurance regime. And the regulator itself should shift its focus from regulating process to risk.
The report claims that the less prescriptive regulatory regime that it outlines will deliver greater customer choice, lower costs and more tailored services.
A single regulator will also be in a better position to act as an advocate for consumers and seek redress in situations where consumers have bundled packages of utility services, it claims.
Alongside the new consumer regulator, the report recommends the development of a new infrastructure regulator for utility monopolies’ fixed assets.
It predicts that the current “prescriptive” model of regulation will not be able to survive this new environment because it will face enormous pressure to “catch up” with innovations and risks being behind the curve in identifying bad behaviour.
The reports says there is both an opportunity and a necessity to redesign the market to reflect the new environment.
“We need to normalise the electricity sector. Identifying where risks really lie, open up new competitive pressures and shape a new market structure.
“We must resist from trying to squeeze a very exciting multi-vector future into a rigid command-and-control straitjacket. The current arrangements will crush innovation and also add significant cost to the consumer. Doing nothing is not an option.”
Sandys co-authored the report with Imperial College London academics Dr Jeff Hardy, Professor Richard Green and Dr Aidan Rhodes.