The Utility Regulator for Northern Ireland has vowed to “get out of the way” of company innovation, as it does not want to “tell companies what they should be doing”.
“We see our role as understanding when there are any regulatory blockages… which would prevent companies from innovating,” finance and network assets director Brian McHugh told delegates at WWT’s Water Northern Ireland conference in Belfast.
The regulator, which is responsible for the electricity, gas, water and sewerage industries in Northern Ireland, “does not want to get involved” in innovation to the point of telling any of the companies what they should be doing. “We don’t see that as our role,” said McHugh.
As work begins this year on the approach it will take to the next price control, PC21, it will look to other regulators to work out what it should do to promote innovation.
“We have moved price controls now across all the utilities to six years,” said McHugh. “One of the reasons for that is to give the companies more space to invest and deliver solutions, and more time to get a reward for their innovation.
“We do recognise that there is the potential for regulatory barriers, and maybe six years is not enough. We have previously worked with companies in terms of what pilots they want to do and what business plans they have put in place. We are always open to those discussions.”
He said the regulator “happy to talk about what incentive package there should be to promote innovation”, but wants to will “leave it in the hands of the companies” to decide what innovation they want to do and what risks that they want to take.
Utility Week understands that Ofwat, the water regulator for England and Wales, is also currently exploring new ways in which to encourage “truly frontier-shifting” innovation in PR19.
It has asked companies for their views on a mechanism applied in Australia which uses variable cost of equity to reward water companies which take on riskier innovation schemes.