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Regulatory architecture and its evolution in the UK and Australia


Panel Discussions


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Event Overview

There are similarities at a high level in the regulatory frameworks used in the UK and Australia, but there are significant differences in implementation and in the direction of evolution.  This round table will compare and contrast approaches, focusing on three main areas:

Should the regulatory rule setter be separate from rule implementer?

In the Australian energy sector, the functions of setting the regulatory rules is undertaken by a different organisation (the Australian Energy Markets Commission, AEMC) from that which implements those rules (the Australian Energy Regulator, AER).   This provides clarity of process for changing approaches to price control determinations and changes to other energy market rules.  It provides protection for investors but may reduce regulatory flexibility.

  • Does splitting of rule setting and rule implementation provide better protection for investors?
  • Does the split of roles reduce regulatory flexibility?
  • Are there lessons from the approach in Australia that can be used in the UK?

Are experimental approaches to getting challenge and customer engagement effective?

Regulators are increasingly seeking alternative ways to involve customers in decision making.   In both jurisdictions, customer representatives and customers are involved in price control processes, provide submissions to regulators through customer challenge groups and challenge panels (like Ofgem’s RIIO-2 challenge panel, and the AER’s Consumer Challenge Panel).  More recently, in a new initiative the AER jointly with Energy Networks Australia and Energy Consumers Australia have established a process* based on the Scottish Water experience which negotiates parts of the business plan with the network. This will be reflected in submissions to the AER which may then expedite the regulatory process.

  • In what ways have the formal challenge processes affected price determinations?
  • Do they bring a customer perspective, or can they be better characterised as a governance role?  Could the benefits be achieved more efficiently in other ways?
  • Does the Australian experience with New Reg indicate that direct involvement of alternative counterparties is a realistic way to enhance outcomes and reduce the role for regulators?

Are expert panel and “hot tub” processes useful?

The AER recently reviewed its approach to setting the Rate of Return in price determinations (the “Rate of Return Guideline”).  The process involved two innovations: the use of an Independent Panel to provide a critical review of draft proposal before the final decision; and “Concurrent Expert Evidence Sessions” which involved open panel sessions of experts with the AER board and preparation of a joint report.  In the UK, the UK Regulators Network commissioned a joint expert report on cost of capital.

  • How can regulators best make use of experts with a wide range of views to make better decisions?
  • Are open “hot tub” sessions valuable, rather than production of reports?
  • Do regulators welcome challenge, or see it as a necessary evil?

*CEPA has been engaged by the AER to evaluate a ongoing trial of the New Reg process. None of the panellists or speakers are part of the evaluation team, and they only have access to publicly available information.

Event timings

10.30 - Registration
11.00 - Round table begins
13:00 - Networking lunch
14:00 - Close

Speakers and Panellists

Opening remarks

Dr Xeni Dassiou (Director, CCRP)

Round Table Chairman

Dr  Jonathan Mirrlees-Black, Director, CEPA

Panel Members

Sarah Chambers, Chair of the Legal Services Consumer Panel

Eric Groom, Senior Advisor, CEPA and formerly AER Customer Challenge Panel member

Paul Smith, CAA/formerly CEO of AEMC

Jon Stern, Honorary Professor, CCRP and Senior Advisor CEPA

Roger Witcomb, Chair, RIIO-2 Challenge Group

Speaker biographies

Dr Xeni Dassiou, Director, CCRP

Dr Xeni Dassiou is a Reader of Economics and the Director of the Centre for Competition and Regulatory Policy (CCRP) at the School of Social Sciences at City, University of London. She is also a CMA and an Ofgem academic panel member.

Her research interests lie in the area of industrial organisation theory and competition policy and she has worked in this area for the last 25 years. She has written numerous papers on the economic theory of bundling as an instrument of price discrimination, both on a mathematical platform as well as on the economic policy related implications of bundling in government procurement and financial regulation.  She has also published papers on the institutional arrangements, oversight and competition in public service markets, modelling the formation and updating of trust perceptions in infrastructure contracts, the role of herding in determining managerial and investment behaviour, and the impact on the returns of UK companies involved in failed hostile mergers.

Xeni has given numerous invited talks on behavioural issues in regulation and competition, public service markers regulation, organised several CCRP workshops and annual competition policy roundtables, as well as edited journals on topics such as the regulation of infrastructure utilities and competition in modern market structures.

Dr Jonathan Mirrlees-Black, Director, CEPA

Dr Jonathan Mirrlees-Black has over 25 years’ experience of economics and finance in energy and infrastructure, as investor (with RARE Infrastructure) as a sell-side investment analyst (with Exane BNP Paribas, Lehman, and Dresdner Kleinwort Benson) and as an advisor to infrastructure companies, investors in unlisted infrastructure, governments, competition authorities, and regulators.

Jonathan is a Director of CEPA’s Australian business, leading projects on energy, water, transport, communications and transaction advisory.  In 2018, he was facilitator for the Australian Energy Regulator’s Concurrent Expert Evidence Sessions as part of the review of the Rate of Return Guideline.

In addition he is Senior Advisor to HRL Morrison & Co, the New Zealand based infrastructure investor, advising on macroeconomics and economic regulation.  Since 2013, he has been Honorary / Visiting Professor at University College London, teaching a course in Energy Finance.

He is based in Sydney, Australia.

Sarah Chambers, Chair of the Legal Services Consumer Panel

Sarah is an expert in regulation, competition and consumer policy.  She is currently Chair of the Legal Services Consumer Panel, and of the Renewable Energy Consumer Code applications panel, and a member of the Pensions Regulator Determinations Panel, the Judicial Appointments Commission, and the board of the Electoral Commission.  Until last year she was a non-executive director and Panel Member of the Competition & Markets Authority and the CAA consumer panel.  Before that she spent far too much time as a senior civil servant, mainly at DTI/BIS and as CEO of Postcomm.

Eric Groom, Senior Advisor, CEPA

Eric Groom PSM joined CEPA’s Australia office in 2017 as a Senior Advisor. Eric has over 35 years’ experience as an economist with a focus on regulation, energy efficiency and greenhouse gas emission reduction. Most recently Eric was also a member of the Australian Energy Regulator’s Consumer Challenge Panel until March 2019.

Eric formerly held senior roles at the Independent Pricing and Regulatory Tribunal (IPART) of New South Wales (NSW), the first independent utility regulator established in Australia, and led the development of IPART’s approach to regulation, particularly on financial issues.  While at IPART he was seconded to provide support to regulators in other jurisdiction in Australia and the AER’s Better Regulation review in 2013. Eric was a member of national committees involved in the development of network pricing during the establishment of the Australian National Electricity Market.

During 2004-07 Eric was a Senior Regulatory Specialist at the World Bank advising on regulation and sector reform, particularly in Asia, the Pacific and the Middle East.  After returning to Australia in 2007 Eric continued to provide support to the WB/IFC and regulators in Vietnam, Philippines, Timor Leste, Pakistan, and Ghana. In 2015-16 he was a member an expert advisory panel on regulation in fragile states established by the WB/PPIAF.

In 2015, Eric was awarded the Public Service Medal for his contributions to the development of regulation in Australia and market-based trading schemes in carbon reductions and energy efficiency in NSW.

Paul Smith, CAA/formerly CEO of AEMC

Paul was appointed to the Board as Group Director of Consumers and Markets on 24 May 2018. He leads the teams at the CAA that undertake the economic regulation of airports and air traffic control, the ATOL travel agent licensing scheme, airline licensing and enforcing consumer protections.  Before joining the CAA he was Head of Regulatory Strategy and Policy at the Payment Systems Regulator since January 2016. Paul has also previously held the position of Chief Executive of the Australian Energy Market Commission. Prior to that he worked on economic regulation issues as a consultant and in a number of roles at Postcomm and Ofgem.

Jon Stern, Honorary Professor, CCRP

Jon Stern is an Honorary Visiting Professor in the Department of Economics at City University, London.  Jon Stern was a UK Competition Commission and then a CMA (Competition and Market Authority) Panel Member from 2013-18. While at the CMA, Jon was a Panel Member on several regulatory appeals

From 2005-13, Jon was a Senior Visiting Fellow at the Centre for Competition and Regulatory Policy (CCRP), City University.  He was one of the CCRP founder organisers.  Previously, from 1999-2004, Jon was an Associate Director of the Regulation Initiative at the London Business School.   Jon is a long-time Associate Researcher at EPRG (Energy Policy Research Group) of the University of Cambridge.  He also an associate at CARR, London School of Economics.

Jon has worked extensively as an economic consultant and is currently a Senior Associate at CEPA.  From 1989-2004, he was a Senior Consultant and Senior Adviser at NERA and, from 2006-13, he was a Senior Adviser at CEPA.. Before 1989, he spent over 15 years as an economist in the UK Government Economic Service.

Jon has published over 70 papers on infrastructure industry regulation.  In recent years, he has written a number of papers on UK infrastructure industry regulation and its relationship to the competition policy regime as well as papers on other aspects of UK regulation.

Jon has been an economist member of various UK regulatory academic panels, including advisory panels for the energy, rail and water industry sector regulators.  He has also regularly worked as an economist peer reviewer for a range of institutions and as an academic referee.

Roger Witcomb, Chair, RIIO-2 Challenge Group

Roger Witcomb is Chair of Ofgem’s Challenge Group for RIIO-2, its network price control process.  He was Panel Chair at the UK’s Competition and Markets Authority from 2014 to 2017, where he chaired the market investigations into Energy and Private Healthcare. From 2009 to 2014 he was a Member of the Competition Commission, and its Chair from 2011. He was Finance Director at National Power from 1996 to 2000, having previously been at BP and Cambridge University, where he taught economics. He has held non-executive roles in several organisations, including the University of Winchester, where he was Chair of Governors (2006 -2011), Anglian Water (2002-2010), and  Infraco, a developer of infrastructure projects in developing countries (2005-2011).

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When and where

11.00am - 2.00pmTuesday 30th April 2019

R101 Franklin Building City, University of London 124 Goswell Road London EC1V 7DP United Kingdom

Contact Details

City Events Team

+44 (0)20 7040 8037

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