RPI-X@20: A Plan for Regulatory Regime Change

16 December 2008
By Graham Shuttleworth

In March and October 2008, Chief Executive of Ofgem Alistair Buchanan delivered speeches expressing dissatisfaction with the current format of regulatory reviews, 20 years after the adoption of RPI-X regulation in Britain, and set out his plans for long-term reforms. In this article from Power UK, NERA Director Graham Shuttleworth reviews Mr. Buchanan's concerns and notes that the issues raised by Mr. Buchanan fall into three broad themes: 1) housekeeping -- tidying up all the different, and potentially conflicting, incentive schemes; 2) investment incentives -- encouraging companies to spend money efficiently instead of minimizing all costs; and 3) alternative dispute resolution -- finding ways for regulated companies to settle issues with stakeholders, before approaching Ofgem. He argues that some of the proposed measures to "simplify" the task of regulation in Britain will only work if Ofgem first makes a substantial effort to codify its methods in specific areas.