189. In the UK, regulation
is effectively carried out by individuals sharing duties with
the Secretary of State, each regulating a single utility, but
there are other regulatory models available. In the United States,
both at Federal and at State level, there are regulatory panels
covering one or more industries. We received evidence suggesting
that the single regulators in the UK should be replaced by regulation
by several regulators sharing responsibility. There is of course
already an element of panel decision-making in the system, as
appeal lies from the regulator to the MMC in some cases.
190. Many witnesses were
ambivalent, setting out the arguments for and against panels and
single regulators and coming to no conclusion. Sometimes opposite
arguments were used by different witnesses when arguing the same
side of the question; thus while the DGGS suggested that a panel
might result in potentially inconsistent decision-making,[454]
others suggested that a panel, particularly if its members served
staggered terms, might produce more consistent decisions over
time[455]
the more so if the chairmanship rotated.[456]
Some of the alleged benefits of panels could fairly readily be
achieved by other means; thus the greater breadth of experience[457]
could equally well result from the use of panels of advisers.[458]
Apart from the arguments already considered, the main one in
favour of panels was that they might reduce the personalisation
of regulatory issues[459]
and, against, that they might slow down decision-making, blur
accountability and allow players to exploit any differences of
opinion between the regulators. Our experience in the United
States, where we had meetings with the Federal Energy Regulatory
Commission and the New Jersey and Massachussets Boards of Public
Utilities, suggests that although the process of reaching regulatory
decisions was indeed slower than in the UK the predicted blurring
of responsibility and exploitation of differences between regulators
does not occur, as there is a tendency for one regulator to emerge
as dominant.[460]
191. On the question of
whether there should continue to be single-industry regulators,
or whether there should be a single regulator for both electricity
and gas further arguments come into play. Many witnesses argued
that even if having a single energy regulator was desirable in
the long run, such a change should certainly not be introduced
at a time when the industries were facing the challenges of liberalisation
but, that once liberalisation of both markets had been successfully
achieved, and the scope of regulation narrowed as energy markets
converged, and pressure on the regulators to co-operate grew,
the matter might be reviewed. The time may very well come when
a merger of the offices should be carefully considered, but this
should not happen before liberalisation of the domestic gas and
electricity markets has been achieved. We reiterate our earlier
recommendation[461]
that, when competition in supply is fully established in the gas
and electricity industries, the Government reconsider whether
the offices of the DGGS and DGES should be merged and whether
the regulator should be individual or collegiate.
454 Ev. p.247. Back
455 Mem.
p.27. Back
456 Information
obtained on visit. Back
457 Mem.
p.46. Back
458 Ev.
p.36. Back
459 Ev.
Mem. p.34. Back
460 Ev.
p.150. Back
461 Ev.
p.150. Back
