1. We recommend that the
use of RPI-X incentive regulation be continued. (Para 55)
2. We therefore recommend
that regulators continue to use RPI as a measure of inflation
in the price control formula while continuing to seek improvements
in the methodology for estimating X. (Para 65)
3. We recommend that the
regulators develop such clear rules and communicate them, and
any subsequent changes, to the regulated companies. (Para 71)
4. We recommend that individual
regulators should seek to improve their calculations by taking
account of regulatory practices in other industries with the aim
of achieving greater consistency. This is especially important
for energy regulators whose different methodologies could distort
the choice of energy source. (Para 73)
5. We recommend that, the
next time the Gas and Electricity Acts are amended, the Government
consider defining the duties of the energy regulators with regard
to the development of competition in a common form of words. (Para
76)
6. We recommend that the
Government conduct a thorough review of the relationship between
OFFER and the Pool, to establish whether the DGES needs more extensive
powers to ensure that consumers receive the maximum potential
benefits of competition and that the Pool operates efficiently,
transparently and in consumers' interests. (Para 84)
7. We recommend that the
Director General of Electricity Supply keep the development of
competition in electricity generation under active review and
that he consider adopting further measures to accelerate the development
of effective competition. The possibility of further sale of
capacity by the two main generators should not be excluded. (Para
86)
8. We recommend that the
Government, as part of its review of the relationship between
the DGES and the Pool, consider granting powers to the DGES similar
to those of the DGGS over the Network Code. (Para 87)
9. We recommend that, during
the course of future reviews, the regulator should satisfy himself
that there is sufficient separation of functions and impose further
measures if necessary. (Para 98)
10. We recommend that the
regulator ensure that the natural monopoly part of TransCo is
adequately ring-fenced, that strict cost allocation rules are
enforced to ensure that the regulated business does not unduly
inflate its prices, and that she has access to sufficient information
to satisfy herself that cost allocation is appropriate. We recommend
that companies give consideration to appointing non-executive
directors to their Boards who would have a duty to review company
policy and recommend amendments as necessary in the public interest.
(Para 101)
11. We recommend that the
Government introduce legislation at the earliest opportunity to
create a system whereby information relating to natural monopolies
is assumed to be non-confidential unless it can be shown to be
otherwise and that the Government gives both energy regulators
the authority to publish information relating to natural monopolies
as they see fit, unless the company concerned can prove that publication
would be commercially damaging. (Para 102)
12. We recommend that any
legislative proposals from the Government should take account
of the needs of natural monopolies and reflect advice from the
Stock Exchange regarding the release of market sensitive information.
(Para 103)
13. We recommend that further
consideration is given by the Government to establishing an appropriate
framework within which sustainability can be achieved, and which
would allow the Environment Agency to operate on the basis of
an integrated approach in its dealings with the regulators. (Para
104)
14. We recommend that the
Government annually publish and disseminate a clear statement
defining the environmental regulatory responsibilities of each
Government department and each agency involved and include in
such statements a report on progress made towards meeting its
internationally agreed obligations. These statements should be
subject to appropriate regular parliamentary scrutiny. (Para 110)
15. We recommend that the
Environment Agency and the energy regulators, in the course of
reviewing their relationships, consider establishing a systematic
mechanism for ensuring regular contact and discussions designed
to ensure that all agencies and other parties involved in the
environmental regulation of the energy sector work effectively
and in concert and that the operation of such mechanism be the
subject of an annual report to Parliament. (Para 113)
16. We recommend that the
Government accept responsibility for raising any levies on gas
consumers to fund energy efficiency measures and that, it introduce
appropriate legislation to achieve this. (Para 118)
17. We recommend that the
Government accept responsibility for raising any levies on electricity
consumers to fund energy efficiency measures and that, it introduce
legislation to achieve this. (Para 121)
18. We recommend that the
regulators do their utmost, within their respective remits, to
promote energy efficiency (Para 123)
19. We support the recommendation
of the UK Round Table on Sustainable Development that the government
"should consider promoting the development of energy services
if these do not emerge quickly on their own accord". (Para
126)
20. We recommend that the
Government consider further ways, for instance through consumer
education, building regulations, appliance standards, labelling
schemes and, where appropriate, financial incentives, to encourage
all consumers to invest in cost-effective energy efficiency measures.
(Para 127)
21. We recommend that the
Government should make a commitment to the long-term funding of
the Energy Savings Trust. (Para 128)
22. We recommend that the
Government introduce legislation amending the 1989 Electricity
Act to impose a duty on the Director General of Electricity Supply
to take into account in the exercise of his primary duties the
needs of those who are chronically sick. (Para 142)
23. We recommend that both
regulators undertake detailed monitoring of the effects of liberalisation
on vulnerable consumers and publish their findings, and take swift
remedial action where necessary. We further recommend that they
continue to seek ways in which the interests of such consumers
can be best protected and implement such provisions where it is
consistent with their other duties. (Para 144)
24. recommend that the Government
introduce legislation to impose duties on the Directors General
of Electricity Supply and Gas Supply to take into account in the
exercise of their primary duties the needs of those who are on
low incomes. (Para 145)
25. We recommend that Government
should keep under review the staffing of the regulators' offices
with a view to ensuring that they comprise an adequate number
of appropriately qualified and paid staff. (Para 146)
26. We recommend that the
Directors General take care to ensure that the role of consultants
be restricted to a research and advisory capacity. We further
recommend that regulators should include among their consultants
experts from bodies with knowledge of environmental, social and
consumer protection issues. (Para 147)
27. We recommend that the
Government review practice across the whole field of regulation
and examine the ad hoc arrangements used by some Directors General
with a view to incorporating best practice in future proposed
legislation. (Para 149)
28. We recommend that the
current system of monitoring by parliamentary select committees
should remain unchanged. (Para 156)
29. We reiterate the recommendation
of our Eleventh Report of 1994-95 that the Government impose a
duty on the DGES to give reasons for his decisions. (Para 158)
30. We recommend that all
regulators publish forward plans. (Para 160)
31. We recommend that in
any restructuring of the regulatory system after 1998, the Government
consider also how to establish the most effective means for handling
consumer complaints, taking account of the changing nature of
the competitive markets for energy. (Para 166)
32. We recommend that the
Government, after consultation with the Directors General, the
companies concerned and the consumer organisations, produce a
three-year plan for the resourcing of these bodies. (Para 167)
33. We recommend that the
Government ensure that the MMC be adequately resourced to allow
appeals, where appropriate, to be dealt with more speedily. (Para
170)
34. We recommend that the
Government, in consultation with the energy regulators and licensees,
consider the need to enable licensees to appeal against decisions
not to amend licence conditions and ways in which such appeals
could be conducted. (Para 172)
35. We reiterate our earlier
recommendation 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. (Para
191)
