The Cunliffe review was published earlier this summer and included 88 recommendations on how to “reset the water sector and restore the trust that has been lost”.
The review covers proposed changes to: planning systems; legislation; and regulation. This represents an exciting time for the industry, and a real opportunity for the sector to change the way that it is perceived.
The challenge however will be with how a lot of these recommendations are implemented.
In this new series of papers, we share our initial thoughts on how we think the future economic regulation can evolve, and how changes could be implemented. We pose questions for the industry to debate and identify next steps for implementing changes.
If you would like to have a chat, please do reach out to us at hello@frontier-economics.com
Our Cunliffe paper collection
One of the most fundamental shifts in the proposed way forward is the recommendation to introduce a supervisory approach to regulation. We ask what the benefits and risks are of this change, and share our initial thoughts on the design choices that need to be made.
Authors: Annabelle Ong and Ecem Can
The recommendation to combine a supervisory approach with traditional benchmarking to set cost allowances and performance targets presents an exciting opportunity to shape the future regulatory framework. However, there are many questions about how this would work in practice.
We look at the possible ways of doing this, share our initial thoughts on implementation challenges, and identify next steps for the industry to take.
Authors: Anna Northall and Aurora Phillips
The Review calls for stronger assurance that water companies deliver. But more controls risk complexity and lost innovation. We suggest a refreshed PCD framework that balances accountability with space for cost-effective, flexible solutions.
Author: Phil Wickens
We ask whether the QAA was really the problem, and what risks we face if it is simply removed. We argue for a recalibrated incentive regime within the supervisory model that encourages companies to bring forward credible plans and equips the regulator to judge plans effectively.
Author: Phil Wickens
