Stability in regulation (CERRE)
- Roberto Viola (Deputy Director General, DG CONNECT)
- Philippe Torrion (Executive Vice President, Optimisation and Trading, EDF)
- Shane Lynch (Chief Executive, North Ireland Utility Regulator)
Everyone wants regulation to be stable, unless they think it is bad regulation, when they want it changed at once. The principal reason for the first part of this proposition is that investment in network industries is often both extensive and sunk. Investors will not supply funds, or will demand a high ‘regulatory risk’ premium for them, unless they receive some kind of commitment to the recovery of their efficiently incurred costs. The importance of this is evident in current debates about the regulation of electricity transmission and distribution and the construction of fibre networks. But equally, irresistible pressure to change regulation can arise if current rules prove to be inefficient or become obsolete, if they jeopardise the supply of essential services by driving firms to bankruptcy, or if firms’ high returns or gaming of the rules makes regulation politically unacceptable. The CERRE Regulation Forum will examine how to find the right balance between these considerations and it will also assess the role of forms of commitment to instruments such as price caps of a specified duration or capital valuations enshrined in a regulatory asset base (or RAB). It will finally also discuss how regulators can better take into account the costs and benefits of stability.
On the same day, an afternoon CERRE Expert Workshop will discuss in detail the findings of the recent CERRE study on the same subject (See details).
More information here: http://www.cerre.eu/stability-regulation