Regulatory economics

We help clients across the regulated sectors deal with the challenges and the opportunities of economic regulation. We help regulators to develop innovative policy, to challenge companies’ business plans, and to develop forecasts and financial models. And we help regulated companies, their customers and their stakeholders to anticipate, influence and challenge regulatory settlements.

We have extensive expertise across the regulated sectors, including:

Water;
Energy - including oil, gas, and electric power and transmission;
Transport - including rail, road and aviation;
Telecommunications; and
Post.

How we can support your regulatory policy and business decisions

Regulator
Regulated Entity

Regulator

We can help you answer important questions, including: if you are conducting a price review, if you are looking to assess the impact of technological change to the sector, if you need to incentivise companies to provide better outcomes for consumers or if you are looking to estimate the cost of capital of the sector.

How can we incentivise companies to deliver good outcomes for consumers?
How can we encourage innovation in regulated sectors?
What is an efficient level of capital and operating expenditure?
What is the right measure of inflation for a regulated company?
What makes one firm’s costs higher than another, and how should this be dealt with in estimates of firm efficiency?
What is an appropriate rate of return on capital expenditure?
What is the best way to price access to a network and what should the price be?
How can regulatory asset base (RAB) models be used to incentivise investment?
How ambitious is a regulated company’s business plan for both cost efficiency and desired outcomes?
How can a regulatory regime respond to technological change?

Regulated Entity

We can help you answer important questions, including: if you want to create a compelling business plan, if you want to understand the implications of regulatory change, or if you want to challenge the regulator’s decision.

What makes for a compelling business plan for the regulator?
In what ways is our cost base different from the other regulated companies in our sector?
How can we encourage private investment in capital projects in regulated sectors?
What are the regulatory implications of a merger or acquisition transaction?
How can we challenge a regulator’s decision through a Competition and Markets Authority (CMA) appeal?
How can companies use regulatory insight to transform their business, improving customer outcomes and supporting investment?
How do we change our strategy to respond to new regulation?
How should we respond to the regulator’s consultations?
What are the economic, social, environmental and fiscal impacts of change in the regulatory regime?

Designing the regulatory regime for a new piece of rail infrastructure

How do you encourage whole-system efficiency, while protecting the commercial interest of the infrastructure manager, for a new piece of rail infrastructure? We helped our client and the ORR design and set the level of access charges, and designed and implemented a performance regime.

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Ofwat PR19 Delivery Partner

PwC was appointed as Ofwat’s delivery partner to support them in the 2019 Price Review (PR19). We provided integrated support to Ofwat across all areas including cost efficiency, outcomes, risk and return, past delivery, affordability and vulnerability and resilience.

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Supporting an energy firm with an appeal to the Competition and Markets Authority (CMA)

We helped a Gas Distribution Network to make an appeal to the CMA. Using our expertise in economic regulation and financial economics, we supported our client as expert witnesses.

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Access pricing review for a telecommunications company

When the regulator introduces a new broadband access product, how do you respond? We supported a Turkish telecommunications company review their pricing model and the efficiency characteristics of the new broadband access product.

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Insights

4 results

December 2019

Funding approaches for leakage reduction

Leakage is defined as treated w ater lost from the distribution system, and includes w ater lost from the companies’ distribution netw orks and supply pipe losses from customers’ pipes. It is an indication of how well a company maintains and manages its netw ork, and is an indicator of the resilience of the w ater system.