Incentive regulation in Great Britain: from RPI-X to RIIO | Joe Perkins (Ofgem)

How can you ensure that a monopoly company behaves in the best interest of consumers when the technological, economic and political landscape is always moving? In this podcast, Nicolò Rossetto (FSR) and Joe Perkins (Ofgem) discuss the British experience with inventive regulation for energy grids. In 2010, Ofgem launched a major reassessment of the regulatory framework for energy grids. The analysis showed how the incentive regulation introduced in the 1990s had both merits and drawbacks. Among the latter, a difficulty to promote investments in innovation was apparent. Building on such analysis, Ofgem decided to change the regulatory framework for grids and adopt RIIO. Far from being a revolution, that move represented a natural evolution of the framework previously in place. Achievements so far have been good, but the oversight effort required from the regulator has been significant and the regulated companies may have benefited more than expected in terms of financial returns. It is for this reason that Ofgem is once again assessing the situation and is ready to learn from its own mistakes to improve continually grid regulation in the interest of British consumers. Do you want to know more? Please take a look at the recently published book ‘’Electricity Network Regulation in the EU: The Challenges Ahead‎ for Transmission and Distribution’’ edited by Leonardo Meeus and Jean-Michel Glachant: http://fsr.eui.eu/publications/electricity-network-regulation-in-the-eu-the-challenges-ahead%E2%80%8E-for-transmission-and-distribution/ In the first chapter of the book, Vincent Rious and Nicolò Rossetto cover the British model of incentive regulation for electric grids, from the introduction of the RPI-X formula in the 1990s to the current revision of RIIO.