Is I ish U ili y Regula ion Failing Consume s?
Pa ick Massey1
No embe 2004.
1 The au ho is a di ec o o Compecon Limi ed. I am g a e ul o Sean Ba e , Isolde Goggin, Robin
Mason, Colm McCa hy and Tony Sho all o hei commen s on an ea lie d a . The usual disclaime
applies.
1
Is I ish U ili y Regula ion Failing Consume s?
Abs ac : O e he pas decade he ene gy and communica ions ma ke s in I eland,
which we e adi ionally he p ese e o S a e owned monopolies, ha e been opened up o
compe i ion o some ex en , la gely as a esul o EU legisla ion. This has esul ed in
changes in he egula o y en i onmen and he es ablishmen o independen egula o y
agencies o hese indus ies. The p esen pape analyses he impac o hese changes. I
a gues ha compe i ion, whe e e i is possible, is supe io o egula ion. The pape
sugges s ha policy o da e has paid oo li le a en ion o measu es necessa y o p omo e
g ea e compe i ion and ha egula ion has ailed o p o ec consume s. The pape
concludes ha ac i e measu es a e necessa y o p omo e g ea e compe i ion in gas,
elec ici y and pos al se ices and ha hese need o be combined wi h e o ms o he
exis ing egula o y egime.
2
In oduc ion.
Eu ope’s ene gy and elecommunica ions indus ies ha e unde gone majo changes o e
he pas decade. EU Di ec i es equi ed Membe S a es o open up hei na ional ma ke s
o compe i o s om o he Membe S a es.2 In oducing compe i ion in monopolised
indus ies should inc ease p oduc i e e iciency, leading o lowe p ices, and lead o a
g ea e alignmen be ween p ices and cos s, he eby enhancing alloca i e e iciency. The
p esen pape a gues ha he e o ms implemen ed o da e ha e been inadequa e and ha
egula ion o such indus ies in I eland is de icien in a numbe o impo an espec s. The
pape conside s some possible solu ions o hese p oblems.
Elec ici y and gas p ices ha e isen by 40% and 22% espec i ely since Decembe
2001.3 (See ig.1)
Fig.1: I ish Gas and Elec ici y P ices
(Dec 2001 = 100)
85
95
105
115
125
135
145
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004e
2005
Elec ici y Gas
No es: The 2004 es ima es a e based on CSO da a up o Augus 2004 and inco po a e p ice inc eases o
gas and elec ici y which ook e ec on 1s Oc obe 2004. The 2005 o ecas includes a u he 3.5%
inc ease in elec ici y p ices scheduled o ake e ec on 1s Janua y 2005 and assumes no u he p ice ises.
Sou ce: CSO and Compecon es ima es.
Rising oil p ices only pa ly explain he sha p ise in elec ici y p ices. The Na ional
Compe i i eness Council (2004) epo ed ha I ish indus ial elec ici y p ices we e
2 Telecommunica ions was ully libe alised in 1998, ull libe alisa ion o gas and elec ici y ma ke s o
smalle cus ome s is scheduled o ake place ea ly in 2005, while libe alisa ion o he pos al se ice is a a
much ea lie s age.
3 This akes in o accoun a 3.5% inc ease in elec ici y p ices due o ake e ec on 1s Janua y 2005.
3
among he mos expensi e in he EU e en be o e a 9% p ice inc ease in Oc obe 2004.4
UK elec ici y p ices we e 40% lowe han in I eland o i ms consuming 10 GWh.
Fixed line elephone cha ges declined by o e 30% be ween 1997 and 2001 bu ha e
isen by 9% o e he pas h ee yea s. (See Fig.2) Ei com’s line en al cha ges a e double
he Eu opean a e age.5 Pos al cha ges ha e inc eased by almos 25% in h ee yea s and
An Pos had sough a u he 7 cen (14.6%) inc ease, al hough subsequen newspape
epo s indica e ha his is unlikely o be g an ed by ComReg.6 Senio (2004) epo s ha
he s anda d p ice o a pos age s amp in New Zealand, which has ully libe alised he
pos al sec o , was unchanged on i s 1989 le el o nz45c.
Fig.2: I ish Fixed Line Telephone and Pos al Cha ges
(Dec 2001 = 100)
90
100
110
120
130
140
150
1997
1998
1999
2000
2001
2002
2003
2004e
Telephone (Fixed) Pos al Cha ges
No es: The 2004 es ima es o a e based on CSO da a up o June p ojec ed o wa d, i.e. assuming no u he
p ice inc eases his yea .
Sou ce: CSO and Compecon es ima es.
ESB p o i s be o e in e es and ax in 2003 amoun ed o €354m, wi h 61% o his
a ibu ed o he ansmission and dis ibu ion ne wo k. Pay le els in he elec ici y
indus y ha e isen sha ply ela i e o hose in o he indus ies since mid 2001. (See
4 I eland was second mos expensi e ou o en coun ies o i ms pu chasing 10GWh; 3 d mos expensi e
(ou o nine coun ies) o i ms pu chasing 25GWh and 3 d mos expensi e (ou o eigh coun ies) o 70
GWh.
5 Sunday Business Pos , 12.9.2004.
6 Sunday Business Pos , 14.11.2004.
4
Fig.3). A e age weekly indus ial ea nings in he elec ici y, gas, s eam and ho wa e
supply sec o in June 2004 we e €1,157.47, mo e han wice a e age weekly indus ial
ea nings which s ood a €560.60. Acco ding o newspape epo s, mo e han one ESB
boa d membe “is unde s ood o ha e commen ed a a boa d mee ing ha he company
was doing e y well ou o he egula ion p ocess”.7
Fig. 3: A e age Weekly Ea nings o Indus ial Wo ke s
(1995q3 = 100)
100
120
140
160
180
200
220
240
260
1995Q3
1997Q1
1998Q3
2000Q1
2001Q3
2003Q1
Sou ce: CSO
All Indus ies Elec ici y, Gas, S eam & Ho Wa e Supply
No su p isingly such p ice inc eases ha e led o g owing esen men among consume s
and business. IBEC claimed ha he ene gy ma ke was no wo king and ha a new
app oach was needed o ensu e secu i y o supply a a easonable cos .8 The NCC (2004,
p.ii) s a ed blun ly ha :
“Be e egula ion is needed in sec o s such as ene gy, elecoms and p o essional
se ices o ensu e mo e igo ous compe i ion and d i e down he cos o doing
business in I eland.”
Regula ion – Wha Ha e we Lea ned?
7 I ish Independen , 2.10.2003, Why Regula ion is Good o ESB.
8 I ish Times, 9.2.2004.
5

T adi ionally gas, elec ici y and elecommunica ions we e ega ded as na u al
monopolies which had o be egula ed o p e en he abuse o monopoly powe . In
I eland, as in many Eu opean coun ies, S a e owne ship was iewed as a way o ensu ing
hese indus ies we e ope a ed in he public in e es .9 (Ho elling, 1938). In he US such
indus ies we e gene ally p i a ely owned wi h he scope o abuse o ma ke powe
egula ed by p o i o a e o e u n egula ion.
Du ing he 1970s and ea ly 1980s, he e was a g owing ealisa ion ha adi ional o ms
o egula ion we e ine ec i e. The economic li e a u e highligh ed egula o s’ inabili y o
achie e i s -bes ou comes due o in o ma ion asymme ies, which enable he egula ed
i m o se p ice abo e cos and gain a socially-cos ly en om i s ac i i ies. (See La on
and Ti ole, 1993 and La on , 1994). Na ionalising such indus ies c ea es highly
cen alised o ganisa ions in which in o ma ion is asymme ically dis ibu ed in a ou o
managemen , making i di icul o exe cise e ec i e public con ol. (Schick, 1993)10
Regula o y agencies a e also p one o bu eauc a ic cap u e esul ing in an inhe en bias
owa d inc easing hei ac i i ies. Such conside a ions esul ed in a majo eapp aisal o
public policy owa ds he ene gy and communica ions indus ies, beginning in he Uni ed
S a es and B i ain in he ea ly 1980s and subsequen ly sp eading o o he coun ies.
I was ecognised ha , while he ansmission and dis ibu ion ne wo ks in gas and
elec ici y a e na u al monopolies, o he ac i i ies a e po en ially compe i i e. The e o m
p og ammes in oduced in mos coun ies gene ally had wo b oad cha ac e is ics.
1. Measu es o pe mi compe i ion in po en ially compe i i e segmen s o u ili y
indus ies, e lec ing a iew ha compe i ion was supe io o egula ion; and
2. In na u al monopoly a eas, whe e egula ion emains necessa y, a emp s we e
made o de ise mo e e ec i e egula o y ools designed o educe he isk o
egula o y cap u e.
9 Elec ici y and elecommunica ions we e his o ically s a e monopolies, while he gas indus y consis ed o
a small numbe o local u ban monopolies, which we e la gely p i a ely owned. Wi h he eplacemen o
own gas by na u al gas in he 1980s, he old own gas companies we e acqui ed by he S a e owned BGE.
10 Lawson (1992) desc ibes how, in he UK, he CEGB misled successi e Go e nmen s abou he ue cos
o nuclea plan s, some hing which only eme ged on he e e o he UK elec ici y p i a isa ion.
6
Regula ion has equen ly been seen as a necessa y empo a y measu e “ o hold he o ”
un il compe i ion de elops. (Li lechild, 1999)
P omo ing Compe i i e Ma ke s.
New en an s in gas and elec ici y mus be able o access he na u al monopoly ne wo k
i hey a e o compe e wi h he incumben p o ide . A e ically in eg a ed incumben has
ob ious incen i es o deny access o he ne wo k o o g an i on un a ou able e ms. I
is ex emely di icul o a egula o o es ablish he ue cos s o p o iding access and
e ically in eg a ed incumben s ha e an incen i e o o e s a e hem.
“The p icing o access o essen ial acili ies can be complex e en when hei
owne ship is sepa a e om compe i i e ac i i ies, bu i is especially con o e sial
when he e is e ical in eg a ion.” (Vicke s, 1998, p.34)
In con as , he unin eg a ed owne o a ansmission ne wo k would ne e ha e an
incen i e o e use o deal unila e ally. Ve ical sepa a ion o he na u al monopoly
elemen s om he po en ially compe i i e segmen s o he gas and elec ici y indus ies
g ea ly simpli ies he ask o egula ing access cha ges and is hus mo e e ec i e a
os e ing compe i ion.11 (See, o example, A ms ong e . al., 1994; Li lechild, 2003;
Newbe y, 2001; OECD, 2001; and Uni ed S a es Fede al T ade Commission, 2000).
Accoun ing sepa a ion is no enough, as i is e y di icul o a egula o o ensu e ha
cos s a e co ec ly appo ioned be ween di e en business ac i i ies.
The issues in elecommunica ions a e somewha di e en o hose in gas and elec ici y.
Rapid echnological change and he g ow h in i al mobile ne wo ks mean ha he
na u al monopoly p oblem may no longe a ise. (Ricke s, 2004). Li lechild (2004)
ne e heless a gued o he e ical spli up o BT, poin ing ou ha , whe eas p ice
egula ion had been emo ed in UK gas and elec ici y ma ke s i emained in place o
elecommunica ions.
11 In e na ional expe ience indica es ha he po en ial gains om compe i ion ou weigh he loss o
economies o scope ha esul om e ical in eg a ion.
7
The incumben will ypically ha e inhe i ed a dominan posi ion as a esul o i s o me
p o ec ed monopoly s a us and his may also s ymie new en y. In he case o elec ici y
Be gman e . al. (1999, p.229) concluded ha “compe i i e ou comes canno be eached
wi hou su icien dispe sion o he owne ship o gene a ion asse s.” Nu all (2000),
Newbe y (2001) and Li lechild (2003) all s ess he impo ance o ho izon al
es uc u ing in elec ici y.
Dealing wi h In o ma ion Asymme ies.
P ice cap egula ion a emp s o o e come he in o ma ion asymme y p oblem by
encou aging he egula ed i m o e eal accu a e in o ma ion abou he po en ial o cos
educ ions. The p ice cap is supposed o p o ide a s ong incen i e o he egula ed i m
o achie e g ea e cos sa ings han hose se by he egula o , since his will inc ease i s
p o i s. This in u n p o ides mo e accu a e in o ma ion o he egula o abou po en ial
e iciency gains when he p ice cap is due o e iew.12
Regula ion is a epea ed game which p o ides scope o s a egic beha iou by he
egula ed i m. I will ecognise ha , while i can e ain addi ional e iciency gains in he
sho - un, such gains will lead o igh e p ice caps in he u u e. (See La on and Ti ole,
2003). Giulie i and Waddams-P ice (2000), in a s udy o he e ec s o p ice caps in UK
u ili ies, along wi h ai po s and elecoms in he US, ound “li le e idence ha i ms had
mo ed owa ds mo e e icien p icing s uc u es” unde p ice cap cons ain s. They
epo ed e idence o conside able gaming a ound he ime o p ice e iews in an a emp
o ge p ice caps aised as much as possible. In con as hey epo a mo e owa d cos
e lec i e p icing whe e compe i ion had been in oduced.
Noll (1995) poin ed ou ha high p o i s in public u ili ies we e conside ed unaccep able
poli ically and egula o s in bo h he US and UK we e o ced o ake ac ion o educe
hem, he eby educing he incen i e e ec s o p ice caps.
12 Se ing p ice caps o a baske o p oduc s simpli ies he ask o he egula o and allows he i m
lexibili y o adjus p ices in esponse o changes in cos s and inc ease p o i s. P o ided he p ice cap
ensu es ha consume s, as a whole, a e no wo se o as a esul o such p ice inc eases, he esul is
inc eased social wel a e. Flexibili y also enables he i m o unwind any c oss-subsidies which may exis .
8
I was o iginally claimed ha p ice cap egula ion would be simple o ope a e, and less
ulne able o p oduce cap u e han adi ional a e o e u n egula ion. Li lechild
(1986) subsequen ly conceded ha “ a e o e u n conside a ions a e necessa ily implici
in se ing and ese ing x”. P ice capping is he e o e a highly complex p ocess in ol ing
conside able in o ma ion equi emen s and assump ions abou cos and demand, as well
as p edic ions as o u u e changes in cos and demand. Polli (1999) no es ha poo ly
cons uc ed incen i e egula ion may nega e many o he posi i e bene i s om e o m.
La on and Ti ole (2003) and La on (2004) also ques ion he e icacy o p ice-cap
egula ion.
Massey and O’Ha e (1996) poin ed ou ha p ice capping assumes ha i ms a e p o i
maximise s and elies on he incen i e o inc ease p o i s o induce i ms o e eal
in o ma ion o he egula o . I is designed o apply o p i a e sec o i ms. Dodgson
(2003) a gued ha p ice capping was unsui able o egula ing he UK Pos O ice o
simila easons.
Why Regula ion isn’ Wo king.
The EU Di ec i es on opening up ene gy and communica ions ma ke s only se ou
ce ain gene al p inciples and le Membe S a es conside able scope o decide how such
measu es should be implemen ed. As Wa e man and Si el (1997, p.115) no ed:
“Expe ience in many coun ies shows ha he de il is in he de ail and ha
compe i ion does no a i e o e nigh .”
Ca e and P ospe e i (2001, p.111) desc ibe “ he appalling eco d o some Membe
S a es in implemen ing [ elecommunica ions] di ec i es.” Li lechild (2003) has c i icised
F ance and Ge many o ailing o in oduce compe i ion in hei espec i e elec ici y
ma ke s. The hen EU Commissione o he In e nal Ma ke desc ibed libe alisa ion o
he ene gy ma ke as “s ill incomple e because wo big playe s, Ge many and F ance, lag
behind.” (Bolkens ein, 2004, p.126)
9
The exis ence o in o ma ion asymme ies, combined wi h he ac ha bo h incumben s
and new en an s ha e an incen i e o mislead he egula o , also has impo an cos
implica ions. Inco ec egula o y decisions a e likely o impose signi ican cos s on he
economy as in es men decisions and compe i i e s a egies o i ms will be misdi ec ed.
Regula o y Accoun abili y
Regula o s a e hemsel es monopolies, which sugges s ha he e is a need o ensu e ha
hey a e subjec o an adequa e le el o accoun abili y. Le ine (1998), howe e , claimed
ha “… he wel e o in o ma ion ha he public ecei es abou poli ical issues om he
media and he di icul ies o o ganising o achie e poli ical ends insula e egula o s om
moni o ing and gene al in e es p essu es…” Wes up (2002) ound ha Oi each as
Commi ees had ailed o p ope ly o e see he ac i i ies o egula o y bodies because o a
combina ion o inabili y; igno ance o pa iali y; and lack o in e es . He obse ed ha
“ he Oi each as has shown li le en husiasm o ca ying ou i s sc u iny ole” (p.55) and
desc ibed “ he appa en unwillingness o di e en Oi each as commi ees o mee wi h
he di e en egula o s on e en an annual basis is an indica ion o a eluc ance o ake
se iously a sc u iny ole”. I appea s ha commi ees only ake an in e es in he ac i i ies
o egula o s when such issues become ho opics poli ically and p esen an oppo uni y
o poli ical poin s sco ing. This o cou se does no pe mi o he so o de ailed and in-
dep h pe o mance e iews ha a e necessa y.
Ge ing he Ma ke S uc u e Righ
The lesson om o he coun ies is ha , whe e compe i ion is possible, i is a supe io o
egula ion a inc easing e iciency and ensu ing he lowes possible p ices o consume s.
(Kahn, 1988) Policies which seek o limi compe i ion, and ely ins ead on egula ion o
sa egua d he in e es s o public u ili y cus ome s a e he e o e misguided. As S elze
(2001, p.7) obse ed wi h ega d o UK egula o y agencies:
“…i was somewhe e be ween oolishness and wild op imism o he go e nmen o
imagine ha egula ion is a p ocess ha can be pe o med by a ew olks applying
uncon o e sial echniques o de e mine p ices ha will be ai o consume s and a
16

he same ime yield e u ns adequa e, bu no mo e han adequa e, o a ac capi al
in su icien quan i ies o main ain se ice a accep able le els.”
Bo ens ein e . al. (1999) poin ou ma ke powe p oblems may pe sis in elec ici y e en
when he e a e a numbe o compe ing gene a o s, bu ne e heless a gue ha
compe i ion is supe io o egula ion.
Equally i mus be ecognised ha simply pe mi ing en y will no lead o he eme gence
o compe i i e ma ke s in gas and elec ici y. The objec i e o policy should be o ensu e
ha , in i e yea s ime, egula ion will only emain necessa y in he case o he na u al
monopoly ansmission and dis ibu ion ne wo ks. Achie ing his aim is likely o equi e
some es uc u ing in gas and elec ici y. The owne ship and con ol o he ansmission
and dis ibu ion ne wo ks needs o be ans e ed o companies ha a e independen o
ESB and BGE. In he case o gas, app oxima ely 80% o he ma ke in olume e ms is
cu en ly open o compe i ion. While BGE s ill has 100% o he household and small
business ma ke , ho izon al es uc u ing o i s supply business would appea
unnecessa y.
Elec ici y is mo e complex. The ESB (2003) has commi ed i sel o educing i s ma ke
sha e o elec ici y gene a ion o 60% “ o acili a e he en y o new compe i o s.” This is
unlikely o esul in an adequa e le el o compe i ion, pa icula ly as ESB would s ill
ha e 100% o he peak plan s which e ec i ely se he p ice o gene a ion.18 I has been
sugges ed ha he Republic o I eland elec ici y ma ke is oo small o pe mi
compe i ion; al hough Li lechild (2003) epo s ha compe i ion is being conside ed in
coun ies wi h a o al gene a ion equi emen o 1,000MW o less.
The e a e p oposals o he c ea ion o a single all island elec ici y ma ke and o he
cons uc ion o in e -connec o s o B i ain.19 IPA (2001) concluded, howe e , ha ac ion
would be equi ed o ackle ESB’s dominance in gene a ion e en in he con ex o an all
18 Bo ens ein (1999) has shown ha i ms wi h much smalle ma ke sha es may be able o wield ma ke
powe in gene a ion.
17
I eland ma ke .20 Bo ens ein e . al. (1999) epo ed ha in pa s o he US gene a o s
educed he geog aphic size o he ma ke by educing ou pu and causing conges ion on
he g id. Such expe ience sugges s ha inc easing in e -connec ion capaci y on i s own
migh no su ice. Commen ing on Swedish expe ience, Be gman e . al.(1999, p.229)
concluded, ha “i is be e o ely on he edis ibu ion o gene a ion asse s” whene e
possible, because he bene i s om ma ke expansion “a e likely o be mo e unce ain and
less immedia e.”
Conside a ion should also be gi en o as e libe alisa ion o pos al se ices. The e is
some e idence ha inal deli e y may cons i u e a na u al monopoly. In he UK i al
ope a o s handle he collec ion, anspo and so ing and pay he Royal Mail o inal
deli e y a a a e o 13p pe i em. Such mail can be so ed down o he le el o indi idual
deli e y ou es. (Senio , 2004)
Re o ming I eland’s Regula o y Regime.
S uc u al changes in gas and elec ici y need o be accompanied by signi ican e o ms
o he exis ing egula o y egime. Sha p p ice inc eases o gas, elec ici y and pos al
se ices in ecen yea s has con ibu ed o a g owing public disenchan men wi h he
egula o y p ocess in I eland and c ea ed a mis aken imp ession ha compe i ion in hese
indus ies has no wo ked. In many ins ances egula o y decisions simply summa ise
submissions o a ious pa ies and se ou conclusions. (See, o example, CER, 2004).
S elze (2001, p.105) has c i icised such an app oach in he UK.
“This decision o es ablish a decision-making p ocess ha , o all in en s and
pu poses, excluded consume s om pa icipa ion elied on he e y English no ion
ha esponsible chaps know wha is bes o he public.”
The e is a need o a p ope ly esou ced consume body ha is capable o unde aking he
necessa y esea ch o p esen a coun e case o he egula ed i m. G ea e anspa ency is
19 Be gman, e . al. (1999) desc ibe how Sweden, No way and Finland expanded hei na ional elec ici y
ma ke s by in eg a ing hem in his way. In e connec ion capaci y be ween Sco land and England is being
inc eased in esponse o a lack o compe i ion in Sco land. See O gem (2001).
18
equi ed o es o e c edibili y o p ice egula ion. Fu u e p ice e iews should be
conduc ed by means o a public hea ing. This would allow he a gumen s pu o wa d by
egula ed i ms o be challenged di ec ly. I would also equi e hose opposing p ice
inc eases o p esen mo e igo ous a gumen s. The CER (2004) epo ed ha submissions
om ade and business associa ions opposing he Oc obe 2004 p ice inc ease a gued:
 P ices should no be inc eased because o a cumula i e inc ease o 28% o e he
p e ious h ee yea s;
 P ice inc eases should be less han in la ion because hey a e a signi ican cos o
indus y; and
 Company’s ope a ing budge s had been se o 2004 and included no p o ision o
highe elec ici y cha ges.
The exis ing egula o y agencies o ene gy, elecommunica ions and ai po s should be
combined in o a single egula o y agency. The e would appea o be ob ious economies
o scale and scope sugges ing ha a me ge would be bene icial, while such an agency
migh also be less p one o egula o y cap u e.
Massey and Daly (2003) desc ibe he cu en ad-hoc a angemen s ega ding appeals
agains egula o y decisions, wi h wide a ia ions in he ype o decisions by he di e en
egula o s ha can be appealed and wi h appeals by cus ome s agains p icing decisions
excluded excep in he case o he a ia ion egula o . Cus ome s and cus ome g oups
should ha e a igh o appeal decisions on p ices and p ice caps wi h a single appeals
panel esponsible o conside ing appeals agains egula o y decisions. An appeal by he
majo ai lines, who a e he cus ome s, led o he CAR educing p ice caps o ai po s.
The e is a conce n ha he appeals body would become he de ac o egula o and ha
pa ies would no engage in he ini ial egula o y decision making p ocess bu p ese e
hei ammuni ion o an appeal. Fi ms gene ally end o wan such issues decided
speedily and i is no in hei in e es s o ac in such a ashion. In o de o discou age
exa ious appeals, appellan s could be equi ed o bea he cos o unsuccess ul appeals.
20 This need no in ol e p i a isa ion o exis ing ESB plan s. New Zealand, o example, p i a ised 40% o
i s gene a ing capaci y bu he emaining 60% was spli in o h ee compe ing s a e companies.
19
Wa e man (2003, p.144) a gues ha egula o y c eep is endemic by i s na u e as he
egula o ’s job is o egula e. “Hence blaming hem o egula ing is like blaming ish o
swimming. The e a e only ways o es ain egula o y c eep…” This is exace ba ed by
he ac ha i als ha e ob ious incen i es o complain o egula o s abou incumben
i ms as hey may bene i i he egula o es ic s he abili y o he incumben o compe e
wi h hem. He sugges s ha egula o s should hemsel es be subjec o a p ice cap while
unsuccess ul complainan s should be equi ed o bea he cos o in es iga ions by he
egula o . In I eland’s case a p ice cap o CPI - 10% o he egula o (s) o i e yea s
would encou age mo es owa ds de eloping e ec i e compe i ion and educing he
scope o egula ion. The base poin o he egula o ’s p ice cap should e lec ComReg’s
ac ual egula o y ou lays a he han i s e enue.
Conclusion
Li le p og ess has been made o da e in in oducing compe i ion in gas, elec ici y and
pos al se ices in I eland. A guably his is because oo li le conside a ion has been gi en
o he in oduc ion o measu es necessa y o b ing abou such compe i ion. Policy has
ins ead ended o a ou egula ion o e compe i ion. Such an app oach is clea ly
misguided and will ine i ably esul in highe p ices and a loss in alloca i e e iciency
wi h consequen implica ions o indus ial compe i i eness. Technological de elopmen s
ha e os e ed inc eased compe i ion in elecommunica ions in spi e o such policy
inadequacies. G ea e emphasis mus be placed on measu es designed o p omo e
compe i ion, including es uc u ing in gas and elec ici y and a speeding up o measu es
o libe alise pos al se ices. Such measu es mus be accompanied by policies designed o
limi egula ion o hose a eas ha a e genuine na u al monopolies, some hing which
egula o s a e unlikely o do i le o hei own de ices.
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