As natural monopolies, electricity and gas transmission and distribution networks are generally subject to some form of regulation to ensure that energy is delivered reliably and at least cost. The UK has a long and successful experience of effective incentive-based network regulation.
The challenges now include:
- Identifying best practice in the use of efficiency analysis and benchmarking techniques for network companies
- Investigating the role of network regulation in delivering climate change targets
- Exploring how market mechanisms and competition could play a more central role in the future