Since the 1980’s privatisation of the UK telecoms, water and the energy markest, the UK has a highly competitive but closely regulated telephony, water, power market.
The issue with close regulation, is the fine balance that the regulator has to get right, when it comes to being the champion of the consumer, and also ensuring an economic landscape that encourages investment and the ability to make an economic return for the industries, shareholders and offer decent customer service.
If companies fail to invest in the infrastructure of telecoms, water and energy, the national economy could suffer that in turn could cause long term structural issues, such as poor 3G and 4G coverage, lack of water supply or potential energy shortages whose consequences could be rising prices for the consumer, whether business or retail.
In late March, the UK energy regulator Ofgem [https://www.ofgem.gov.uk/] proposed the UK energy market needs to be referred to the UK Competition and Markets Authority [https://www.gov.uk/government/organisations/competition-and-markets-authority] in response to rising UK energy bills and the dominance of the big six energy suppliers [https://www.ofgem.gov.uk/press-releases/ofgem-proposes-reference-cma-investigate-energy-market]
The risk of this, is that the result of the investigation, could lead of the break-up of the big six players. However now with the risk of a potential divesture of the big six, will the current six players be willing to invest any new money into the UK energy market to develop new sources of energy supply ?
The UK as some structural issues when it comes to energy production. The last coal fired power station to be built was in 1974, the last nuclear power station to be built and turned on was Sizewell B in beautiful Suffolk in the early 1990’s, the legacy Magnox nuclear power stations of the 1950’s and 1960’s are now end of life. The UK as a massive energy shortfall.
It seems like “playing with fire” to disrupt the market with an investigation, when the UK is desperate need for new energy sources, and clearly needs new investment in the energy generation mix of power sources. With the crisis in Crimea and Ukraine, now is the time to invest in new domestic UK energy sources and new supply, rather than being dependent on supplies from Gazprom. The investigation is sending out the wrong message to the power companies, with this level of uncertainty hanging over the sector, investment is now on hold.