Should regulated operators perform activities in competitive markets?
In recent years, regulated utility operators have diversified their activities, leading to a grey area when it comes to defining their mandates. Although their core activities are identified and controlled by a specific authority, there’s no clear regulation on their other, ‘non-regulated’ activities.
In Belgium, for example, it appears that operators in different regulated sectors (transmission system operators (TSOs), distribution system operators (DSOs), water companies, etc.) are increasingly involved in diversified activities. This could lead to potential difficulties such as extra risk for the regulated activities and their stakeholders, higher risk of cross-subsidisation and unfair competition.
The question raised by this report is should regulated operators perform non-regulated activities and if so, under which circumstances?
This study was based on both research and interviews with the following organisations:
The assessment of the above question in this report is built around four topics:
While there’s no one-size-fits-all answer, the key findings of this report emphasise the important roles of both policy makers and regulators to ensure that social welfare is always optimised and that there’s no interference within competitive markets.
Regulations and related topics have recently made headlines on several occasions. While some questioned whether or not a regulated operator should perform a specific activity, others questioned the necessity to regulate competitive activity to avoid the pitfalls of a monopoly. Based on PwC’s extensive experience with regulators and regulated operators, we analysed the scope of activities performed by regulated operators to highlight key principles determining if, and under which conditions, these activities could be performed.
This report is intended not only for regulators, operators and policy makers, but to any individual or organisation active within the numerous sectors facing rapidly evolving regulation.
Partner, PwC Belgium
Tel: +32 478 88 35 32