Embedding broader values in the regulatory model: An analysis of Ofgem's consumer value proposition for the natural gas distribution sector. (February 2023)

• Record Type: Journal Article
• Authors: Poulter, Helen; Bolton, Ronan
• Is Part Of: Utilities policy. Volume 80(2023)
• Publication Date: 2023-02
• Subjects: Public utilities -- United States -- Periodicals; Public utilities -- Government policy -- United States -- Periodicals; 363.6
• DOI: 10.1016/j.jup.2022.101470
• Languages: English
• ISSNs: 0957-1787

Abstract

Abstract: Customer engagement processes introduced in energy network regulation in Britain have incentivised networks to think beyond economic efficiency. To this end, the regulator introduced a new incentive: the Consumer Value Proposition (CVP), allowing companies to use a monetised metric to gain a financial reward should their investments show additional social and environmental value for customers. Through a case study of the RIIO2 natural gas distribution price-control process, we construct a narrative history of the design and assessment of the CVP initiative. We discuss the challenges of implementing such an approach in practice and embedding it in the regulatory model. Highlights: Regulatory frameworks are evolving to include social and environmental outcomes. Ofgem introduced new incentives that evaluate the outcomes consumers value. Challenges occurred during the application and evaluation of the new incentives. Tension exists between appraising customers' values and what the regulator values.