How we regulate

Our regulatory framework aims to ensure that customers get the outcomes they want and will pay for. It ensures that company management get incentives to be efficient and innovative and have the freedom to deliver for customers. And it ensures that investors can make fair returns.

We are ambitious, pushing the sector to perform better, and to do so in a way that commands the trust and confidence of society – an issue that is very much at the forefront of public debate.

Our overall approach to regulation

Our approach is to inform the sector of what good looks like, enable companies to deliver efficiently and effectively, and incentivise them to do more for customers and the environment. Where companies or markets don’t step up and fall short, we will step in to protect customers.

Regulating monopolies and markets

We ensure that monopoly companies deliver the price and services their customers and wider society expect, efficiently and with regard to the resilience of systems and services. And that they remain accountable for delivering their promises.

We use markets to help allocate resources efficiently and to enable service providers to find new and better ways of doing things.

Our principles of economic regulation

Our principles of economic regulation guide how we regulate both monopolies and markets. We focus on what matters, taking proportionate and targeted action where needed, using all of our tools to align interests – and encourage the sector to focus on building strong relationships with their customers and others.

Read more about our approach to regulation for 2019 price review.

Collaboration with other regulators

We work extensively with other regulators, and learn from their approaches and experience, and with bodies such as the National Infrastructure Commission and the Greater London Authority.

In water, our main partners are Natural Resources Wales, the Environment Agency, the Consumer Council for Water and the Drinking Water Inspectorate.

As economic regulators we also work with our colleagues in the UK Regulators Network (UKRN) and the UK Competition Network.