We are advisors to both Ofgem and the Department of Energy & Climate Change in the UK and our staff have played key roles in major industry restructuring and wholesale market liberalisation programmes around the world, for example in Australia and Brazil. We are highly experienced in regulatory policy and have a deep understanding of the regulatory environment in which power and gas utilities operate today.
Regulatory Policy & Tariff Setting
- Support on price control reviews and tariff studies including efficiency reviews to determine opex and capex costs.
- Design of tariff structures including supporting marginal cost studies.
- Management of financial modelling to set allowed revenues for any or all of regulated generation revenues, bulk supply tariffs, TUoS charges, DUoS charges and retail tariffs.
Market & Industry Reform
- Analysis and design of vertical and horizontal separation of generation, transmission, distribution and retail to facilitate wholesale and retail competition.
- Development of contractual arrangements to support wholesale market reform including EMR in the UK.
- Advice on the restructuring of monopoly distribution businesses either to realise efficiency gains through consolidation or to support divestment.
Wholesale and Retail Trading Arrangements
- Design of wholesale markets (both gross and net pool designs)on behalf of governments, regulators and market participants to improve contestability and liquidity.
- Development and drafting of detailed market rules and other supporting legal agreements (e.g. Settlement agreements & licences).
- Development of trading arrangements for both merchant and regulated interconnections.
- Competition assessment including tailoring of standard techniques to ensure they are appropriate to assessing competition in complex gas and power markets often with limited depth and liquidity.
Design of Directed/Vested Contracts
- Support on the development and implementation of vested (directed) power and fuel contracts, often put in place to support restructuring and/or privatisation (the Irish SEM market being a recent European example).
- Design of contract form (e.g. forwards/futures, one or two way CfDs, PPAs), pricing, and volume to support objectives such as mitigation of market power by dominant generators, as well as tariff and financeability, environmental policy, social policy and privatisation objectives.
- Support to market participants in assessment of vested/directed arrangements and response to regulatory authorities.