Unit 3: Ofwat curbs price rises

Here is an important example of regulatory control of utility businesses with regional natural monopoly power. Ofwat is requiring regional water companies to cut their bills in real terms for the next five year pricing regime.

Regulatory agencies are often accused of failing to be sufficient strong with suppliers leading to allegations of regulatory capture i.e. producer interests dominate consumer interests. Ofwat may be an example of a regulator that avoids this criticism.

Click here for the article from BBC news

Questions for discussion:

Why does the water industry need regulation?
Are there any disadvantages to the consumer of govt intervention?