The Finance and Regulation Group
Purpose and objectives
1. The CC investigates references relating to issues in several regulated industries under the relevant regulatory statutes. There are four main types of reference:
(a) Licence modification references and references concerning non-licensable activities, for example in the gas, electricity, and water sectors;
(b) Price determination references, for example in the water and sewerage, gas, electricity, and telecommunications sectors;
(c) Water merger references;
(d) Airport references (quinquennial reviews of designated airports and licence modification references for non-designated airports)
2. The CC recognises the importance of its role in these sectors and of ensuring that its expertise in economic regulation is appropriately captured and bought to bear on references. These include references in regulated sectors and may also include market investigation references and merger references. The Finance and Regulation Group (FRG) contributes to this expertise.
3. The FRG is an expert committee and reports to the CC Council. It has responsibility for:
(a) Providing expert advice to reference groups, where appropriate, in particular on:
(i) Cost of capital and financeability1;
(ii) The impact of different regulatory mechanisms on the CC’s work;
(b) Ensuring that the CC remains abreast of regulatory and strategic financial issues and developments and formulating appropriate approaches to these issues for use in CC references; and, where appropriate, representing the views of the CC in consultations with government and other regulators in matters concerning regulated industries.
Composition and ways of working
4. The FRG comprises a Chair and a number of members appointed by the CC Chairman. Members of the FRG will be recruited from the CC’s membership. Staff with an expertise in regulation assist and advise the FRG and are responsible for reflecting the views of the FRG in working papers and minutes. The FRG may make use of external advisors. Operational responsibility for the FRG lies with Lucy Beverley, Deputy Director of Financial Analysis.
5. The FRG generally meets on a bi-monthly basis.
Procedural aspects on reference related work
6. Where a reference is likely to raise issues within the remit of the FRG, parties to the reference will be notified that the FRG may be invited to advise the reference group.
7. The CC will seek to include at least one member of the FRG on groups convened to decide references under regulatory statutes.
8. The reference group should determine whether it is appropriate to consult the FRG and, if so, the particular matters on which it wishes to do so. The reference group may or may not choose to accept the advice of the FRG and it is the reference group that is ultimately responsible for the decision .
9. The Chairman of the FRG may appoint a sub-group of the FRG to deliberate particular reference-specific issues and provide advice to the reference group.
10. In accordance with the CC’s guidance on conflicts of interest, members of the FRG should disclose to the Chief Executive any interest which might give rise to a conflict or the appearance of a conflict. Any such interests which emerge during the course of a reference should be disclosed immediately.
1 The FRG replaces the Cost of Capital Advisory Panel Current members of the FRG |
