Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.

About Reckon

Web feed (RSS)

10 May 2008

Fri
May 9

G3 proposals for distribution structure of charges

ScottishPower EnergyNetworks proposals (72 pages, PDF) to implement the G3 "forward cost pricing" method to set its electricity distribution use of system charges.

The company has also published additional documentation on this proposal, including reviews by Frontier Economics (58 pages, PDF) and Reckon LLP (16 pages, PDF).

permanent link

Tue
May 6

Ofgem consultation on SP's IDNO charging proposals

Ofgem consultation (11 pages, PDF) on ScottishPower EnergyNetworks' proposal (30 pages, PDF) to change the basis of calculation of electricity distribution use of system charges for independent distribution network operators. Responses by Tuesday 17 June 2008.

permanent link

Fri
May 2

ORR examination of obstacles to third party investment

ORR invitation (6 pages, PDF) for stakeholders to provide feedback on the arrangements established by ORR to enable third-party investments in the mainline rail network in Great Britain (see the policy, guidelines and rebate system). ORR is looking for:

information, preferably broken down by specific elements of a project, on what went well and what less well and what impact any project ‘failures’ had on timescales and costs, including abandonment of projects and appetite for future investments.

Responses by Friday 25 July 2008.

permanent link

Thu
May 1

Costs of GB participation in EU inter-TSO compensation

Ofgem consultation (9 pages, PDF) on the recovery of the costs of the participation of National Grid (as GB system operator) in a voluntary arrangement between European transmission system operators for mutual "compensation" in respect of cross-border flows. Ofgem proposes to allow net payments made by National Grid (estimated at more than £7 million a year) to be recovered through domestic price controls, but not to make adjustments for National Grid's own costs or exchange rate differences.

Neither this document nor the November 2007 board minutes (6 pages, PDF) recording consent in principle for recovery explain the benefits to GB system users of National Grid's participation in this voluntary inter-TSO scheme. The only explanation provided by Ofgem appears to be that the costs are warranted by its desire to support the development of a compulsory EU scheme. According to Ofgem:

The association of European Transmission System Operator ("ETSO") has developed the 2008/9 scheme for the two calendar years 2008 and 2009. The terms of the circulated agreement contained a clause with the effect that if one or more TSO did not receive the support of their national regulator for their participation in the 2008/9 scheme, then the scheme would become null and void for all signatories. We understand that only with full participation could ETSO and the EC be confident of progressing mandatory ITC [inter-TSO compensation] Guidelines within the two year timescale (i.e. for implementation from 1 January 2010).

Responses by Thursday 12 June 2008.

permanent link

Tue
Apr 29

Stansted price control reference to Competition Commission

CAA submission (349 pages, PDF) to the Competition Commission accompanying its reference of the price control arrangements for BAA's Stansted airport. The Competition Commission has set-up an inquiry web page and invited (2 pages, PDF) initial responses by Tuesday 13 May 2008.

permanent link

Fri
Apr 25

Full text of Greek lignite Article 86(1) decision (maybe not)

European Commission decision (77 pages, PDF, now a broken link) finding that Greece had breached Article 86(1) in conjunction with Article 82 by granting special rights to lignite to the largest electricity generator.

The decision was made on 5 March 2008. A one-page summary was put in the Official Journal on 15 April 2008. The full decision was on the relevant page of DG Competition's website on 24 April 2008.

Update, 3 May 2008: The full decision has been removed from the DG Competition's website. I have a copy of the file that was available on 25 April 2008 if anyone is interested (or wants to give me a good reason why it should not be relied on or quoted from). Franck

permanent link

Thu
Apr 24

Arcor v Germany/Deutsche Telekom [2008] EUECJ C-55/06

European Court of Justice judgment (about 24 pages) on EC law aspects of a dispute about the basis for local loop price controls in Germany.

The court found, in line with the Advocate General opinion, that the concept of cost-orientation did not mean much on its own:

56. It is apparent from the above that, generally, Community law lays down, in various areas of the telecommunications sector, the principle of cost-orientation of rates or prices without specifying what that means in each of the areas concerned (interconnection, voice telephony or the local loop).

57. In those circumstances, to define the principle that rates for unbundled access to the local loop are to be set on the basis of cost-orientation, account must be taken not only of the wording of that principle but also of its context and the objectives pursued by the legislation laying down that principle.

The court rejected both Germany's arguments in favour of the systematic use of replacement (current) costs and Arcor's arguments in favour of the systematic use of actual (historic) costs, holding instead that it was for the national regulator to determine its approach in the light of the competitive situation in each market and the relevant policy objectives. There was no EC law objection to the use of cost modelling methods to estimate such costs.

permanent link

Tue
Apr 22

BAA break-up inquiry: interim report and consultation

Competition Commission consultation (169 pages, PDF and appendices) on its market investigation into BAA under the Enterprise Act 2002.

This focuses on the possibility of ordering the divestment of some airports. According to the Competition Commission:

275 ... Others issues identified related to services to passengers: car parking; minibus, bus and coach operators; taxis; car hire; retail more generally; and also use of compulsory purchase order powers.

276. These concerns arise irrespective of common ownership, reflecting the strong position of any airport operator over the supply of services at an airport; some also relate to practices also at other airports. It is, however, currently not clear to us that they are appropriately addressed under the terms of this inquiry rather than by other competition legislation. But we invite further comments on concerns from concessionaires or other suppliers arising from BAA’s common ownership of its seven airports ...

As promised, there is some discussion of the economic regulation system (including the CAA's last-minute increases to capital expenditure forecasts) and the lack of financial ring-fencing. But this paper does not discuss what to do about it: this seems to have been treated as a question for a future consideration of remedies.

Responses by Friday 30 May 2008.

permanent link

Earlier items available from Reckon Online (free registration required).

Our services

About Reckon
Our consultants
Data analysis
Economic regulation
Competition law

Reckon LLP

London office
20 Theobald's Road
London, WC1X 8PF
Tel. 020 7841 5850
feedback@reckon.co.uk
Privacy and legal
Right of reply