Negotiated settlements, water regulation and regulatory innovation: towards a transformed regulatory state?

Across economic sectors, contemporary regulation is said to be characterised by two central dimensions, the centrality of regulatory agencies in price-setting, and the utilisation of the RPI-X formula to incentivise regulated... [ view full abstract ]

Across economic sectors, contemporary regulation is said to be characterised by two central dimensions, the centrality of regulatory agencies in price-setting, and the utilisation of the RPI-X formula to incentivise regulated companies. These dimensions have also come to play important roles in the regulation of water. This paper considers one major shift in regulatory approach in the governance of water, namely the move towards growing customer engagement between customer representatives and water providers. It focuses in particular on the negotiated settlement between a 'customer forum' and the monopoly provider, Scottish Water, in the period 2011-14, and contrasts this experience with customer engagement processes in England and Wales. By drawing on original interview and documentary analysis, this paper considers this case of regulatory change and questions whether this case represents a transformation of the regulatory orthodoxy of the past three decades or so. It does so by, first, considering models of regulatory innovation, highlighting in particular approaches stressing the importance of policy disappointment and policy entrepreneurs. The paper then explores the extent to which the process of negotiated settlement in Scotland and England and Wales have transformed the existing regulatory arrangements and concludes that it is doubtful whether the change represents regulatory innovation since does not break with the dominant logic of the ‘regulatory state’.