Services ‘need single regulator’

IRELAND’S regulatory agencies for energy, telecommunications and airports should be combined into one single regulatory body, according to a former cartel-buster at the state competition watchdog.

Pat Massey, who was head of enforcement at the Competition Authority until 2001, said sharp price increases for gas, electricity and postal services in recent years had contributed to a growing public disenchantment with the regulatory process and created the mistaken impression that competition had not worked in these industries. Mr Massey, who is now managing director of Compecon, a business consulting firm, was speaking at the Dublin Economic Workshop in Sheen Falls Lodge, Kenmare over the weekend.

“Greater transparency is required to restore credibility to price regulation. Future price reviews should be conducted by means of a public hearing. This would allow the arguments put forward by parties to be challenged directly.”

Recently approved rises in electricity and gas prices will result in cumulative increases of 40% and 22% respectively since December 2001. The rise in electricity prices cannot be explained by rising oil prices, he said. Pay levels in the electricity industry have risen sharply relative to those in other industries. Average weekly industrial earnings in the electricity and gas sector in June 2004 were €1,157.47, more than twice the average weekly industrial earnings of €560.60.

If ComReg approves An Post’s request for a further 7% increase in the price of a standard postage stamp, it will mean a cumulative increase of 44% in three years.

A merger of the various regulatory agencies would have obvious economies of scale, he said. The new public utilities regulator should itself be subject to a price cap of consumer price index - 10% for the first five years.

And he said if the regulators are not merged they should each be subject to such a price cap.

“This would encourage moves towards developing effective competition and reducing the scope of regulation,” he argued.

Mr Massey said there should be a single appeals panel to consider appeals against regulatory decisions. In order to discourage vexatious appeals, appellants should be required to bear the cost of unsuccessful appeals.

Isolde Goggin, commissioner for communications regulation, told the conference that overall telecommunications regulation in Ireland has resulted in a good deal for consumers and the promotion of competition.

“As sectors become progressively more competitive regulation can be rolled back,” she said.