Utility prices: How are they calculated?

How are water, energy and broadband prices calculated? How do these different utilities operate? How are they regulated? And what does this mean for everyday consumers? We tackle these questions and more in the second episode of the Commons Library Podcast.



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On 18 March 2019 we spoke to Ed Potton, Suzanna Hinson, and Georgina Hutton – all policy specialists from the House of Commons Library.

To go straight to the answers that interest you the most, skip to:

Water

  • Why do consumers have no choice in their water supplier? (1:25) 
  • How does the structure of the water industry affect prices – do different regions have different prices? (2:20) 
  • What does regulation of water suppliers involve? (3:10) 
  • How has political pressure affected water companies? (4:41) 
  • What can we expect to see in the long term in terms of regulation and pricing? (6:10) 

Energy

  • How does the energy sector differ from water? (7:09) 
  • How did the energy sector operate in the past – and how has it changed over time? (7:42) 
  • What has changed recently? (8:28) 
  • What did the Competition and Markets Authority find in its review of the energy market? (9:04) 
  • Where did the idea of an energy price cap come from? (9:48) 
  • What has been the reaction to the introduction of the price cap? (10:46) 

Broadband

  • How does broadband compare to the other two utilities? (11:57) 
  • Is there any regulation of broadband companies? (12:36) 
  • How does regulation of access to BT’s network affect the market? (13:02) 
  • In which parts of the UK do BT not run the telephone network? (13:57) 
  • How does this industry structure affect consumers? (14:32) 
  • How much consumer confusion is there about the broadband market? (15:02)
  • Is Ofcom taking any action on pricing? (16:02) 

Please note: After this episode was recorded, the National Audit Office published a report on the protection of consumers in these markets:

Transcript

Further reading

To dig deeper into the issues discussed in this episode, you might find the following Commons Library briefings useful:

More in this series