TRUST US - REGULATORS AND THE GOVERNANCE OF PRIVATIZED UTILITIES

This article examines the processes of regulation of the newly privati zed utilities (gas, electricity, telecommunications and water) and ide ntifies four key aspects of the UK system: regulator discretion and re gulatory risk; the powers of the regulator; a regulator: regulatee exp ectations gap; and a regulator: public interest expectations gap. The crucial role played by trust-in the regulator and in the regulatees - is highlighted. The tension and straining of the trust between these t wo parties can be seen. as inherent in the present regime, and an obst acle to its reform. On the other hand, this tension can be viewed as a constructive force at work to promote the efficiency of these enterpr ises. It could be further utilized to enhance the accountability of th ese enterprises by encouraging the regulator to scrutinize the risk/re ward structures for the various stakeholders - shareholders, employees and consumers.