Regulatory Impact Assessment in the energy transition era: insights from the UK experience

Independent energy regulators need analytic frameworks to assess and defend their regulatory decisions. This paper critiques the traditional economic recommendation and explains a new approach applied in Great Britain. We find reliance on quantified cost-benefit analysis (CBA) as the dominant metric inadequate, particularly in the context of the clean energy transition. We do so by exploring the theoretical and practical limitations of CBA and the GB energy regulator Ofgem's response to these, drawing on experience of the authors who worked with and for Ofgem. We outline the unavoidable complexities that climate change, in particular, created considering the division of responsibilities between the government and the regulator and describe the major revisions to Ofgem's Regulatory Impact Assessment (RIA) framework that sought to address the resulting challenges.