Paul Grout and Andrew Jenkins*
*Institute of Education, University of London
This paper compares the evolution of the treatment of the asset base in the US with the equivalent evolution in the regulatory framework applied to privatised utilities in the UK. A particular concern is to look for common themes and lessons. We analyse the relevant US Supreme Court cases between Smyth v Ames (1897) and Hope Natural Gas (1944). These cases suggest that changes in preference as to the appropriate asset base appear to be somewhat sensitive to underlying changes in prices. This is tested using logit and multinomial logit regressions. We find that both the companies and regulators are opportunistic and that regulators appear to be more opportunistic than companies. We then assess the UK regulation evidence. The UK evidence is consistent with and supportive of the US conclusions but because of the limited data it cannot be more than suggestive.
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