UK regulatory price reviews and the role of efficiency estimates

The paper provides an introduction to and overview of five papers which derive from a conference on efficiency estimation for utilities in UK price reviews held at the London Business School in June 2004. The introductory paper summarises the discussion on the role of efficiency estimation methods, firstly, where there are comparator companies-as in the water industry and electricity distribution; and, secondly, where there are no within-country comparator companies-as with railway networks and electricity transmission systems. The paper concludes with some personal conclusions both on the sensible uses and on the limitations of formal statistical efficiency estimation methods in utility regulation.