contract. No regulatory and the underlying regulatory contract can ever be bargain have also been (efficiently) fully specified, publicly and transparently laid and so, it might be argued, out in a series of regulatory perhaps regulatory asset decisions. A series of AER write-downs could be viewed decisions have quite clearly as a clause of the regulatory set out its views on both how contact that policy makers the risks of changing demand and regulators simply levels should be shared over neglected to fill out. That is, future current regulatory that the regulatory bargain periods. Therefore, always has an implicit clause Rawlsian puzzling that things change, things about what regulatory ‘if may change’. In the case of bargain have been ‘might long-lived capital intensive struck’ in the face of networks, however, this changing demands is not thesis faces a few problems. required. Indeed, as a construct applied to the First, with the latest version actual circumstances National Electricity Rules applying to energy networks, stretching to 1469 pages, such puzzling is highly incompleteness is amongst artificial. Rather, the bargain the least of its vices. In fact, is detailed, detailed indeed at Rules around the updating what many would say was and stability of the regulatory inordinate length. asset base are amongst the most specific and detailed, A problem is that even if with specific nominated the thought experiment is values arising from past followed it leads in different – decisions in’ to a directions from write-downs. ‘locked schedule of the Rules. In cases where new sunk capital Second, implementation of investments are entered into these Rules by regulators
contract. No regulatory contract can ever be (efficiently) fully specified, and so, it might be argued, perhaps regulatory asset write-downs could be viewed as a clause of the regulatory contact that policy makers and regulators simply neglected to fill out. That is, that the regulatory bargain always has an implicit clause that ‘if things change, things may change’. In the case of long-lived capital intensive networks, however, this thesis faces a few problems. First, with the latest version National Electricity Rules stretching to 1469 pages, incompleteness is amongst the least of its vices. In fact, Rules around the updating and stability of the regulatory asset base are amongst the most specific and detailed, with specific nominated values arising from past decisions ‘locked in’ to a schedule of the Rules. Second, implementation of these Rules by regulators and the underlying regulatory bargain have also been publicly and transparently laid out in a series of regulatory decisions. A series of AER decisions have quite clearly set out its views on both how the risks of changing demand levels should be shared over future current regulatory periods. Therefore, Rawlsian puzzling about what regulatory bargain ‘might have been struck’ in the face of changing demands is not required. Indeed, as a construct applied to the actual circumstances applying to energy networks, such puzzling is highly artificial. Rather, the bargain is detailed, detailed indeed at what many would say was inordinate length. A problem is that even if the thought experiment is followed – it leads in different directions from write-downs. In cases where new sunk capital investments are entered into
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