Dublin Economic Workshop: Regulation fails Irish consumers and major changes are needed in the way sectors such as electricity and gas are overseen, according to Mr Pat Massey, a consultant and former member of the Competition Authority.

In gas, electricity and postal services the regulators have decided on price increases by analysing the cost structure of the regulated firms and allowing some provision for a profit margin, he told the conference.

This is akin to a system of price control, he said, and ignores the fact that the regulator has "insufficient information to decide whether costs are justified or not". It also provides no incentives for the regulated firms to cut costs.

"In such circumstances, prices are unlikely to differ from what an unregulated monopolist would charge," he argued.

Electricity and gas prices will have increased by 40 per cent and 22 per cent respectively since December 2001, while postal charges will also have risen by 44 per cent if a new increase is granted.

The rise in electricity prices cannot be explained by rising oil prices, he argued. Pay levels in the electricity industry are more than twice average industrial earnings, while ESB profits doubled between 2000 and 2003.

Measures were needed to restructure the gas and electricity industries, he said, to promote greater competition. It was essential that ownership and control of the transmission and distribution systems be transferred to companies independent of the ESB and Bord Gáis.

Mr Massey also called for the existing agencies for energy, telecommunications and airports to be combined into a single entity and a new public hearings system on price rise applications to increase transparency.

The performance of the telecommunications regulator, however, was strongly defended by Ms Isolde Goggin, one of the commissioners for communication regulation.

"Overall, telecommunications regulation in Ireland has resulted in a good deal for consumers and the promotion of competition," she told the conference.

As sectors become progressively more competitive, regulation can be rolled back, Ms Goggin said.

"For example, the price of international telephone calls is no longer controlled and ComReg has proposed, in its consultation document on the review of the leased-line market, to remove regulation on international leased lines and national higher-bandwidth leased lines."