THE restrictions which the British Gas Regulator, Ofgas, has imposed on TransCo, British Gas's monopoly pipeline business, focuses attention on the importance of having a Regulator objectively independent and capable of defending both the domestic and industrial consumer.

The British Gas Regulator has proposed a new pricing formula for TransCo which will reduce the average British gas bill by an average of 10 per cent per annum.

Looking to Ireland, it is indisputable that the telecommunications and energy sectors are two the most important areas of our economy. Both have been dominated by state companies which, in general, have served consumers very well, particularly in the last few years.

Nevertheless, there is a consensus that competition should take place in these sectors, as well as in other areas of the economy, and that there will be further benefits to consumers and users in respect of lower prices, improved service and innovation.

A key issue to be considered is whether a regulator is needed at all. IBEC, along with other business organisations in Europe, has been calling for less regulation on business, and less state involvement generally in the economy. We have argued that market forces tend to bring about lower prices and improved service. The Competition Act, which has been operational since 1991, is a form of regulation and specifically prohibits the abuse of the dominant position.

IBEC has come to the conclusion that there are special issues to be considered in relation to telecommunications and energy and perhaps other sectors which might be better dealt with by a regulatory body than through the courts as is required by the Competition Act.

For the foreseeable future, Telecom, ESB and An Bord Gais will continue to be in a dominant position in relation to their national networks. There would be a need, therefore, for decisions to be made between competing companies on what are fair prices and terms of access between competitors.

In addition, there will be, specifically in relation to telecommunications, a need to agree tariff policies with service providers to reflect "universal service obligations" issues and address matters such as number plans, number portability, frequency allocations etc.

A further issue which has to be considered is whether there should be separate regulatory bodies for each of the industries or one overall regulatory body. Given the size of the country, the need for the minimum level of public spending and the need for shared experience, IBEC concluded that the ideal arrangement would be to have an independent part time board with an appropriate secretariat.

Reporting to the board would be a regulator of telecommunications and an energy regulator. The independent regulatory body would need to have a core of expertise in specific areas and could, from time to time, buy in that expertise from outside.

It would be very important that the regulatory body would be independent of the commercial operators in the regulated sectors and not be captive to them.

A further conclusion was that the regulatory body should be completely independent of the Ministers with responsibilities in these areas. The Ministers, of course, would establish the policy framework within which the regulatory bodies would carry out their functions. However, within the policy framework, the regulatory bodies would be completely independent of the Ministers.

Business is also of the view that the level of regulation should be the minimum necessary to achieve the objectives of regulation. The companies within the sectors should be allowed the maximum possible commercial freedom.

Specifically, we do not envisage that the regulator would determine all of the price structures of the regulated bodies but, instead, would fix maximum prices to protect consumers. This would permit users to negotiate lower prices, and to achieve economic co operation between users and the regulated bodies.

Again, while the level of licensing throughout the economy needs to be reviewed to ensure that it is not having an anti competitive effect, IBEC accepts that, in these sectors, it will be necessary to issue licences for participants in the market. However, the licences should not prevent entry to the market but instead control standards and be for the protection of users.

IBEC believes that it is important that the Competition Act should continue to apply to the regulated sectors.

However, at some time in the future, when competition law and practice has become more developed and the regulators have established many of the ground rules in relation to the regulated sectors, consideration might be given to the merging of the competition and regulatory bodies. In order to ensure a competition input to the work of the regulatory body, one member of the Competition Authority could serve on the board.

IBEC, in general, would like to see competition developed as rapidly as possible in these sectors. The pace of the development of competition is entirely up to the Government which sets the policies in these areas. We suggest that the Minister should publish the current policies in the form of a statutory instrument. This would give guidance to the regulators. It would also permit changes to the policies without the need for further legislation.