New York’s REV and UK policy


A recent discussion paper from a UK energy policy group describes the current governance of UK energy as confused, with advisory and regulatory bodies which have different objectives, and are concerned with different aspects of the energy system. The paper analyses the present structure of governance, and makes recommendations for reform. The model of governance recommended is that of New York State’s Reforming the Energy Vision (REV) initiative, which describes itself as concerned with renewable energy; building and energy efficiency; clean energy financing; sustainable and resilient communities; modernization of energy infrastructure; innovation and R&D; and transportation [1].


A paper on the REV initiative by J. D. Makholm [2] reports that important aspects of the project drew inspiration from the UK. In view of the above policy group recommendation, this claim invites examination. New York has pursued the REV initiative since 2014. Makholm describes it as borrowing often “from an initiative in the UK called “RIIO” (Revenue = Incentives + Innovation + Outputs)” (Ofgem [3]). REV envisioned “An intelligent network platform that will provide safe, reliable and efficient electric services ... that monetizes system and social values, by enabling active customers and third party engagement that is aligned with the wholesale market and bulk power system” [4]. 


 Makholm says that despite the “continued fascination with UK regulatory mechanisms” shown by the New York Public Service Commission, the REV initiative “settled down to a familiar process” central to the “previous century’s regulatory model”. The paper describes key events in the evolution of the US regulatory model, beginning in the early 19th century, and continuing with legislation on topics such as private ownership of utilities, public transparency of private public-service firms, and holding-company structure; it presents a picture of a system built on solid and well tested foundations. Makholm points out that this traditional regulatory model proved itself adequate to the needs of the “vigorous, technology-driven, and competitive” U.S gas market. In contrast, he sees the U.K. regulatory system as “somewhat of a work in progress”, with the UK Cabinet effectively wielding “considerable influence over its regulators”. In his view “REV borrows heavily from the UK’s RIIO without fairly acknowledging the different institutional foundation upon which RIIO rests.” Makholm does not criticise the UK model, but points out that it “arose only after Prime Minister Margaret Thatcher’s privatization efforts starting in the late 1980s”. He sees it as largely “an evolving effort to deal with … privatized utilities, without specific constitutional protections of property … or legislated administrative procedures for regulatory actions.”

 The main attraction of the REV model to those wishing to reform the UK system may be the set of clear goals and responsibilities which it set for itself, but ideas originating in the UK might re-emerge in policy recommendations, perhaps modified by New York’s REV experience.

  [1] https://rev.ny.gov

 [2] The REVolution yields to a more familiar path: New York’s Reforming the Energy Vision(REV) Jeff D.Makholm (2016) (open access).

 [3] Ofgem: Electricity Distribution Annual Report for 2008-09 and 2009-10 

 [4] Order Adopting a Ratemaking and Utility Revenue Model Policy Framework, May19, 2016.


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