Frontier Economics

Frontier Sectoral Interests

Frontier Economics have a wide and diverse array of interests. These are

• Energy
• Financial Services
• Healthcare
• Media
• Post
• Retailing
• Telecoms
• Transport
• Water
• Competition
• Public Policy
• Regulation
• Strategy
• Contract Design and Evaluation
• Dispute Support

They say that they 'blend economics with innovative thinking, hard analysis and common sense. This helps us home in fast on market dynamics to create powerful arguments and robust strategies'[1]. To help grasp what is actually meant by this seemingly innoccuous statement one needs to examine their activities in their different sectors.

For example in water they say

• 'Frontier's water practice combines an in-depth knowledge of the water industry with the ability to apply advanced economic techniques to provide analysis to companies, investors and regulators.

• Frontier's staff members have been advising water companies from the beginning of privatisation in the UK, preparing companies for the regulatory regime and advising them on tariff setting and regulatory strategy, including preparing submissions at price reviews, advising on mergers and acquisitions and analysing tariff design issues.

• Outside the UK we have advised on industry restructuring, the design of regulatory frameworks, the assessment of the financial viability of reform programmes and the welfare impact of such reforms.

• The expertise we have developed enables us to provide an unparalleled depth of insight into the economic issues relevant to water industries' [2].

- In their brochure for water they give - 'Examples of work carried out by Frontier staff

• The preparation of long-term policy for the urban water and sanitation sector in India. This involved assessment of the potential efficiency and financing gains from increased private sector participation, and the means to achieve this.
• Providing advice to the EBRD on the implementation of their recommended strategy for the rapid introduction of private sector participation into water services in Eastern Europe.
• Developing a strategy for restructuring the water services industry in Bulgaria. This included development of a corporatisation plan and corporate governance arrangements, tariff and environmental regulation, and investment appraisal.
• Assisting with the development of plans for the transfer of the operations and responsibilities of the current public utility to the private sector in Trinidad and Tobago (1998-99)'[3].

In the same brochure they proclaim how 'The successful development of the water and waste water industry in any country revolves around the following issues:

• how the private sector should be involved;
• the right industry structure; and
• the way in which it should be regulated.

The members of Frontier’s water practice have played a central role in the evolution of the regulatory regime in the UK, shaping the debate on many issues and analysing and improving aspects of the regulatory framework. This range of experience has underpinned advice given in many countries where regulatory and institutional reform were undertaken, possibly as part of a privatisation programme or private sector participation'[4].

They seem to be saying here, and their examples of action around the globe support their assertions, that they believe privatisation of water, or at least private involvement in water, is a prerequisite for a successful water industry. Reading between the lines they also seem to be saying that they can help advise their clients, private water companies, to help shape a regulatory environment conducive to their interests. This is especially interesting when one considers that the senior associate at Frontier Economics in their water section is Sir Ian Byatt, the current economic regulator for Water in Scotland. A water utility which, incidentally is still a publicly owned. This is a situation that does seem to smack of a conflict of interest.

People

• Sarah Hogg