Regulatory price performance, excess cost indexes and profitability:how effective is price cap regulation in the water industry?

In this study we apply an index number approach to allow for cross sectional comparisons of relative profitability, productivity and price performance of the regulated Water and Sewerage companies (WaSCs) in England and Wales during the years 1991-2008. In order to better analyse the impact of regulation on WaSC performance, we decompose actual economic profits into spatial multilateral Fisher productivity (TFP) index, the inverse of which is demonstrated to be a regulatory excess cost index that measures the deviation of a firm’s actual costs from benchmark costs, and a newly developed regulatory total price performance (TPP) index, which measures the excess of regulated revenues relative to benchmark costs. Increases (decreases) in regulatory price performance are indicative of the loosening (tightening) of price cap regulation. Moreover, we also show that the relationship between actual economic profitability, regulatory excess costs and regulatory price performance indices can be used to categorize regulatory price caps as “weak”, “powerful” or “catch-up promoting”. The results indicated that throughout the entire 1991-2008 period, price caps were never “powerful”, in the sense that they required less productive firms to immediately and fully catch-up to the most productive firm to regain economic profitability. More specifically, during the years 1991-2000 price caps were “weak” as prices were high enough for the firms to achieve economic profits despite their low productivity levels. However, after 2001 prices became “catch up promoting” as they required less productive companies to eliminate at least some excess costs in order to eliminate economic losses. Finally, we emphasize that as our results also clearly demonstrated a much closer alignment between allowed revenues and benchmark costs after 2001, Ofwat’s approach during this period was not only appropriate, but should also be continued in the 2009 price review.

How do engineering students develop practical competencies during a period of industrial placement? - Students' perceptions

This paper explores engineering students' perceptions of developing practical competencies as experienced in their industrial placements. In addition, it discusses the criticisms in the literature on Problem Based Learning, Project Based Learning and Conceive-Design-Implement-Operate in relation to the evaluation of effective learning and teaching during placements. The paper goes on to discuss a study which examines how undergraduate engineering students develop practical competencies during their industrial placements. A phenomenological research approach is adopted using in-depth interviews and document analysis. The research findings from this PhD study will contribute to the knowledge, theory and practice for the students, the industries and the institutions of higher education as students' practical competencies are developed and graduate employability rises. In conclusion, this study explores students' experiences of developing practical competencies during industrial placements. Hence, the study should be able to contribute to a set of evidence-based guidelines for higher education institutions and industry.