The Essential Services Commission’s recently released 2028 Water Price Review Draft Guidance Paper contains a subtle but important signal. While it doesn’t prescribe how businesses should account for artificial intelligence, it makes clear that expenditure proposals will face increasing scrutiny around efficiency, evidence and productivity outcomes.
That reflects a much broader trend. Across the utilities sector, AI is already changing how organisations forecast demand, optimise operations, improve customer service, manage assets and support decision-making. As these capabilities mature, it is difficult to imagine a future where regulators don’t ask how AI-enabled productivity has been reflected in expenditure forecasts. Equally, businesses that cannot demonstrate they have appropriately considered AI opportunities may increasingly find themselves having to justify why.
Our latest insight paper explores what this means from a business perspective. It considers how AI is likely to influence future price reviews, why organisations should begin building evidence of productivity improvements now, and how today’s investment decisions may shape tomorrow’s regulatory outcomes.
This is Part 1 of a two-part series.
Part 2 will turn the lens towards the regulators themselves, exploring how economic regulation may evolve as AI not only becomes embedded across the sectors they regulate, but also within their own administration of regulatory framework, including the use of AI agents to undertake price reviews, the challenges of measuring productivity, sharing benefits with customers, setting efficiency expectations and adapting regulatory frameworks for an AI-enabled future.
The tide is rising. The question is no longer whether AI will influence economic regulation, but when, and how quickly.
