Utility and Independent Regulators: Building Capacities for Market Regulation

Our views on governance of independent regulators

“A wider governance view focusing on "checks and balances" between competing institutions in the regulatory regime could be a more flexible and effective guiding principle than "independence" in producing a credible regulatory framework.” Scott Jacobs

“The past decade has witnessed the proliferation, across OECD Member countries and beyond, of independent institutions in charge of the regulatory supervision of vital economic sectors. … The challenge for regulatory institutional designers has been to make the regulatory system simultaneously accountable t…, without compromising the operational independence of the regulators that sets them at a remove from the interested parties.” Cesar Cordova and Deirdre Hanlon

Jacobs, Cordova & Associates assists in designing, and tailoring to the country context and development needs, regulatory policies, instruments and institutions for specific sectors, including telecommunications, energy, transport, and water. See our projects for sector regulators here. Link to sector regulators project page

We have worked in many areas of utility regulation:

Telecommunication regulation
Energy regulation
Postal services regulation
Governance of independent regulators, including their degree and type of policy and financial independence, their governance and accountability, their transparency and procedures, their staffing, and their relations with competition authorities
Use of RIA by independent regulators
Role of competition authorities in regulation

Regulatory policy advice. Regulatory policy in liberalizing utility networks is a continually moving target. Regulators must put into place the proper incentives for market actors to improve efficiency and serve consumer needs. Regulators must balance consumer interests with those of investors, and short-term welfare against longer-term innovation and dynamism. In telecommunications and energy fields, regulators must work in increasingly open regional and global markets, requiring convergence of domestic regulations with international norms. Pricing policies must reward producers for good service, while keeping prices as low as possible for consumers. Competition policy has an important role to play in leveling the playing field. Jacobs, Cordova & Associates provides expert, technical advice on the design of regulatory regimes in developed and transitional economies.

Advice on the design and operation of independent regulators, based on international standards of performance in competitive investment environments. A highly regarded institution of modern regulatory governance is the independent regulatory body, often used in network sectors such as energy and communications, and in other sectors where sector-specific oversight is needed such as financial services. Independent regulators are intended to shield market interventions from political interference, and to improve transparency, stability, and expertise. They must ensure non-discriminatory access and economically rational pricing for services. But experience in many countries shows that independent regulators have not always resolved serious regulatory failures, and have not always succeeded in establishing independence and credibility. Jacobs, Cordova & Associates helps to improve design and performance of these critical institutions in initial and later stages to meet market needs.

Assistance in drafting major regulatory decisions. Independent regulators must draft complex decisions that are clear, persuasive, and meet market expectations. The quality of decisions is important in influencing credibility and market confidence. Jacobs, Cordova & Associates offers an advisory service to independent regulators to assist in bringing individual decisions up to international standards in reasoning, content, and presentation.