In order to supplement oversight at the O&M stage, it is also reasonable to oversee regulatory performance so as to verify that the regulator complies with the best practice principles of good governance and that the regulatory process and the organization actually reflect those principles.
In this regard, Eberhard (2005) states that "…the requirement of pre-scheduled, periodic, independent reviews of regulatory performance and impact" are "…ex-post evaluations and should include recommendations that are made public and are used to guide remedial action. The reviews should cover regulatory governance and regulatory substance [such as tariff-setting or service standards], as well as the impact of the regulator's actions and decisions on sector outcomes."
The reviews that regulators are required to undergo can be performed by national or international expert panels made up of experts who are independent of any economic or political interest in the sector. Table 13 illustrates the aspects that are generally taken into consideration by said institutions to assess regulatory performance relative to what we have defined as Best Practice Regulation:
Table 14 : Regulatory Performance
Regulatory agency functions | Were the regulatory objectives met? How were opposing goals balanced? How did the agency use the power assigned to it? How did it respond to changes in surrounding conditions and environment? Did it fulfill its duties and meet its priorities? |
Regulatory agency resources | Budgetary execution. Were there any resource savings? What were the funds used for? Does the staff have the required skills to carry out the regulatory activities? Is the staff up to date and in contact with the latest economic regulation practices? Are there any training activities for the regulatory agency's staff? |
Information system | What are the system and the storage format like for the information received by the agency? Does it allow the implementation of adequate monitoring of the regulated agents? Is information stored homogeneously? Does it allow the application of benchmarking techniques? Does it allow instant access to the information? Is the information updated? What is the update frequency? Are there any penalties applicable to the regulated utility company for a failure to timely provide the required information? How many times were penalties applied? Has the penalty application rate gone down? |
Accountability action | Has the agency submitted the reports and annual reports it is mandatorily required to submit to the controlling agencies? Number of reports on sectoral situation and regulated companies' performance produced by the regulator. Publication frequency. Availability and easy access to publications. Number of approved resolutions and supporting reports. Number of appeals filed and reasons therefore. |
Participatory action | Number of consultation documents published and/or sent to the stakeholders. Number of public hearings held. Number of publicity events held. |
Regulatory action | Number and type of actions performed by the agency to promote competition. Results of action taken. Action taken on reports of anti-competition practices. Assessment of oversight and controlling actions taken by the regulator on the regulated agents. Assessment of enforcement mechanisms applied by the regulatory agency to persuade the regulated agents to comply with their obligations. Is the price-setting process fair and transparent such that it guarantees a service price in line with service quality and the regulatory objectives? Does the market structure present features of a natural monopoly such that the presence of a price-setting authority is warranted? Number of claims submitted, handled and settled by the regulatory agency. Number of disputes between the parties submitted and settled by the regulatory agency. Existence of procedures defining the steps to be taken for lodging claims and complaints. |
Even if the regulatory agency meets all these requirements concerning the principles, processes and organization, if sector performance does not meet the goals -as defined in the PPP contract-, then the agency will not meet the Best Practice Regulation objectives either.
As noted by Sanford Berg (1999), "a key indicator of regulatory performance is sector performance. The number of studies, cases decided, and rules promulgated are regulatory inputs. However, the fundamental regulatory output is industry performance."
Accordingly, these analyses (monitoring of private sector and regulatory agenda) should not be seen as independent tools at the time of overseeing the development of a PPP contract; rather, they clearly supplement each other.