Regulatory Models II
As we continue to discuss regulatory models, this week our focus is on the pros and cons of multi-sector and sector-specific models of regulation operating at national (local) or regional levels. In our region, perhaps the best known recent example of government-led regulation is the creation of the Eastern Caribbean Telecommunications Authority (ECTEL) in 2000. The move by governments of the Organization of Eastern Caribbean States (OECS) (except Antigua & Barbuda) introduced a new regulatory framework for managing the telecommunications sector in the OECS, including Saint Lucia, that was previously dominated by a monopoly provider. ECTEL is a unique example of a sector-specific, regional regulatory agency. It has a three-tiered structure with different levels of responsibility. The Council of Ministers and regional Directorate set and implement telecommunications policy, rules and procedures at the regional level for the member states. At the national level, each member state has a National Telecommunications Regulatory Commission (NTRC) that is the regulator at the national level responsible for the processing of applications and advising the Minister on the award of licences. A similar model for a regional regulatory agency for the electricity sector, the Eastern Caribbean Energy Regulatory Agency (ECERA), is being proposed, but to date only Grenada and St. Lucia have signed up to participate. The advantages of having a regional regulator include shared administrative and operating costs, an arm’s length approach to regulation, a larger pool of funds to operate, and a perception of greater independence. These entities can also share regional best practices. On the flip side, a regional regulatory authority can be costly, especially where it involves multiple levels of decision making. Also, decision-making may be slow and of a “one size fits all” nature, that is, not customised to the specific local circumstances. Regulatory models designed around local, sector specific regulators have the advantages of specialized knowledge of the sector and of local conditions that impact decision making, and decision making can be quicker and more timely. An example of a local, sector specific regulator is the National Water and Sewerage Commission responsible for regulating the delivery of water and sewerage services in St. Lucia. Such local, sector specific regulatory models pose challenges for small states. They are expensive to operate as each sector has its own regulatory agency and they are not able to draw on as large a pool of experts needed to regulate sectors that by their very nature require expertize to ensure effective regulation. They are usually challenged by limited financial resources and there is a greater likelihood of political or other local influences including regulatory capture where the regulatory agencies come to be dominated by those they are tasked to regulate. A multi-sector regulatory authority addresses much of the shortcomings of single sector regulators. Some, like the Public Utilities Commission in Belize, regulate all utilities (water, telecommunications and electricity). Others, like the Office of Utility Regulation in Jamaica, have one regulator for water and electricity, while telecommunications is regulated separately. The Government of Saint Lucia is seeking to set up a similar entity, the proposed National Utilities Regulatory Commission (NURC), to regulate the water and electricity sectors in St. Lucia. The advantages of such multi sector regulators include synergies between sectors thereby providing savings through the use of a single commission maximising the limited pool of experts by sharing professional and administrative staff and costs. The challenges for such regulatory models include some compromise on sectorspecific expertise. Our next column in the series will examine the existing the framework for regulating the electricity sector in St. Lucia.