Reg­u­la­tory Mod­els II

The Star (St. Lucia) - - LOCAL -

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.

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