DRIVING PERFORMANCE AT LATVIA’S
PUBLIC UTILITIES COMMISSION
Nick Malyshev, Head, & Filippo Cavassini, Policy Analyst, Regulatory Policy Division
Public Governance and Territorial Development Directorate, OECD
Launch of the OECD Performance Assessment Review of Latvia’s PUC
Riga, 20-21 September 2016
• Unique forum to promote cross-sectoral dialogue across regulators – More than 70 energy, telecommunication, transport,
water regulators
– OECD members and non-members
– Meeting twice a year in connection with the meetings of the Regulatory Policy Committee
• Strong attention for governance and performance – Best Practice Principles for the Governance of
Regulators
– Independence, accountability and application of behavioural insights
– Developing a framework for supporting regulators’ efforts to assess performance
1. OECD Network of Economic Regulators
1. Body of work of the NER
http://www.oecd.org/gov/regulatory-policy/ner.htm
1. What makes a world-class regulator?
http://www.oecd.org/gov/regulatory-policy/governance-of-regulators.htm
Assessing the impact of regulatory actions and decisions to drive improvements
Supporting transparency and accountability to public institutions
Building trust and confidence of investors and citizens by tracking tangible results
1. Measuring outcomes is a key feature
of a world-class regulator
1. Performance assessment
Output & Outcome Input & process
Regulatory, governance & cultural context
Role & Strategy
2. Regulation & governance
Market concentration index, 2013
Government involvement
in network sectors, 2015
Low involvement
High involvement
Recognised & affirmed independence
Multi-sector model providing some protection from undue influence
Goals: competition & dvlpt of public utilities
Wide scope of action
Proactive co-ordination
Strategy framework in place
2. Role and strategy – state of play
Which strategic priorities?
How to balance consumers’ and investors’ interests?
What is the “right” advisory role?
Regulatory functions fit-for-purpose?
2. Role and strategy – next steps
Revamp the strategic planning framework to clarify goals, priorities and outcomes, aligning functions with these outcomes.
Ensure that regulatory functions are fit-for-purpose, including through the use of incentive regulation and the power to amend tariff proposals.
Continue to provide expert advice for the development of regulation, while remaining within the role of an independent regulator, including by releasing opinions publicly and relying on the media and other accountability avenues to draw attention to them.
Transparent & accountable budget
Attractiveness/commitment to staff development
Transparent Board decision-making
Effective use of multi-sector model
Informed & systematic consultation
Accountability to parliament
2. Input and process – state of play
How to avoid conflict of interests in setting regulatory fee?
Salary system weakening long-term attractiveness?
Which system for board renewal ?
How to engage with parliament?
2. Input and process – next steps
Consider an alternative process for setting the regulatory fee, either by relying exclusively on the legislated ceiling or through some independent council or body
Develop a “total rewards” approach to attract and retain staff, while further investigating the possible long-term effects of the salary cap.
Consider staggered terms for Board members.
Facilitate mobility across sector departments and unleash opportunities for innovation and experimentation.
Introduce more regular and formal exchanges between Parliament and the PUC.
Systematic data collection & guidance
Some measurements of regulatory processes
Analysis of costs and services provided
Some data presented in annual report
Regular meetings Board-staff to alert/discuss issues
2. Output & outcome – state of play
What linkages between data and strategy?
Which data aggregation and linkages to regulatory processes?
How to make greater use of data in the decision-making process?
Greater use of data for consumers (e.g. choice engines)?
2. Output & outcome – next steps
Develop a performance assessment matrix that links goals and priorities to outputs and outcomes.
Use performance information to communicate with key stakeholders, especially Parliament.
Explore the use of data to develop choice tools for consumers, either directly or indirectly
http://www.oecd.org/publications/driving-performance-at-latvia-s-public-utilities-commission-9789264257962-en.htm
Thank you!