What are the essential features of an effective utility regulatory system? Dr. Mark Jamison's presentation at the CARILEC Regulatory Forum 2013
September 16, 2013
What are the essential features of an effective utility regulatory system? This was the topic of PURC director, Mark Jamison's, presentation at the CARILEC Regulatory Forum 2013 in Barbados on September 16, 2013. Speaking on the topic of "Economics of Best Practices Regulation", Dr. Jamison explained that an essential feature of regulation is protecting customers from politics as well as from operator market power. He described how regulation by independent, expert agencies in response to the failure of political actors to keep commitments and match the expertise of utilities. Political processes encourage politicians to seek short term goals at the expense of long term efficiency. Independent regulation helps address that shortcoming by keeping political pressures at arms length from investment decisions, and by providing expertise in the complex engineering, economics, finance, law, and the like. This quality of regulation also helps ensure that when politicians find a project that they like and that they want the utility to pay for, that there is a credible agency to explain that customers will be the ultimate financiers of the project. Dr. Jamison also described the economic essentials of regulation and the effective institutional frameworks, as well as the leadership challenges that utility regulators face.