Economic Regulation Research Programme: Concept Paper
Year:
2007
Organisation:
TIPS 
TIPS has added Economic Regulation as one of its main research areas, where we'll focus mainly on essential services (energy, telecoms, transport and water) because of their social impact and network characteristics, to ensure universal and affordable access to essential services. The purpose of the paper is to provide some food for thought and to raise issues that can lead to further discussion and research. It covers the rationale for economic regulation, principles of regulation, a few country experiences in economic regulation, a snapshot of the South African situation and a concluding broad discussion and recommendations.
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Re:
Re:
Economic regulation study
Hi Cornel
I am currently busy with an assessment of the policy and implementation gaps in economic regulation of key sectors (ports, rail, electricity etc.). In this regard, your paper "Economic Regulation of SA's public utilities" has been most useful.
In your paper you make the statement that: "an independent regulator has been established in terms of the National Ports Act. It does appear however that in terms of the National Ports Act the Minister will still play a role in the regulatory environment, which may give rise to uncertainty regarding role clarity."
I'm interested in the bit which I've bolded:
1. How will the minister play a role in the regulatory environment?
2. What in the Act gives you this impression?
3. What uncertainty do you think will arise regarding role clarity?
Furthermore:
4. Do you have a sense of how the ports regulator will be funded?
5. In making decisions, does the regulator have to revert to the relevant government department?
Basically, I'm trying to get a hold on the independence of the regulator, which I think will say a lot about the likely success of the regulator in this situation.
As an aside:
7. What is the situation regarding an independent regulator in the rail sector?
Re:
Re: Economic regulation study
Dear Richard
These are only my views. I know the Energy Regulator Act and its sectoral acts well. The Ports Act I have only studied in passing. So, if you do not agree with me on things....I will be glad if we can discuss it.
First of all, what is worrying in a sense is that there are only part-time Regulator members in the Ports Regulator. I am one of the few that believe that regulation is a complex job and that you can not really do justice to it by being only a board of part-time members, except if you have such a good staff complement that they can do all the work and the Regulator just have to sign off. This does not happen in practice however.... Issues are so complex usually.
Regarding the issue of independence and the role of the Minister:
In reading the Act, especially from section 30 I can see difficulties for the Regulator having to acquire concurrence by the Minister on all the issues in section 30(2)(3). For the Regulator to have concurrence on issues such as basically how they're going to do their job, does not for me illustrate true independence.
See section 30(2)(5) - Whenever necessary or required by the Minister, the Regulator must report to the Minister on any matter relating to the application or purposes of this Act. This leaves scope for interference.
Section 31(2) and (3) - for me, the Minister can then actually appoint anyone. The whole calling for nominations can hypothetically only be done for the "show". The Regulator members are thus politically appointed, which also place a question mark on "independence", because sometimes you'll find that political appointees find it difficult to distinguish between the political objectives and the objectives if they were truly independent.
You'll see that when you read further through that section that the Minister is very much involved in the appointment processes of staff of the Regulator.
I think the National Energy Regulator Act is for me an example of a legal framework for an independent regulator.
The issue of role clarity - I guess for me the risk here is that there is not a clear division between the regulator and the minister - they must basically concur on almost everything. So why then is it not called a ministerial regulator and why is it called an independent regulator?
4. According to the Act the Regulator can be funded either by monies appropriated by Parliament, interest on investment or fees charged for filing of complaints or appeals. To me this shows that the Regulator will also be very much dependent on government for funding, which places another question mark on its independence.
5. I do not get that sense. It seems it must be written and based on facts, reasons and evidence - the decision-making process looks good to me. However, what I do not get from the Act is what a party can do if they do not agree with a decision of the Regulator. The only thing I can see regarding appeals is where a party does not agree with a decision by the Ports Authority it can then appeal to the Regulator.
7. Sorry, I could not find a no. 6. What I've heard is that there are no decisions regarding an economic regulator for the rail sector, which makes Transnet player and referee at the moment.