6th November 2017, Paris, France
The Network met for its 9th meeting, bringing together regulators worldwide. The meeting embodied the spirit of the NER that seeks to push the frontier of regulatory delivery and focused on the overarching theme of the future of regulation. The meeting took forward the discussion on organisational performance and behaviour of regulatory agencies, by addressing questions like: How do regulators deal with uncertainty and manage risk in an ever-changing context? How does organisational culture and actual behaviour follow these evolutions? What needs to happen for organisational culture and behaviour to support the achievement of the regulator’s objectives, including when the context changes? How can assessing organisational performance help regulators deal with emerging challenges?
Key highlights of the meeting included:
Collaboration and Consumer-Centric Scotland’s Strategic Review of Charges 2021-27
- Over the next few years, the OECD will work with key stakeholders in Scotland to provide support throughout the process of setting water charges for 2021-27. The OECD will document the process and its stakeholder engagement, testing tools and experimenting with behavioural insights, as well as investigate the issue of capital maintenance.
- In Scotland, the framework for setting water charges has progressively moved from a traditional price-setting process between regulator and regulated entity, to an innovative approach based on clear roles and an overarching common goal: working jointly for the customer and the environment. The key actors of this journey came to the NER to share their insights and draw key lessons and ideas as to how this can help map the future of regulation.
- The collaboration between the OECD and the Water Industry Commission for Scotland (WICS) and other stakeholders will continue throughout the price setting review and NER members will have opportunities to share lessons and experiences on common relevant issues like capital maintenance and consumer engagement.
Driving performance at Ireland’s Commission for Regulation of Utilities
- The OECD was requested to carry out a Performance Assessment Review of Ireland’s Commission for Regulation of Utilities (CRU) in 2016-17. The NER discussed the findings and recommendations of the review that analyses the internal and external governance arrangements of the regulator.
- The CRU is a mature and well-performing regulator that has, among some of its achievements, facilitated Ireland’s transition from monopolistic gas and electricity sectors to fully competitive markets, and expanded its regulatory remit to include energy safety, the joint-oversight of the all-island Single Electricity Market between Ireland and Northern Ireland, and water regulation.
- A number of challenges await the regulator, linked to external policy uncertainties or the delivery of increasingly sophisticated products, such as smart meters, and the report recommends a package of integrated reforms to help the CRU prepare for the future. These recommendations are intended to complement the CRU’s ongoing efforts to improve its governance processes in line with best practices. They refer, for example, to building a stronger culture of independence, seeking more flexibility in managing its human resources, and better aligning strategic objectives with resources and outcomes for a stronger narrative of its activities and results, and, based on this, reinforcing its accountability system.
- The review is expected to be launched and discussed with key stakeholders in Dublin in early 2018.
Behavioural insights, organisational behaviour and safety culture
- In follow-up to NER work on behavioural insights and organisational culture, there is much opportunity for the cross-pollination of ideas, experiences, tools and strategies in adapting and applying BI to a wide variety of regulatory challenges. The NER discussed an exciting new project on how to apply behavioural insights to creating a safety culture within regulatory agencies and the regulated industry, that is being supported by Canada’s National Energy Board, Natural Resources Canada and Mexico’s Agency for Safety, Energy and Environment. Other regulators are also in the process of joining the project.
- Regarding barriers and enablers to safety culture, strong leadership support and demonstration are essential for promulgating a culture where staff of all levels feel empowered to address safety concerns. Morover, discussing the importance of safety from a positive perspective (i.e. objective analysis) rather than a negative perspective (i.e. accidents) could be more effective in encouraging organisation-wide uptake.
- Moroever, safety culture goes beyond safety oversight culture and should be all-encompassing and pervasive as the common language bonding the organisation or the sector. It is important to move away from a punitive or complacent view towards safety, towards a positive demonstration. Articulating and codifying key principles that exemplify safety culture, and then continuously practicing and learning from it, will be essential.
- The OECD will use behavioural insights to develop case studies and experiments for the development of safety culture in regulators and industry.
For more information, please contact Faisal Naru.
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