by Luigi Carbone (President of Committee, Supreme Administrative Court of Italy) and Nicolò Di Gaetano (Senior Advisor, AEEGSI)
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In almost all OECD Countries, the progressive opening of regulated markets (energy, communications, transport, water, etc.) has gradually led to the institution of independent regulatory entities, operating in crucial sectors from social and economic point of views.
In order to carry on its mission of stimulating high level debates on regulatory issues, the OECD felt the need to strengthen the dialogue with the economic Regulators, which were, till then, kept outside the internal discussions.
In November 2013, following a passionate internal debate, the Regulatory Policy Committee (RPC) decided to establish the Network of Economic Regulators (NER), charging Italy  as the Chair of the first Bureau, considering the role played by this Country in promoting and supporting the start-up of the Network (other Members are representatives of Regulators from Australia, Germany, Portugal, United Kingdom and France).
As a supporting body of RPC, NER is meant to be a unique forum to expand the discussion on regulatory reform to new actors. Economic Regulators have some particular features that are real added values: a natural “biodiversity” in governance, since most of them are independent entities, as well as a cross-sectorial approach in critical public services. Finally, an experience “on the ground” in using regulatory tools (such as public consultation, cost\benefit analysis, regulatory impact assessment, ex post evaluation, behavioural regulation) allows to avoid abstract policies and to concentrate on issues with direct and effective engagement of the stakeholders.
NER’s meeting rapidly demonstrated to be very attractive for the relevance and the quality of the themes; registered an increasing number of participants at the meetings (more than 70 participants in last April meeting) and received great appreciations from the OECD Council, which considered this Network as “highly positive”. As a consequence, the horizon of the NER (originally scheduled for only one year) has been extended, and a more complex governance has been also introduced (enlargement of the Bureau and a Deputy chair, assigned to France).
Accordingly to its mandate, the work program is defined every year with main issues on regulatory practises and solutions, allowing regulators to share experiences and to explore new and different approaches to regulation. At the moment, the main working streams are:
- The Governance and the independence of Regulators
- The Role of Regulators in the Governance of infrastructures
- Assessing Regulators’ Performance and Regulators’ accountability
- Use ‘in concrete’ of Regulatory tools and best practices
The Governance and the independence of Regulators
NER has elaborated a framework of good principles for the governance of Regulators  (i.e. independence, accountability, transparency) in order to provide a greater confidence that regulatory decisions are made on objective, impartial and consistent basis without conflict of interest, bias or improper influences, as well as regulatory management analysis on the water sector  and on Product Market Regulation .
In particular, great attention has been recently paid to the independence of Regulators, with a survey  which has been focused not only in analysing the “de jure” independence, but also in investigating how Regulators are “de facto” autonomous from undue influence. Main outcomes will consist of guidelines and recommendations for Regulators (and policy makers) to demonstrate the effective utility of a ‘really independent’ Regulator, to safeguard its independence and ensuring its accountability, to guarantee transparency and co-operation with the stakeholders.
The Role of Regulators in the Governance of infrastructures
Regulators play a critical role with regard to the governance of infrastructure, namely by providing the right incentives for infrastructure investment and delivery, through setting and enforcing tariffs and other regulations. Predictability, independence and strong regulatory functions are crucial, if these functions have to be carried out effectively. Regulators have to face an increasingly complex environment, where short-term returns on investment need to be balanced with long-term innovation, and where there is a multiplicity of actors (including at the supranational and sub-national levels).
This growing complexity affects Regulators’ more traditional responsibilities (of ensuring economic efficiency, for example). This uncertainty is growing in a context of shifting policy objectives and expectations, and challenges Regulators’ capacity to adapt to new demands without over-stretching their resources.
The debate within NER aims to better understand role, responsibilities and experiences of Regulators with regard to the governance of infrastructure, and will serve to identify further areas of work and gather NER contributions to wider work on the topic.
Assessing Regulators’ Performance and Regulators’ accountability
In times of budget restraints, there is always somebody who wonders if it’s efficient or not to create, or to keep, an economic Regulator for certain sectors. In order to demonstrate the efficiency of a Regulator, it’s crucial to verify and eventually to improve its procedures and performances, and to communicate its final results and outcomes.
NER set up a methodology  to check the compliance of assessment procedures with the principles and best practices adopted in the OECD. A number of Regulators have been voluntarily submitted to peer reviews to test their performances, allowing to tune up more and more the methodology.
Use ‘in concrete’ of Regulatory tools and best practices
Every economic Regulator has its own ‘regulatory toolbox’; but most of the tools are similar all over the world. Debating and sharing the concrete experiences about their daily use may be extremely useful. If the debate is really frank and open, everybody can learn from best practices, but also from failures. New and emerging issues are also discussed in the Network: for instance, how Regulators can use and apply the theory of behavioural economics to consumers and regulated companies. Case studies provide experiences of its implementation in order to develop some possible recommendation for the practical application of a behavioural regulation.
For instance an important topic is being developed in defining best practice principles on stakeholder engagement in regulatory policy. This work aims to provide Regulators, policy-makers and civil servants with a practical instrument to better design their stakeholder engagement strategies. Particular attention is paid to the objectives of regulatory policy and governance as to make it more inclusive, to strengthen the accountability of institutions when developing, reviewing and enforcing regulations and to improve the effectiveness and efficiency of stakeholder engagement processes in gathering valuable input for improving countries’ regulatory frameworks.
As demonstrated by the discussion within each meeting, Regulators around the world face similar issues and use similar tools. “International” cooperation can become a very fruitful “institutional” cooperation, even (or mostly) to support Regulators within their national borders to improve their independence and (which is even more important) their services to citizen and to the business community.
 The Chairperson is Luigi Carbone, at that time component of AEEGSI Board.
 OECD (2014) “The Governance of Regulators. OECD Best Practice Principles for Regulatory Policy”
 OECD (2015) Principles on Water Governance.
 OECD (2016) Regulatory management practices in OECD countries
 OECD (2016) Being an Independent Regulator
 OECD (2014) OECD Framework for Regulatory Policy Evaluation