What are some common mistakes of omission by regulators?

[Response by Ashley Brown, Jon Stern and Bernard Tenenbaum, July 2009]

Mistakes (Sins) of regulatory omission

  • No uniform system of regulatory accounts;
  • No regulatory methodologies in place;
  • No quality-of-service standards, or seriously ineffective monitoring of regulatory standards;
  • No monitoring of competitive behavior or market abuse in electricity generation or telecom markets which are intended to operate competitively;
  • Absence of access charges and rules for industries where there is competition over networks (primarily telecom, electricity and natural gas, but also to a lesser extent, water and railways);
  • Failure to adequately address consumer complaints and monitor performance;
  • Failure to monitor costs;
  • Failure to provide effective competitive tendering procedures for new capacity;
  • Failure to take action to raise retail tariffs that are far too low to support financial viability and justifiably necessary levels of investment;
  • No clear standards for tariff setting for future tariff periods (eg, absence of clear standards for power purchase costs or distribution costs; no definition of the regulatory asset base);
  • No mechanism to relate payment or non-payment of government subsidies into tariffs;
  • No attempt to make transparent cross-subsidies between customer classes even when the law supports it;
  • Failure to efficiently target cross-subsidies;
  • Failure to deal with non-payment issues.


Handbook for Evaluating Infrastructure Regulatory Systems
Washington, DC: The World Bank Group, 2006.
Brown, Ashley C., Jon Stern, and Bernard Tenenbaum