Limiting capture of the concessioning authority and the regulator
Implement a system for user participation and supervision covering all areas of the utility company’s management, such as the evaluation of annual reports and opinions on investments or the settlement of complaints
Ensure that decision making by supervisory bodies is transparent, to avoid their
capture by the regulated company to the detriment of users.
Implementing and strengthening regulation and supervision
Specify the types of decision to be taken by regulators, the means and proce- dures to be used, the information to be requested and the reports to be submit- ted by the utility company
Define a precise scheme of penalties for non-compliance, which must be dissua- sive in their frequency, impact and magnitude
Define the capacity of the regulatory body to impose penalties, as a key element in motivating or correcting the conduct of the utility company, limiting its scope for finding administrative loopholes
Take steps to ensure that the regulatory body’s internal organization includes the definition of roles and assessment of specific tasks, providing for the formulation of a long-term strategic plan and the calculation of a budget with secure funding
Use competitive processes to select management and technical staff, requiring appropriate experience and expertise and establishing responsibilities and roles and a system of remuneration and promotions.
Enforcing compliance with the investment plan and guaranteeing access to services for low-income groups
Prepare a consistent and sustainable development plan for services, with a prior- ity on meeting social needs
Define ex ante the economic and financial structure of the service provision including, where appropriate, return on private capital invested in accordance with the risks assumed, reconciling tariffs levied on low-income groups with their capacity to pay
In order to achieve universal service coverage in the shortest time possible and avoid disputes arising from the consequent rise in tariffs, the state should be actively involved in the funding of investment plans, either by contributing with budget funds or by assuming long-term loans.
Put in place mechanisms to protect funds earmarked for investment (whether de- rived from tariffs or from state contributions), in order to ensure that investment goes ahead as planned; a trust fund may be one good mechanism
Establish subsidy systems targeting low-income groups, both to expand service coverage and to help pay bills. Although it would be preferable to provide subsi- dies directly through external contributions, another alternative would be to set up funds using contributions from users with a greater ability to pay. This would then fund cross-subsidies through a focused procedure using a survey structured to minimize inclusion and exclusion errors.
