Driving Performance at Brazil’s Electricity Regulatory Agency

Assessment and recommendations

Introduction

Since its establishment as Brazil’s first independent regulator in 1996, ANEEL has supported the development of the Brazilian electricity sector and has built a reputation as a competent economic regulator with an ambition to lead and excel.

The Brazilian electricity sector has gone through profound transformations over the past decades. ANEEL has accompanied and implemented important reforms seeking to reshape a sector that was characterised by vertically-integrated and state-controlled energy companies in the 1990s, and by supply crises in the 2000s. The current (2020) hybrid sector combines both regulated and free market segments and is the subject of further liberalisation and privatisation plans. This final push for “sector modernisation” seeks, among other things, to bring down residential electricity tariffs that compare unfavourably with neighbouring or similarly “hydro-powered” countries. Of further note is that Brazil currently ranks among the least carbon intensive countries in the world, with 45% of total energy supply provided by renewables.1

The institutional landscape of the Brazilian electricity sector includes a large number of public bodies, and in some cases formal co-ordination mechanisms are lacking. At worst, a crowded sector can create issues of role clarity. Moreover, the power sector is becoming more complex over time as it expands and is transformed by technological progress. In this context, innovative business models offer the potential to improve the efficiency of the sector and produce value for consumers, but there is a risk that policy and regulation lag behind this transformation.

Stakeholders recognise ANEEL as a technically capable regulator, and ANEEL’s internal teams ensure a sound evidence base for decision-making. ANEEL also demonstrates a willingness to improve its processes. For instance, it led efforts to improve regulatory quality by using regulatory impact assessments, pioneering this practice among Brazilian federal agencies before it became a federal legal requirement. The use of new approaches such as behavioural insights and ANEEL’s active participation in many international networks further attest to the agency’s desire to innovate in its way of working.

In a context of nation-wide anti-corruption efforts, ANEEL has implemented a wide array of transparency measures and strong institutional arrangements. ANEEL ensures transparency in its decision-making through its consultation procedures and the online streaming of board meetings. The 2018 OECD Indicators on the Governance of Sector regulators show that ANEEL has the best independence score among energy regulators, indicating a high number of formal independence safeguards regarded as good practice. To ensure accountability of its processes, ANEEL consults on decisions, publishes a wide range of data and reports on progress as per its strategic indicators.

Building on the solid results of this work and its reputation, ANEEL can make a further push to generate a culture of independence in its relations with stakeholders and to go the last mile to assert itself as a world class regulator. This will require transparent dialogue with sector stakeholders regarding roles and responsibilities in designing and implementing “sector modernisation”. ANEEL will also need to define its strategic agenda beyond technical decision-making and use its discretion within legal and technical requirements to ensure that regulatory actions benefit long-term policy objectives for the sector. In doing so, ANEEL can advocate for changes that safeguard its autonomy with regard to its resourcing. Finally, in designing and implementing processes, the regulator will need to focus on their quality and outcomes, to ensure streamlined methods of working and avoid bureaucratisation.

Role and objectives

Mandate, functions and powers

ANEEL was the first of ten independent regulatory agencies created by the Brazilian government between 1996 and 2005, as part of a move towards liberalisation and privatisation of the economy.2 ANEEL regulates a power sector that brings electricity to 99.8% of Brazil’s 209 million inhabitants,3 in a context of rapid changes due to increased private investment, market reforms and new technologies. The main statutory functions of ANEEL are:

• To regulate service provision by concession, permit and authorisation holders and implement federal government policies and guidelines;

• To set tariffs for distribution, transmission, interconnections and hydro generation subject to the quota regime;4

• To define bidding procedures and manage concessions, permits and authorisations;

• To mediate and arbitrate in disputes;

• To promote universal access to electricity;

• To supervise service provision and monitor compliance with antitrust laws;

• To enforce compliance with sector legislation and levy fines and other penalties.

ANEEL has a broad mandate within the Brazilian electricity sector that has remained stable over time. Since its creation in 1996, ANEEL is responsible for the regulation and supervision of the electricity sector and it performs a wide range of functions. The most notable change in its mandate since 1996 is the transfer of the role of granting authority for concessions, permissions and authorisations to the Ministry of Mines and Energy (Ministério de Minas e Energia – MME), as part of the 2004 reforms. The change was motivated by the consideration that the granting of concessions for public utilities should lie with the executive and not with regulatory agencies. However, ANEEL still performs a number of functions through delegation by the ministry, such as the organisation of auctions and the management of concessions, permits and authorisations. It carries out these responsibilities within the guidelines and the granting plan as set by the MME.

A wide range of regulatory powers match ANEEL’s functions in the regulation of electricity services. ANEEL carries out the regulation and supervision of the production, transmission, distribution and commercialisation of electricity in Brazil. Through its three inspection departments, ANEEL supervises compliance with technical and operational standards, implementation deadlines and the financial and economic situation of companies. ANEEL has broad powers to execute its different functions, and is able to issue a wide range of penalties on companies in enforcing sector compliance, ranging from warnings to fines and the termination of concessions and permits.

Stakeholders regard ANEEL as a transparent and competent regulator, but the wider public is largely unaware of ANEEL’s role in the sector. Stakeholders highlight the transparent process of decision-making through board meetings that are open to the public and livestreamed on the regulator’s website. ANEEL’s staff is generally regarded as well qualified, and staff members are proud to work at ANEEL. However, the regulator’s role is unknown to a large majority of the wider public. A 2019 survey among residential consumers on consumer satisfaction found that only 12.8% of the consumers were aware of ANEEL’s role in the sector. This low public awareness could lead to consumers not being aware of ANEEL’s potential role in addressing complaints with the distribution company. It could also limit ANEEL’s ability to involve all consumers in the regulatory process.

Plans for the modernisation of the electricity sector pose new challenges for ANEEL, as the regulator needs to facilitate changes to the regulatory framework and at the same time bring predictability. The Brazilian electricity sector is experiencing many changes at once. Distributed generation, liberalisation of the supply market, new technologies and a move away from hydropower are all reshaping the sector landscape. ANEEL faces the difficult task of ensuring predictability and trust in this context, and will need to adjust its regulatory framework to accommodate the dynamic sector environment. There is a risk that regulation lags behind or even hinders innovation. This may be exacerbated by a context of high complexity of regulatory procedures compared to OECD countries (and other non-OECD countries). In addition, upon entering new regulatory areas where legal frameworks are not always clearly defined, ANEEL will have to navigate within a wider margin of regulatory discretion. This poses the challenge of balancing interests without losing sight of ANEEL’s identity as an independent regulator.

Box 1. Energy Regulation Sandbox at UK’s energy regulator, Ofgem

Ofgem launched in July 2020 their refreshed Energy Regulation Sandbox. This follows from the 2017 experience, when Ofgem worked with 68 innovators from the energy sector recruited through two sandbox application windows. Ofgem analysed the results of these sandbox cohorts, and published a report on Insights from running the regulatory sandbox. This not only provided the regulator with valuable insight on how to adapt the future Sandbox programmes, but also provided public accountability and gave future applicants further understanding of the process.

The Sandbox service complements current Ofgem reforms by allowing innovators to trial or launch new products, services, methodologies and business models without some of the usual rules applying. These can be rules that Ofgem controls (usually in licences) or, in some circumstances, from the rulebooks (codes) owned by industry, which underpin the day-to-day operations of the energy system.

The Sandbox offers a range of tools to innovators across all the regulated areas, including suppliers, generators and network companies, or even those who are not directly regulated by Ofgem – for example third party intermediaries and energy services providers.

The use of Sandboxes in 2020 is considered an ideal time, as the energy system and consumer behaviour are evolving. As well as responding to the long term challenge of achieving net-zero, the Sandbox can help innovators and industry participants respond to nearer term challenges wrought by COVID-19, with consumer demand patterns changing as more people work from home, and more reliance on renewable generation due to lower levels of industrial demand.

The Energy Regulation Sandbox is run by the Ofgem’s dedicated Innovation Link team, which offers support on energy regulation to businesses looking to launch new products, services or business models and will act as the single point of entry for innovators who also wish to access the flexibility available in industry codes that have developed sandbox capabilities.

Source: Information provided by Ofgem, 2020.

While ANEEL’s mandate has remained stable, the expansion of the sector has led to an increase in ANEEL’s activities and could ultimately overstretch its resources. Although the functions and powers of the regulator have not changed much over time, the expansion of the electricity sector has affected the execution of those functions in practice. ANEEL’s activities in licensing independent power producers increased in recent years while the free market (Ambiente de Contratação Livre – ACL) became larger5, for example, and an expanding sector means ANEEL has to supervise a wider range of activities. While this provides an incentive for ANEEL to improve the efficiency of processes, and demonstrates the agility of the regulator, an increase in demands beyond its means could decrease its ability to fulfil all of its objectives.

Recommendations:

• Launch an effort to define a forward-looking, comprehensive regulatory approach for ANEEL that positions ANEEL as a key driver of sector modernisation. The effort can start with the agency’s already-defined values (including its independence) and mission. The regulatory approach will connect the agency’s mission and values to the long-term vision, defining an approach that outlines how ANEEL will build on its pioneering role among Brazilian public institutions to promote agile regulation, facilitate sector innovation, streamline processes and reduce red tape and bureaucratisation. The regulatory approach should be informed by future market analysis and analysis of ANEEL’s organisational readiness and capacity to respond to expected trends and, importantly, to drive desired sector outcomes linked to ANEEL’s strategic objectives. It will indicate how ANEEL will assert its discretionary decision-making in the middle ground between policymaking and the technical level. ANEEL should be aware of its margin of discretion within legal, economic and technical requirements, to steer sectoral outcomes towards the regulator’s ultimate objectives in support of Brazil’s policy goals. This effort should be led by the board with the support of staff and include all superintendencies of the regulator, and be consulted with stakeholders, possibly as part of the next strategic planning exercise of the regulator. After ANEEL defines its long-term vision and overarching regulatory approach, ANEEL’s regular strategic planning exercise can take over to identify priorities during the coming regulatory period.

• Define a strategy and activities to communicate ANEEL’s overarching regulatory approach to both staff within the organisation and external stakeholders. This communication effort could create predictability regarding the agency’s regulatory approach and ensure the approach is fully and continuously applied in the execution of all regulatory activities.

• Monitor, in collaboration with the executive, the scope of ANEEL’s functions and activities in an expanding electricity sector, to make sure ANEEL’s responsibilities match its resources. ANEEL could establish a periodic meeting with the executive to discuss ANEEL’s range of responsibilities in the sector as well as the foreseen impact that market developments may have on the overall level of regulatory activities. ANEEL should come to these meetings with scenario analysis at hand and a strong sense of how future changes, organisational scope and organisational capacity will create risks and affect ANEEL’s ability to fulfil its functions.

• Build stronger awareness within society of ANEEL’s role as an economic regulator in the Brazilian electricity sector and the role of economic regulators in the economy generally. To raise awareness, ANEEL could:

  • Engage proactively in dialogue with key representative organisations to clarify ANEEL’s role;

  • Start a public awareness campaign to inform consumers of ANEEL’s role in resolving disputes and to involve them in the regulatory process; and

  • Develop messaging and a campaign with Brazil’s economic regulators to communicate on the role and contributions of agencies to the economy of the country and life of its citizens.

Box 2. Mission statement Germany’s Bundesnetzagentur

The strategic agenda sets out the high-level principle or mission statement of the regulator summarising in a nutshell the “regulatory philosophy” guiding all activities. BNetzA, the German multisector economic regulator, published in 2020 its strategic agenda called “Shaping the future for Germany’s key infrastructure”. The strategic agenda highlights the three main objectives which BNetzA pursues, namely “A constellation of competition, network expansion and consumer protection”. The three objectives are interrelated as competition is not a purpose in itself, but ensures efficient outcomes of markets for the benefit of consumers who can choose from different providers the offer that best serves their needs and preferences. The mission statement bundles the core messages:

“The Bundesnetzagentur is committed to the expansion of a modern, efficient core infrastructure in Germany. Both for the benefit of the people who live here and to safeguard the competitive strength of our country”.

The regulatory activities of BNetzA aim to promote the expansion of modern efficient infrastructure in Germany, this relates to electricity, gas, broadband, railway and postal networks. Networks are the “lifeblood” of all economic activities and a modern infrastructure thus promotes economic growth and jobs in all sectors of the economy, as well as providing services such as internet access and secure and reliable energy for all consumers.

Source: Information provided by BNetzA, 2021; (BnetzA, 2020[1]).

Box 3. Regulators raising awareness of their role

Regulators performs critical functions in regulated sectors, which affect both regulated entities and consumers in their daily lives. However, their role may not always be clear to the wider public. In an effort to increase the effectiveness of their role, regulators worldwide undertake efforts to increase public awareness of its functions. Approaches differ and are context-dependent.

Canadian Transportation Agency (CTA)

The CTA identified ‘public and stakeholder awareness’ as one of its four strategic priorities between 2017 and 2020. The goal was to provide clear, relevant information for stakeholders and the general public on the national transportation system, the rights and responsibilities of transportation providers and users, and the CTA’s services. By increasing outreach through social media, engaging in more stakeholder events, using targeted advertising (particularly during travel season), and engaging more with the media, the CTA has ensured that those parties for whom legislative remedies exist actually know what steps they can take. Emphasis was also placed on ensuring that all of the CTA's tools and promotional materials were created in a variety of accessible formats (screen-reader friendly, ASL/LSQ, audio versions, text-to-speech friendly, etc.). Increasing awareness was systematically measured using methods such as web traffic/social media monitoring and client surveys. It is clear that a combination of promotional efforts, rising concerns about rights in air travel, and the introduction of new regulations, lead to Canadians being more aware of their rights. This is confirmed by year over year increases in complaints volumes; from about 800 in 2015-16, to over 3 000 in 2016-17, 5 500 in 2017-18, and 7 650 in 2018-19. In 2019-2020, that number leapt to almost 19 400.

International Confederation of Energy Regulators (ICER)

The International Confederation of Energy Regulators (ICER) also acknowledges the importance of public awareness of the work of energy regulators. As part of its mission, the confederation aims to “raise the profile and public awareness of the work of national energy regulators in monitoring electricity and gas markets and safeguarding consumer interests”. ICER notes that while regulators protect the interest of consumers, for long they had not much of a direct relationship and consumers may not even be aware of the existence of the regulator. To highlight the common challenges faced in engaging consumers in the regulatory process, ICER published a paper on “Energy Connections: Engaging the consumer in building stronger systems” in which it discusses a number of efforts undertaken by regulators in Austria, Canada, the Netherlands and the United States to increase awareness.

Source: Information provided by CTA; (CTA, 2020[2]); (CTA, 2020[3]); (ICER, 2009[4]); (ICER, 2015[5]).

Strategic and operational objectives

ANEEL sets and communicates its strategic objectives, mission and vision through a transparent and inclusive process. ANEEL defines its objectives, mission and vision in advance of a new strategic cycle in a so-called strategic map (Mapa Estratégico), which is a visualisation of its strategic planning. ANEEL’s mission is unchanged since its creation, mirroring the purpose as defined in its establishing decree, while its vision changed slightly compared to the previous strategic cycle (see Figure 1). ANEEL groups the different strategic objectives according to the perspectives ‘results’, ‘processes’ and ‘people and resources’. ANEEL matches its strategic objectives with strategic initiatives and indicators, to translate the objectives into actions and measurable targets. In the 2018 – 2021 strategic cycle, ANEEL links its strategic objectives with 61 strategic indicators, which it monitors regularly and reports on in its annual report. ANEEL ensured the accountability of the process by establishing a communication plan and the use of interviews with associations, sector actors, employees and former board members. These measures, aimed to strengthen the transparency and inclusivity, improve the legitimacy of the strategic planning process.

Figure 1. ANEEL’s mission and vision

Note: The mission has been unchanged since the creation of the agency, and therefore does not link to a specific strategic cycle.

Source: (ANEEL, 2018[6]).

ANEEL regularly assesses its strategic planning but rarely reviews strategic objectives during their cycle. Although ANEEL has the ability to revise its strategic planning on a frequent basis, it generally chooses not to change its strategic objectives during a strategic cycle. ANEEL engages in an annual review process and has the power to review the objectives, initiatives and indicators at any time. However, annual reviews usually only lead to changes in the initiatives and indicators that are linked to the objectives, not the objectives themselves. Therefore, in most cases strategic objectives will remain the same throughout the entire strategic cycle of four year. This practice ensures a more credible commitment to the longer-term strategic direction, but there could potentially be a risk of a status quo bias in the fast-changing sector context.

The large number of strategic objectives can blur the focus on ANEEL’s strategic goals in its day‑to-day operations, and objectives focus mostly on processes and resources. In the strategic map for the period 2018 – 2021, the third strategic cycle, ANEEL lists sixteen objectives. Only two of the strategic objectives focus on the results of ANEEL’s actions in terms of sector outcomes. The other fourteen objectives focus on processes and resource management (see Table 1). Combined with the fact that there is no further prioritisation among the objectives, this mix of objectives could potentially result in a lack of a clear change agenda for staff on where the organisation would like to go, as well as a lack of focus on outcomes. Resources tend to be scarce, and therefore a wide range of strategic objectives, mostly inward looking, could make it more difficult to identify which activities should receive the greatest degree of attention. As objectives may at times be at odds with each other,6 a more focused strategic planning based on objective criteria can improve the strategical guidance in ANEEL’s activities.

Table 1. Strategic objectives

Perspective	Strategic objectives
Results	1. To promote a regulatory environment that favours efficient and sustainable sector development
	2. To ensure the provision of quality electricity services at fair prices and tariffs
Processes	3. To refine, simplify and consolidate regulation
	4. To promote a regulatory environment favourable to technological innovation and energy efficiency
	5. To improve auction and grant management processes focused on contract compliance
	6. To optimise inspection processes, focusing on monitoring and prevention, and improving the quality of the service provided
	7. To improve the effectiveness of public participation and communication with society
	8. To strengthen the role and institutional image
	9. To improve decision-making at all levels to ensure timeliness, quality, stability and regulatory certainty
	10. To improve the management of judicial action focusing on prevention of claims
	11. To restructure and implement information management
People and resources	12. To value people and develop skills focused on results
	13. To ensure organisational management that favours process integration and innovation
	14. To improve the physical infrastructure, material resources and administrative services
	15. To modernise information technology infrastructure and solutions
	16. To ensure decision-making, administrative, budgetary, financial and human resource management autonomy

Source: (ANEEL, 2017[7]).

Recommendations:

• Clarify ANEEL’s goals in the electricity sector through an overarching and forward-looking strategic agenda that highlights a limited number of main strategic objectives that ANEEL aims to achieve over the next strategic period. In formulating its main strategic objectives, ANEEL could also discuss its vision on what it expects a future electricity system could bring in terms of both outcomes and challenges. The discussions should be led by a high-level official or officials at ANEEL, and involve all superintendencies and teams within the regulator for input and ownership of the objectives. The outcome should be shared and consulted with stakeholders.

• Increase the focus in ANEEL’s strategic objectives to enable prioritisation of activities and improve the efficiency and consistency of ANEEL’s actions. Increased focus could result for example by further limiting the number of objectives, or by creating levels of prioritisation of strategic objectives to identify the most crucial objectives. In this effort, ANEEL should make sure to:

  • Consult stakeholders on the strategic objectives they regard as most crucial;

  • Assess the potential welfare gains that the different strategic objectives could bring; and

  • Use objective criteria to narrow down the focus in the strategic objectives, to avoid (the perception of) subjectivity in the process.

Box 4. Measuring organisational and policy performance: The Canada Energy Regulator’s Departmental Results Framework

Strategic Priorities are a means by which the Canada Energy Regulator (CER) improves its influence in achieving Departmental Results. Strategies are planned with a “whole of organisation” lens, and answer the question “Where can the CER drive and influence change to optimise regulatory outcomes? The CER Board of Directors set the Strategic Priorities. The CER has four Strategic Priorities that will drive its focus for the next three years.

Once Strategic Priorities are set for the organisation, Program Officials work within their Programs to make tactical decisions (i.e. new projects, change in activities, re-alignment of resources) to reflect and implement the strategies. Those decisions will then impact the processes or activities undertaken to deliver specific outputs (products or services) by their teams.

Note: CER defines a strategic priority as an organisational priority developed during the planning cycle that is time-bound and addresses a gap or opportunity in the organisation. At the CER, implementation is led by a senior executive.

Source: Information provided by CER, 2021.

Co-ordination

ANEEL operates in a complex institutional environment with a multitude of intervening bodies, which can result in involuntary tensions and insufficient co-ordination. Table 2 shows the different public bodies involved and their main responsibilities in the Brazilian electricity sector. The variety of institutions can affect the effectiveness of the overall framework if role clarity or appropriate co-ordination mechanisms are lacking. The process of granting concessions exemplifies the complexity of the institutional framework with regard to specific duties; many different actors share responsibilities throughout the process and these tend to differ across types of concessions (Table 2). ANEEL’s relationship with the national system operator (Operador Nacional do Sistema Elétrico – ONS) and the Electric Power Trading Chamber (Câmara de Commercialização de Energia Elétrica – CCEE) also shows that there can be dual roles for ANEEL in its interaction with other bodies: ANEEL co-operates with both organisations in the execution of tasks, but also supervises and regulates their operations . This can create involuntarily tensions in the relations with ONS and CCEE. However, someco-ordination mechanisms do exist. Most notably, the Electricity Industry Monitoring Committee (Comitê de Monitoramento do Setor Elétrico – CMSE) provides a co-ordination mechanism between a number of sectoral bodies7 on the topic of security and continuity of supply.

Table 2. Public bodies involved in the Brazilian electricity sector

Institution	Role
Ministry of Mines and Energy (Ministério de Minas e Energia – MME)	Ministry responsible for the design of policy in the Brazilian energy and mining sector and the granting of concessions.
National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – ANP)	Federal regulator of the oil and gas industry, with overlapping responsibilities in the regulation of fossil fuels used in electricity generation, and the arbitration in case of frustrated negotiations.
National Water Agency (Agência Nacional de Águas – ANA)	Federal water regulator, in charge of issuing Water Availability Reserve Declarations for hydro generation, and with shared responsibilities in the monitoring of hydrometric monitoring stations and dam safety.
National Telecommunications Agency (Agência Nacional de Telecomunicações – ANATEL)	Federal telecommunications regulator, which co-operates with ANEEL in the regulation of infrastructure sharing.
Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica – CADE)	Competition authority responsible for antitrust enforcement in the sector.
National Energy Policy Council (Conselho Nacional de Política Energética – CNPE)	Committee that advises the President of the Federative Republic of Brazil on energy policy.
Energy Research Office (Empresa de Pesquisa Energética – EPE)	Public company linked to the MME that designs the long-term strategy for the Brazilian electricity sector.
Brazilian Institute of the Environment and Renewable Natural Resources (Instituto Brasileiro do Meio Ambiente – IBAMA)	Environmental agency overseeing the issuing of environmental licenses on the federal level in Brazil.
Electricity Industry Monitoring Committee (Comitê de Monitoramento do Setor Elétrico – CMSE)	Committee that evaluates the security and continuity of supply in the Brazilian electricity sector.
National Congress of Brazil (Congresso Nacional do Brasil)	Bicameral legislative body, which initiates and approves new laws.
Federal Court of Accounts (Tribunal de Contas da União – TCU)	Supreme audit institution responsible for examining Brazil’s public accounts.
Electric Power Trading Chamber (Câmara de Commercialização de Energia Elétrica – CCEE)	Not-for-profit entity responsible for settlements between the regulated and free market.
National Electric System Operator (Operador Nacional do Sistema Elétrico – ONS)	Not-for-profit entity responsible for co-ordinating, monitoring and controlling the operation of generation and transmission facilities in the National Interconnected System and the Isolated Systems.

Source: Information provided by ANEEL, 2020.

Overlapping competences and insufficient role clarity between ANEEL and other federal agencies add another layer of complexity to the institutional framework. ANEEL shares responsibilities with the petroleum, natural gas and biofuel agency (Agência Nacional do Petróleo, Gás Natural e Biocombustiveis – ANP) in the regulation of fossil fuels used in electricity generation. The activities of both regulatory agencies become more interlinked with the increase of thermal power generation, most notably based on natural gas. It also shares responsibilities with the water agency (Agência Nacional de Águas – ANA) and the competition authority (Conselho Administrativo de Defesa Econômica – CADE) in the area of hydropower generation and merger analysis. In some cases, certain aspects of co-operation are formalised through agreements, such as with CADE and ANP. However, role clarity may be lacking in some cases. A decision of the Federal Court of Accounts (Tribunal de Contas da União – TCU) in 2020 highlights this. The supreme audit institution concluded that certain smaller hydro dams were not inspected, because different interpretations of legislation led both ANEEL and ANA to conclude that the other agency was responsible. In this case, TCU informed both parties that ANEEL was ultimately responsible for the inspection of the smaller hydro dams.

Recommendations:

• Advocate with the MME and other public bodies for the need to create sectoral co-ordination platforms, such as periodic sectoral meetings and stakeholder networks, and promote bilateral meetings with other sectoral bodies. ANEEL could use the co-ordination platforms and bilateral meetings to discuss role clarity and responsibilities, as well as points of contact, and assess the need to formalise relations in agreements and memoranda of understanding. Such mechanisms would respond to the need for further co-ordination given the complexity of the sector structure, the multitude of bodies and the dynamic sector context.

• Establish a formal co-ordination mechanism with ANP, such as quarterly formal meetings between the two bodies, to discuss areas of shared competence. ANEEL and ANP can also use this formal co-ordination mechanism to assess if certain regulatory functions in the natural gas sector should move to ANEEL, to improve the consistency and effectiveness of regulatory frameworks. Frequent interaction between both regulatory bodies can promote the sharing of knowledge and best practices, and both regulators could start a dialogue to analyse where integration of functions could bring efficiency. ANEEL could also consider extending this practice to other regulators active in the electricity sector, such as ANA.

• Consider the establishment of additional conflict resolution mechanisms, such as consultation of a third party or (as a last resort) judicial review, in areas of overlapping competences with other bodies. This could enable ANEEL to resolve any differences of views and to prevent potential deadlocks. Apart from more formalised mechanisms, ANEEL should also seek to engage in discussion with all parties involved in case grey areas or conflicting interpretations of legislation become apparent.

Box 5. Examples of co-ordination among regulatory agencies

The challenges faced by regulators often transcend sectoral and geographical boundaries; hence, greater co-ordination and collaboration are needed. There are a number of experiences with co-ordination among regulatory agencies domestically, including:

• Australia: the Utility Regulators Forum aims to facilitate the exchange of information, understanding of the issues faced by regulators, consistency in the application of regulatory functions and the review of new ideas about regulatory practices. The newsletter of the forum is published quarterly and contains articles on common challenges, summaries of recent journal articles on regulatory matters, and updates on regulatory decisions.

• France: the Club des Régulateurs provides a forum for both established and new economic regulators to share common problems with a few thematic meetings every year, most recently on issues of data privacy and data handling. A third party, currently an academic institution, hosts it.

• United Kingdom (Scotland): As part of the Strategic Review of charges for 2021-27, stakeholders in Scotland meet on a monthly basis to ensure collective buy-in and collaborative working around the key issues faced by the water and wastewater sectors. The meetings involve high-level representatives from the water operator (Scottish Water), economic regulator (The Water Industry Commission for Scotland, WICS), the quality regulator (Drinking Water Quality Regulator for Scotland, DWQR) and the environment regulator (Scottish Environment Protection Agency, SEPA), as well as the Customer Forum and the consumers association. More granular analysis from the working groups feeds into those high-level discussions.

• Ireland: a new Economic Regulators’ Network is convened around four times a year and hosts discussions on common challenges such as the legal interpretation of new regulations. Participants recognise that further work is needed to address technical regulatory issues across sectors.

Source: Network of Economic Regulators (NER) at the OECD.

Relations with state regulators

Delegation of ANEEL’s activities to Brazilian state-level regulators has the potential to increase the effectiveness of regulation, given the size of the country and heterogeneity of regions. The co-operation brings the regulation closer to companies and consumers in all areas of Brazil and frees up personnel capacity at ANEEL for other activities. State regulators mention that the co-operation is good for their reputation as a regulator and that they benefit from capacity building activities by ANEEL. As of 2020, ANEEL holds “Goals Contracts” with nine state regulators. With four other state regulators, it has taken steps towards co-operation through the establishment of co-operation or interest agreements. ANEEL can delegate certain supervisory, sanctioning and arbitral activities to state regulators, but can only do so if they meet certain criteria regarding their governance and autonomy to ensure independent decision-making.

There is no uniform process for the execution of delegated tasks by state regulators and their level of capacity and governance varies, hindering the effectiveness of delegation. While the process to enter into co-operation is formalised into a uniform three-step process, as determined by Normative Resolution no. 417/2010, the execution of regulated tasks differs across state regulators. State regulators also vary greatly in terms of autonomy, decision-making processes, regulatory instruments and staff qualifications. This lack of uniformity could affect the implementation of delegated tasks, and the efficiency that the delegation of activities brings to ANEEL. State regulators may not always be sufficiently prepared for tasks, which means ANEEL needs to build in extra checks or reimplement certain elements of delegated activities.

Recommendations:

• Invest in training and the standardisation of processes to ensure a high quality and consistent execution of delegated tasks, by allocating a specific part of ANEEL’s budget towards this goal. In standardising processes, ANEEL could facilitate consistency through the development of manuals and formats for the execution of supervisory, sanctioning and arbitral activities. It could also promote discussion to share experiences and practices between state regulators that hold a co-operation agreement, for example, through regular thematic meetings for state regulators facilitated by ANEEL.

• Conduct a comparative analysis of the competences and governance arrangements of state regulators, in co-operation with other federal bodies (e.g. the Comptroller General of Brazil – CGU) with the aim of moving towards a level playing field in the competences and capacities of state regulators Such analysis and data should be compiled in collaboration with state regulators and may be used as input for capacity building programmes at federal level.

• Push for improvements in the decision-making processes and performance of state regulators that hold a co-operation agreement, to increase the effectiveness of the delegation of tasks. In this endeavour, ANEEL could consider advocating together with other federal regulators that co-operate with state regulators for necessary alignment in powers. Federal regulators could create a regulatory performance toolkit for state regulators, setting out the best practices for organisational and regulatory performance. ANEEL could also assess the role the Brazilian Association of Regulatory Bodies (ABAR) could play in developing a more unified approach towards electricity regulation across state regulatory bodies.

• Engage with state regulators that do not currently hold a co-operation agreement, to communicate the required adjustments in governance structures and competences that could enable the delegation of tasks in the future. To do so, ANEEL could organise open meetings for state regulators that are interested in co-operation, to inform them on requirements and procedures.

Relationship with the executive

ANEEL interacts closely with the Ministry of Mines and Energy: it contributes to the implementation of federal policies and guidelines and provides input to the policy-making process. ANEEL’s broad responsibilities in the sector require regular interactions with the ministry. While not a statutory function of ANEEL, it also regularly contributes to the policy-making process by defining an institutional position and providing input and text suggestions for bills related to the electricity sector. Upon invitation, ANEEL occasionally presents its position on bills to the legislature.

ANEEL is able to design new sector regulations, but there may not always be sufficient clarity on the respective roles vis-à-vis the ministry. A core function of many independent economic regulators is to introduce new regulations. ANEEL has the power to issue regulatory acts within the sector, to ensure compliance with Law no. 9.074/1995 and other relevant legislation. It has introduced new regulations in certain areas, such as distributed generation and the introduction of a variable electricity tariff, with social and redistributive consequences. In the case of the distributed generation regulation, a lack of incentives for small-scale renewable generation, contrary to international tendencies, motivated the regulator to propose the regulation. The regulator is currently in the process of reviewing this resolution.8 There is a perception among some stakeholders that ANEEL – in some cases, when stepping in to fill the gap left by unclear legislation – has taken a more active role in the design of specific regulations than initially intended. When role clarity in the area of emerging regulatory topics decreases, this could blur the dividing lines between ANEEL’s regulation and policy-making by the ministry.

Recommendations:

• Leverage existing co-ordination mechanisms, such as sectoral and bilateral meetings, to discuss the impact of a changing sector context on role clarity. ANEEL should advocate that role clarity is a priority topic for discussion within the sector modernisation initiative.

• Engage in regular discussions with the MME to discuss emerging regulatory topics and to identify in advance any potentially problematic ‘grey’ areas on the frontier between policy-making and economic regulation. In these discussions, ANEEL should safeguard that its responsibilities in these grey areas are in line with its distinct identity as an independent economic regulator.

• Ensure role clarity through a clear definition of the competences and tasks that are delegated to ANEEL by the MME. ANEEL could publicly communicate this definition of competences and tasks to stakeholders, to avoid the perception of blurring lines between policy-making and ANEEL’s economic regulation.

Autonomy and independence

ANEEL has built a reputation for integrity in a context characterised by the fight against corruption in Brazil’s infrastructure sectors. Important reasons to delegate tasks to an independent regulatory agency are to enhance the credibility of long-term policy commitments in the sector, and to create the trust that decisions are made with integrity. Independent regulation can create stability and trust and, among other things, decrease uncertainty for companies to invest in a sector. However, delegating significant regulatory and enforcement powers to independent regulatory agencies, outside the direct hierarchical supervision of the ministries, was not without controversy in Brazil at the time of creation of ANEEL, coinciding with a period of major turmoil in Brazil. It has proven difficult to build consensus on the topic of autonomy in a context where corruption scandals have eroded trust in democratic institutions. A lack of consensus can affect the independence regulators experience in practice, and Brazilian regulators were faced with the difficult task of building a reputation for integrity. To do this, while corruption scandals impacted Brazilian infrastructure sectors, ANEEL has put a great emphasis on the transparency of its processes and linked one of its strategic objectives to ensuring its autonomy.

ANEEL has many de jure arrangements in place to safeguard the regulator’s independence but as for regulators at large, its independence can be undermined at “pinch-points” in its life cycle. ANEEL has the best independence score compared to energy regulators in OECD and non-OECD countries included in the 2018 OECD Indicators on the Governance of Sector Regulators, indicating many good practices in terms of formal independence arrangements (see Figure 2.1 for the independence score of energy regulators). ANEEL receives guidance from the government on its long-term strategy, but not on its work programme, decisions or appeals. Only the court is able to decide to overturn decisions by the regulator, or to dismiss its leadership in case of a judicial sentence, conviction or breach of the legal prohibitions. These measures can act as bolsters against undue influence in ANEEL’s day-to-day work. In practice, however, de jure arrangements will not be sufficient and need to be complemented by strong de facto independence and culture. Moreover, independence is never a given or static, and it may come under stress at different “pinch-points” when political pressure or undue influence are perceived to be higher. Especially in a context of significant public ownership in the electricity sector and a strong interlinkage between electricity tariffs and social policy, protecting ANEEL’s decision-making process from undue influence will be essential to safeguard its de facto independence.

Recommendations:

• Engage with governmental and non-governmental stakeholders to demonstrate the importance of ANEEL’s independence as a sector regulator, as a means to improve the investment climate and market outcomes. Proactive engagement can help to increase the understanding of ANEEL’s role, and help maintain de jure and de facto independence. In this effort, ANEEL could present information on the performance of the regulator so far, and discuss the role its independence plays in delivering sector outcomes. These efforts would support the creation of the overall culture of independence for arms-length agencies in Brazil.

• Advocate together with other independent regulatory and oversight agencies for additional measures that could improve the de facto independence that agencies experience in practice. Depending on the issue at stake, ANEEL could consider to release its opinions on matters of independence publicly and use the media to draw attention to them if needed. Actions and positions such as these would allow ANEEL to continue to strengthen a culture of independence, both inside the regulator and in its relations with stakeholders, based on the regulator’s forward-looking, comprehensive regulatory approach.

Input

Financial resources

ANEEL’s operational budget is funded through a regulatory fee on industry, and the government can retain a portion of the fee revenues. ANEEL is funded through the Electric Energy Services Supervisory Tax (Taxa de Fiscalização de Serviços de Energia Elétrica – TFSEE), set in law. The fee is based on the annual revenue of the company, and is currently set at 0.4% of a company’s annual “economic benefit” (the calculation differs between sector segments, involving revenue minus energy and access charges). ANEEL defines the calculation methodology for payment, fixed annually, and concessionaires, permittees and authorisation holders are subject to pay the fee. ANEEL’s budget is treated within the national budget, and the government retains a significant proportion of the fee revenues (both ex ante and ex post, through mechanisms discussed in greater depth below). For example, in 2019, 61% of revenues from TFSEE (Table 3) was directed towards ANEEL’s operational budget, with the remainder retained by the government. Apart from the fee revenues, ANEEL also collects fines, penalties as well as public assets utilisation fees (Uso de Bem Público – UBP). These resources are directed to the Energy Development Account (Conta de Desenvolvimento Energético – CDE) managed by CCEE and do not fund ANEEL’s operations. Of total resources collected by ANEEL, the largest proportion are directed to the CDE (fines, penalties and UBP), while the industry fee (TFSEE) accounts for 41% of resources collected.

Table 3. ANEEL’s operating budget, revenues from industry fees, and fines and public asset utilisations fees, 2016-2019, in euro

	2016	2017	2018	2019 (est)
ANEEL’s operating budget	44 519 131	45 790 424	54 028 183	57 519 971
Revenues from industry fees (TFSEE)	77 385 542	82 598 396	87 487 341	94 998 878
Public assets utilisation fees (UBP)	94 838 237	102 620 074	107 157 339	113 085 394
Sanctions  fines and penalties	36 881 176	31 953 019	23 929 493	21 457 550
Total payments collected by ANEEL (TFSEE + fines and penalties + UBS)	209 104 955	217 171 489	218 574 173	229 541 822

Note: Figures presented in Euros, based on the exchange rate of 1BRL = 0.151809 EUR; UBP resources and sanctions, fines and penalties do not form part of resources made available to ANEEL and are directed to the Energy Development Account.

Source: Information provided by ANEEL, 2019.

The government and parliament both have the opportunity to affect ANEEL’s budget throughout the budget cycle, creating uncertainty and undermining ANEEL’s financial independence. As most regulators, ANEEL integrates its financial planning process within national fiscal and budgetary instruments. Planning starts in ANEEL, when the agency consolidates proposals for departmental budgetary needs into a single annual business plan. The business plan becomes ANEEL’s budget proposal, added with the budgets of government agencies and ministries by the Ministry of the Economy to the Annual Budget Law (LOA). The Ministry of the Economy has the power to adjust ANEEL’s budget proposal in the draft LOA, which it subsequently sends to Congress. When Congress considers the law, it has the power to increase and decrease the proposed budgets (although certain expenditures, such as salaries for government employees, cannot be amended). After congressional approval and signing of budget implementation decrees by the President, the President and Ministry of Economy can adjust the budget of ANEEL (again, apart from certain expenditures such as salaries) by issuing new decrees. A budgetary arrangement with multiple opportunities for budget cuts runs counter to OECD Best Practice Principles on the Governance of Regulators, which state that secure multi-year funding arrangements protect a regulator from politically-motivated budget cuts (see financial resources in Chapter 2).

Moreover, government decrees can divert resources from the regulator’s cost-recovery fee to the general government budget and further reduce the predictability of ANEEL’s funding. Such “contingency decrees” allow the government to redirect revenues within a fiscal year to correct a budgetary imbalance. The regulator reports that these government cuts happen frequently and without warning, and ANEEL prepares for potential constraints by defining courses of actions for different budgetary scenarios in its risk management plan. ANEEL’s annual budget has increased overall in recent years (with a 5 to 6% increase in the operating budget each year from 2016-19), but ANEEL has had experience with budget cuts in recent years significant enough to force the agency to suspend certain services. For example, two budget cuts in 2016 reduced ANEEL’s budget by more than half. However, ANEEL reports that it has successfully advocated the Ministry of Economy to maintain a healthy budget in recent years. However, there is a risk that budgetary constraints and contingencies could again cut into the funding ANEEL needs to perform its functions in the future.

Recommendations:

• Continue to advocate for the retention of revenues necessary to perform functions, ensuring fees raised from the sector are not diverted and ANEEL can continue to serve its functions over budget cycles. While ANEEL’s annual operating budget has increased on an annual basis, there is a risk that budgetary constraints and contingencies could cut into the funding ANEEL needs to perform its functions. In its advocacy, ANEEL could highlight the importance of establishing cost-reflective industry fees and a ring-fenced process to allocate funds to the regulator. This could safeguard an appropriate and predictable level of funding and ensure industry actors are paying the “right” fee.

• Advocate for the creation of a reserve fund that would enhance the stability and resilience of the regulator’s funding model, in a context of shocks to the sector and regulatory income. The reserve fund could act as a buffer to compensate positive and negative differences between ANEEL’s budget and fee revenues in individual years.

• Foster ongoing dialogue with the government about new budgetary decrees, aiming for increased transparency about potential decrees and a “no surprises relationship” with the government about changes affecting ANEEL’s budget. This dialogue could involve not just ANEEL, but also other organisations that are subject to the effects of budgetary decrees in a similar way.

• Communicate the impacts of budgetary constraints from the government and parliament, documenting and sharing the effects on ANEEL’s operations and activities. ANEEL has gone to the press to express the impact of recent budget cuts, but could build additional public awareness by reporting this information more regularly.

• Engage systematically and regularly with stakeholders involved in budgetary planning as new or increased activities result from sector changes. With expected continued growth in the electricity sector, it will be important for ANEEL to communicate proactively the evolving needs of the sector. Expanding sector activities may have different effects on the level of fee revenues (as a percentage of sector revenues) and the level of regulatory activities, which creates a need to monitor these effects collectively.

Box 6. Ensuring cost-recovery appropriately supports the regulator, in the short- and medium-term

Latvia’s Public Utilities Commission (PUC)

As a consequence of a legislative change on 22 November 2017, the regulatory fee that funds the PUC’s operations is set directly in legislation. To account for any potential overpayments above the PUC’s budget as approved by Parliament, excess funds are deposited in the account of the regulator at the Treasury. These limited funds can serve also to avoid unexpected or transitory decrease in PUC’s income without revising primary legislation every year.

The regulator can use these funds to fund its operations in subsequent years, in accordance with its approved budget. In case the funds in the account exceed 25% of total fee revenues, the excess funds are returned to market operators through a deduction in fee payments in the respective year.

Ireland’s Commission for Regulation of Utilities (CRU)

The CRU is funded entirely through levy and licence fees from relevant electricity, gas, petroleum safety, and water industry participants. Levies from market participants comprise the bulk of the CRU’s income. The CRU sets its own budget without requiring government participation, and is defined annually on a cost-recovery basis in the fourth quarter of the year, on the basis of an estimate of CRU operating and capital budget required for the next year. There is no direct government contribution to the CRU budget and the regulator’s annual budget is approved by the Commission without approval or ex ante assessment by the Oireachtas.

Annual budgets for the electricity, gas, petroleum and water are allocated by the CRU to each sector. Revenues, expenses and capital expenditure directly incurred by each sector are recorded in the separate budgets of the electricity, gas, petroleum and water sectors. Shared costs are allocated to each sector in proportion to the staff numbers engaged in the relevant sector. Costs linked to shared administrative functions such as finance, HR, IT, and Communications are pooled for all sectors.

Where annual expenditures exceed revenue, the balance is offset against the levy income for the subsequent year. The balances for the electricity, gas, petroleum and water sectors are recorded in their respective accounts, and audited on an annual basis by the Office of the Comptroller and Auditor General, which reports to the Public Accounts Committee of the Oireachtas. The CRU also conducts an annual internal audit, which is outsourced to an audit company). Moreover, based on a risk assessment, a contingency fund is defined on a yearly basis to provide flexibility to deal with potential legal challenges or costs linked to safety cases or events. Any excess of revenue in the financial year is taken into account in determining the levy for the subsequent year per sector. The CRU can carry unspent funds over to the following year’s budget without review or approval from external government entities.

Canada Energy Regulator (CER)

The CER’s Cost Recovery Regulations set out the manner in which the CER determines the costs related to carrying out its mandate and the process for recovering all or a portion of those costs from the companies it regulates. Currently, the CER’s cost recovery system is premised on commodity charging costs that are allocated to specific entities within those sectors (oil – oil pipelines, gas – gas pipelines, etc.). While the CER performs the administrative functions of calculating, billing and collecting cost recovery levies from industry, it does this on behalf of the Government of Canada and does not have respendable revenue authority, rather, companies pay their share of recoverable costs to the Consolidated Revenue Fund of Canada and the CER receives its funding through an annual appropriation process through Parliament.

The CER has a Cost Recovery Liaison Committee, which is composed of the staff from the regulator and representatives of the regulated companies. The purpose of this committee is to:

• provide industry with a thorough understanding of CER costs,

• provide a forum to raise issues or concerns related to the cost recovery processes and methods; and,

• discuss the Cost Recovery Regulations.

Source: Information provided by CRU and CER, 2019.

Human resources

Government restrictions prevent ANEEL from hiring as many permanent civil servants as the agency requires, and this has pushed the regulator to rely more on outsourced professionals in recent years. ANEEL’s staff consists of three categories: 1) career civil servants approved in public personnel selection exams, 2) commissioned staff who have not gone through public service examinations and can be appointed and removed at will, and 3) administrative support staff who are outsourced professionals under the responsibility of the contracted companies. The number of civil servants that can be employed at ANEEL is set in legislation but the number of this type of staff has lagged behind allowable numbers due to the restricted availability of public exams. The Ministry of Economy, in charge of authorising requests for public exams, has denied recent public exams on the basis of fiscal concerns. This practice has left ANEEL with a workforce of civil servants that is 89% of the number allowed by law in 2019. ANEEL’s workforce constraints may only increase as the Brazilian electricity sector expands, especially in the areas of regulation and monitoring. The total number of staff has remained roughly stable in the last four years, but the number of support staff is rising while the number of professional staff (including civil servants and senior appointed positions) has decreased in recent years (Table 4).

Table 4. ANEEL staff by category, 2016-2019

Year	Number of support staff	Number of professional staff	Total Workforce
2019	339	681	1 020
2018	325	694	1 019
2017	309	706	1 015
2016	302	714	1 016

Note: All categories of staff other than support staff are considered professional staff. Data from 2019 is from September, and does not include contracts providing IT services.

Source: Information provided by ANEEL, 2019.

The deficit of permanent civil servants is a driver in ANEEL’s increasing reliance on support staff and forces ANEEL to “do more with less”. An increasing use of the services of support staff is one way that ANEEL has continued to deliver its functions even as the number of civil servants employed by ANEEL falls (Table 4). ANEEL reports that it has had to take other measures to “do more with less,” including delegating activities to state regulatory agencies, accrediting companies to help with activities and harnessing technology and innovative methods like geotagging for enforcement activities to help departments improve their processes.

ANEEL’s civil servants are highly qualified with specialised training and multiple years of experience. Civil servants fall into a particular job family and category, which denote the basic salary and the amount of bonus that a staffer can receive. To hold a level B position, the civil servant must have more than 5 years of relevant experience and 360 hours of specialised training, or 8 years of experience and 240 hours of training. For a “special” level position, a civil servant must have at least 14 years of experience and have completed a specialisation course of at least 360 hours, hold a master’s degree and at least 12 years of relevant experience, or hold a doctorate and have at least 10 years of relevant experience. The number of civil servants in each class skew away from the “A” level, showing that ANEEL’s civil servants tend to have significant training and experience (Table 5).

Table 5. Number of ANEEL civil servants by category

Level	Administrative analyst	Specialist in regulation	Administrative technician
A	3	4	1
B	90	150	24
Special	65	162	91
Total	158	316	116

Source: Information provided by ANEEL, 2020.

Male staff outnumber female staff in every category – senior management, civil servants of technical or administrative departments, and support staff – and a comprehensive diversity and inclusion programme is lacking in ANEEL. 37% of staff members are female (Table 6). The gender imbalance is highest in the category of senior staff members, where only slightly over a quarter of staff members are female. ANEEL approaches gender parity in the category of support staff and civil servants in administrative departments, where nearly half of staff members are women. ANEEL has taken early steps to implementing diversity activities, such as instituting diversity training and working to form an internal diversity committee, but it lacks an integrated diversity and inclusion programme.

Table 6. Male and female staff by category

Staff category	Male	Female	Total
Senior management	206	76	282
Civil servants – technical departments	180	80	260
Civil servants – administrative departments	73	66	139
Outsourced administrative support staff	180	159	339
Total	639	381	1 020

Source: Information provided by ANEEL, 2019.

ANEEL’s training programme helps develop its workforce, and certain key competences could benefit from additional training. With an annual training budget of more than EUR 500 000, ANEEL has been able to provide training to 95% of its staff. It offers training to all staff in five areas: integrity, management methods, digital transformation, systemic view and relationships. In some cases, ANEEL sponsors continuing education for staff members, such as master’s degrees. In addition to this professional training, ANEEL has also invested in technical training for regulatory impact assessment, in co-operation with the University of Brasilia. ANEEL also offers training in data analytics and data literacy. However, ANEEL faces the same challenge as many regulators, with the number of staff with specialised analytical skills lagging behind agency needs.

In a sector where salaries are not always competitive when compared to the private sector, additional benefits make employment at ANEEL attractive. According to the regulator, salaries are less competitive at the senior management level, where private sector remuneration would typically be higher. Public servants are entitled to benefits beyond salary, including the job security of a civil servant position, nursery education, food and transportation aid and healthcare aid. ANEEL has put into place other initiatives to improve staff well-being, such as flexible working. ANEEL’s training programme also helps to build and retain in-house talent.

Increased connection with strategic planning could ensure that all staff members’ goals are aligned with the strategic goals of the agency. Civil servants and commissioned staff members share a procedure for individual performance evaluation. The manager conducts a midterm and annual assessment of each employee, identifying development needs and defining goals for the next evaluation period. The law stipulates a number of factors that must be evaluated for civil servants, such as productivity and teamwork. Along with new experience or qualifications, the results of the performance assessment determine whether an employee continues to the next career step, with a commensurate increase in salary. Senior managers are evaluated based on the overarching criteria of strategic management, human performance management, internal conflict mediation, negotiation, change orientation and innovation and management communication. While senior managers’ performance evaluation has a strategic element, the evaluation of other staff is not necessarily tied to the strategic planning of the agency.

Recommendations:

• Assess exact staffing and competency shortfalls and build a case for the urgency of increasing the headcount of career civil servants directed at the executive both formally and publically. Continue meetings with other federal agencies to share challenges and consider advocating collectively on human resource matters.

• Investigate additional efficiency-boosting measures to deliver on functions with a limited workforce, such as ANEEL’s existing geotagging programme. ANEEL can take advantage of its participation in national and international networks of regulators to exchange ideas for new measures, engaging its innovation team in discussions with other innovators. As part of this effort, ANEEL could assess if any of the adjustments in its regulatory practices, in response to the COVID‑19 crisis, should remain in place to support more efficient ways of working after the recovery.

• Continue to offer high-quality tailored training for ANEEL employees to develop human capital and offer a non-salary benefit to staff members. With limited opportunities for recruitment of new staff, ANEEL’s efforts to develop its existing workforce take on greater significance. As ANEEL takes a more “hands-on” approach to driving sector modernisation, the ambition of its training programme should match its ambitions for its role in the sector. To do so, the training programme should foster human capital development at all levels of the agency and target areas of greatest need, like data analytics. Of course, training existing staff will only take ANEEL so far, and it will be important for ANEEL to communicate to the relevant authorities when it needs to hire new talent.

• Build on the success of the training programme to offer targeted training on evolving regulatory competences. Following the success of ANEEL’s RIA training, a formal training programme for ex post analysis may facilitate the mainstreaming of this tool. Further training on data analytics can help staff keep pace with ANEEL’s evolving approach to data.

• Collaborate with the other regulatory agencies to advocate for a remuneration regime for civil servants that is competitive with industry remuneration at the senior level. In this effort, ANEEL could conduct a quantitative analysis of how its salaries compare to market salaries for different staff levels, and communicate the results publicly.

• Revisit ANEEL’s diversity and inclusion efforts with the goal of developing an effective and comprehensive diversity and inclusion policy. While ANEEL measures the distribution of women and men in the organisation, it should strengthen its evidence base with the goal of understanding needs and tracking progress towards improving equality in the workplace (both for women and other groups). In line with the 2015 OECD Recommendation of the Council on Gender Equality in Public Life, the policy should establish clear roles, responsibilities, and lines of accountability for the implementation phase. ANEEL’s internal diversity committee is one body that could provide a level of accountability and oversight, but high-level buy-in and attention will be critical to give its recommendations weight. Through its diversity and inclusion programme, ANEEL should attempt to understand barriers preventing women (and other groups) from reaching senior staff positions and introduce programmes to address barriers (for example, mentorship programmes or targeted leadership training).

• Establish a stronger connection between the daily work of the staff and the strategic planning of the agency. Strategic objectives aim to provide a clear focus on what the organisation wants to achieve, which also gives clarity to stakeholders. However, in practice staff members at ANEEL may not always be able to directly connect the strategic planning to their daily work. Disconnections between the daily work and the strategic planning can decrease the effectiveness of the agency in achieving its objectives, as agency’s actions could become less predictable and not align completely with the overall objectives.

Process

Internal organisation

ANEEL’s three levels of hierarchy – the board, the heads of departments and team leaders – manage the large agency. ANEEL is led by a board of one Director General and four directors. The Director General has the support of the Office of the Director General, while the board benefits from the support of the Board Advisory and the General Secretariat. The board has executive and non-executive functions. It makes decisions related to day-to-day functioning of the organisation, sets strategic direction and has a role in monitoring performance. In addition, it issues regulatory decisions, ensures compliance with the law and policy, administers contracts and reviews appeals. The board oversees twenty-three departments falling under seven thematic areas: management advisory and control, economic regulation of the market and stimulus to competition, relations with society, grants and hydraulic potential management, inspection of electricity services and facilities, technical regulation and service standards, and planning and administrative management. Having limited hierarchical levels brings the board closer to the daily functioning of the agency, but executing executive and non-executive functions may run the risk of stretching the board’s resources.

Some of ANEEL’s activities involve multiple teams and overarching issues, but the structure and the size of the agency raises risks of developing silos and failing to diffuse shared approaches and culture. ANEEL holds technical meetings involving multiple teams discuss issues of cross-team relevance. The board also plays an important role in the harmonisation of approaches, ways of working and culture. However, in a large organisation with numerous departments separated thematically, there is a risk that activities become siloed without adequate interface between teams. For example, separate technical areas, each with a high degree of operational autonomy, may favour the formation of information silos. In addition, the size of the agency can make it challenging to maintain common approaches and ways of working, and to develop a shared culture.

Although regulatory staff makes up the majority of ANEEL’s workforce, there is a strong presence of administrative and management advisory staff. The Planning and Administrative Management area, the Director’s Office, and the Management Advisory and Control area (which includes board support, the General Secretariat, the public relations department, the Internal Audit, Federal Attorney’s Office, and the Executive Secretariat of Auctions) together account for around 40% of the total workforce (Figure 2).9 After Management Advisory and Control and Planning and Administrative Management, Inspection of Electricity Services and Facilities is the next largest area (for a full organigram with staff counts, see Figure 2.2).

Figure 2. Percent of total professional staff by thematic area

Note: All categories of staff other than support staff are considered professional staff. Data from 2019 is from September, and does not include contracts providing IT services.

Source: Information provided by ANEEL, 2019.

Recommendations:

• Examine the distribution of human resources across departments and between ”regulatory” and “support” departments to assess if more resources can be directed to carrying out the core duties of the regulator. This exercise should be carried out in a transparent manner and could include benchmarking with other Brazilian regulators and public bodies to identify good practices.

• Develop horizontal alignment on the staff and leadership level in order to mitigate the risk of inconsistency in decision-making and organisational inefficiencies. ANEEL could create multiple cross-functional teams (in the same spirit as CT-REG). It could also facilitate cross-silo dialogues to investigate where silos exist and how to overcome these key silos, such as between inspections superintendencies. ANEEL already strengthens ties between teams by allowing for horizontal movement and improving the information management system to ensure cross-silo information/data sharing (see also below). The agency could benefit from creating positions for “cultural brokers”, which are employees that report to more than one team, to facilitate interaction and create linkages. On the leadership level, ANEEL should consider ways to make managers drivers of cross-team thinking. Temporarily rotating leaders into different leadership positions could help team leaders understand the challenges of other teams, identify opportunities for collaboration, and more generally to “speak the language” of other teams.

• Evaluate incentives for collaboration across teams and establish cross-functional incentives, for example using “name and fame” examples of effective cross-department co-operation to incentivise this behaviour. Establish shared goals between individual departments that incentivise reducing inefficiencies from organisational silos. For example, inspections departments could set cross-departmental goals to limit the number of duplicate information requests.

• Push ANEEL’s shared vision and overarching regulatory approach throughout the entire organisation, and ensure that every staff member understands and feels commitment to shared objectives. Without a shared vision and objectives that percolate throughout the organisation, the benefits of cross-functional work will be limited and staff members may not be able to relate their activities to the organisation’s objectives. In addition to involving staff in the creation of strategic objectives, which ANEEL already does, ongoing communications tools that communicate ANEEL’s performance against objectives (both overarching objectives and those that relate to the work of a limited number of teams) can help staff members understand how their work is furthering the vision of the organisation. To complement annual and quarterly reporting of ANEEL’s performance, regular emails to staff, reporting progress and highlighting achievements, or a regularly-updated organisational dashboard could provide continuous information to staff on a limited number of key performance indicators.

The Board

While current ANEEL board members have highly relevant and technical backgrounds, the politicisation of board appointments for Brazilian agencies has been identified as an issue in the past. The Director General and four directors of ANEEL are appointed and, after approval by the Senate, nominated for five-year terms without renewal by the President of Brazil, as provided by law. One study suggests a growing number of political appointments in the early 2000s across federal regulatory agencies in Brazil, with an increase in the proportion of appointees without any relevant technical or academic experience between 2002 and 2005. Another study finds that less than half of directors between 1997 and 2014 had a post-graduate degree. The law, updated in 2019, does not preclude the possibility of the appointment of board members with a non-technical background. It formalises the requirement for a relevant academic background and spells out other requirements related to an appointee’s professional history. It specifies that a board appointee must have an unblemished reputation, a relevant academic background, and expertise in their field of specialty. It requires that appointees have a certain number of years of professional experience within one of the following categories:

1. the public or private sector in the field of the agency or a related area,

2. company in the agency’s field in a senior management position,

3. the public sector at a position higher than a specified level,

4. the academic and research field as a professor or researcher in a relevant area, or

5. the liberal profession field in a relevant area.

It is not uncommon for administrations to appoint directors in line with party affiliations, which has the potential to increase the responsiveness of the agency to government requests and also may contribute to the politicisation of an agency. An analysis of the party affiliation of directors across federal infrastructure sector regulators finds that a significant minority of appointees are affiliated to a party at the time of nomination across:10 15% in the Fernando Henrique Cardoso government, 23% in the Luiz Inácio Lula da Silva government, and 15% in the Dilma Rousseff administration. The politicisation of the board may also occur through strategic vacancies, whereby the executive delays the nomination of new board members. There is evidence that the executive has made use of this technique in the past three administrations. The current board members all have relevant industry or regulatory backgrounds, and decision-making by the majority reduces the risk that any one appointee would sway the board. Nevertheless, the possibility of politicised appointments (even if only a perception) could be a risk to the credibility of the agency.

ANEEL’s board operates in close proximity to its technical departments, delegating regulatory activities to the departments with strong technical capacity and a degree of autonomy but maintaining its role as the final decision-making authority. The departments elaborate the agency’s technical work, bringing the product to the board for the final vote as written in ANEEL’s organisational norms and described below. Certain competences must remain with the board by law, and the board has formally delegated other activities to departments. According to the regulator, ANEEL’s horizontal structure with only two layers of hierarchy makes the agency agile and swift.

The board’s decision-making process favours deliberation before board meetings, and the lack of a right to amendment might make board processes more unwieldy. When it comes to regulatory decision-making, the relevant department initiates the process. It publishes a technical analysis with recommendations for regulatory options, which it submits to the board. The rapporteur, a member of the board selected by draw, evaluates the proposal with a legal advisor before reporting back to the entire board. Four or five advisers support the board members in decision-making. The board members have eight weeks to consider proposals. By the time voting occurs, the vote is a simple yes/no, without amendment. Board members cannot modify a proposal, but they have the right to present a separate proposal for vote if there is divergence from the proposal of the technical team. A decision of the board requires a majority of three votes to pass.

In an evolving sector, the board plays a critical role in anticipating change. The board’s remit is broad; it includes decisions related to the day-to-day functioning of the organisation, regulatory decisions, ensuring compliance with the law and policy, administering contracts and reviewing appeals. On top of these tasks, the board sets strategic direction and has a role in monitoring performance, as described above in Strategic and operational objectives. A growing and changing electricity sector will bring new regulatory challenges, which will require ANEEL to have strong foresight capacity. The board’s strategic vision will be a critical driver of the agency’s ability to anticipate and adapt to change.

Recommendations:

• Recalibrate the board’s focus, allowing the definition and implementation of ANEEL’s strategic agenda to be the nucleus of the board’s actions. ANEEL has formally delegated some decisions, and could stand to explore other frameworks that the regulator can use to deepen delegation and strengthen focus on strategic issues. To support the board in its strategic role, it will need to define core issues for its remit and assess which decisions can be delegated to superintendencies beyond those that it has already delegated. For example:

  • ANEEL’s procedures could define that decisions without precedence or decisions of a principled nature are always handled by a board, while later decisions of the same type could be delegated to technical teams that use the Board’s earlier decisions as models. ANEEL can use a similar approach for other outputs; and

  • if ANEEL receives a specific government assignment resulting in a report or similar output, the board would decide upon this output. For reports produced for internal use (excluding certain influential outputs like policies or guidelines), the board can delegate decisions to technical teams, which will only present the product to the Board for information.

  • ANEEL could assess if there are any competences that cannot be delegated according to existing legislation, but for which delegation could potentially improve efficiency or improve the focus of the board on its strategic role. For those competences, it could advocate for legislative change to enable delegation of decision-making.

• Enhance the regulator’s foresight capacity by dedicating some of the internal advisory resources to this specific task, and consider creating an informal group including external experts to support the regulator in this task. This group could report on a regular basis, through informal discussion documents, on the main anticipated developments that affect the sector and could warrant adjustments in ANEEL’s regulatory practices. As the transformation of the electricity sector places extra demands on ANEEL, the board will be a key driver of institutional readiness.

• Consider introducing a right to amendment in ANEEL’s internal procedures to give board members the option to modify proposals before the board instead of introducing alternative proposals, as part of an effort to streamline the board’s processes and to ensure regulatory discretion is actually exercised. With a high volume of decisions11, the ANEEL board must exploit opportunities to make its processes more efficient. In combination with allocating to the Board only the decisions of fundamental importance the Board will be able to focus on the key policy issues that require a weighting of pros and cons of a proposed regulatory measure which goes beyond a “technical yes/no choice” without discretion. By introducing the right to modify the draft, the Board will be in a position to introduce these considerations where needed without having to reject the complete draft which is an inefficient use of time of the Board members. Also, with these “targeted amendments” the quality of the decisions is improved as the reasoning can be fine-tuned and completed. Thus, the decision-making of the ANEEL Board is focused on the most important decisions and will be more efficient.

• Build trust in the independence of the board’s decision-making to counter perceptions of board politicisation. Measures to safeguard the independence of the regulator (as discussed in Autonomy and independence) and to protect the integrity of ANEEL staff (as discussed in Code of ethics) will be critical contributors to confidence-building.

• Advocate for the introduction of deadlines for the executive to appoint board members to reduce the use of strategic vacancies that can hobble the board’s effectiveness. If needed, ANEEL could also consider communicating publicly to stress the importance of timely board appointments.

Box 7. Board decision-making

Efficient decision-making through delegation: the Swedish Energy Markets Inspectorate’s experience

The Swedish Energy Markets Inspectorate (Ei) is a supervisory authority working on behalf of the Government (the Ministry of Infrastructure). Ei's duties are governed through terms of reference (2016:742), the annual appropriation directions and specific government assignments. Its operations are governed by the Swedish energy policy and the work contributes to implementation of the Government and the Swedish Riksdag's energy policy for well-functioning energy markets.

Ei is led by a Director General (DG) who is appointed by and accountable to the Government. The DG is the authority’s decision maker but has a mandate to delegate some decisions to others. All delegations are listed in the Ei rules of procedure. Once a week there is a two to three-hour DG decision meeting during which the DG, supported by the Chief Economist and the Chief Legal Counsel, acting as advisors to the DG, makes decisions on submitted cases. A case must be submitted for decision two weeks prior to a decision meeting and include relevant documentation e.g. a draft decision, a presentation brief and an indication of how much time is needed for the presentation. The submission is digital allows for commenting prior to the meeting. At the meeting, the relevant department presents the case, a discussion follows, and a decision is made.

In order to make the DG decision process as efficient as possible, several decisions have been delegated to department Directors. However, as a rule, a case for which there is no precedence, or a decision of a principled nature are always handled at a DG decision meeting. However, once the DG has decided a case of e.g. a principled nature, then coming decisions of the same type have been delegated to the relevant Department Director using the initial DG decision as a template. Examples of such delegated decisions in Sweden include revenue cap decisions and certain types of concession decisions.

Another example of delegated decisions includes decisions on reports. For all government assignments that result in a report, the report is decided on by the DG (this is true for all reports for external publication) whereas decisions on reports only for internal use (unless it is policies or guidelines) are delegated to Department Directors.

Between 2010 and 2020 roughly 2565 decisions were made at Ei of which approximately 95 were DG decisions. The process for delegated decisions and the use of templates has made it possible to have a streamlined, efficient and effective process.

Germany’s Bundesnetzagentur

The Presidential Chamber composed of the President and the two Vice-Presidents of BNetzA decides only on issues that are of fundamental importance and have a major impact on the market. Mainly these are decisions such as the definition of the relevant markets susceptible to ex-ante regulation and the designation of an operator as having significant market power following a thorough market analysis. This is a fundamental decision as it triggers the ex-ante regulation of an operator designated as dominant operator.

Another example is the assignment of spectrum, therefore only the Presidential Chamber decides on running an auction in case of scarcity of spectrum as this shapes fundamentally the mobile market in the future, e.g. the 2019 auction on 5G spectrum.

The last example of a decision fundamentally impacting the operator is the imposition of a universal service obligation e.g. for the provision of basic postal services or basic telecommunications services.

Source: Information provided by the Swedish Energy Markets Inspectorate and BNetzA, 2021.

Code of ethics

ANEEL’s internal mechanisms for ethics for employees attest to the regulator’s dedication to the promotion of integrity. ANEEL supplements the Code of Professional Ethics of the Civil Servant of the Federal Executive Branch with its own internal code of ethics, introduced in 2009. The code outlines ANEEL’s values – impartiality, transparency, independence and social responsibility – and commits ANEEL to taking a number of measures to improve integrity. It establishes an ethics committee responsible for implementing, monitoring and evaluating ethics management actions and providing ethics guidance. The committee is composed of an executive secretary and three members with three alternates, all appointed by the board. Given the importance of integrity to ANEEL and the need for the regulator to set the bar high in a quickly evolving context, there is a need to continuously monitor the relevance and effectiveness of the Code of Ethics and its governance.

Federal pre-, during- and post- employment restrictions manage the risk of conflicts of interest at the highest levels of public service. Pre-employment restrictions for high-level appointees including ANEEL directors state that appointees are ineligible if they or their relatives hold certain political or union jobs prior to appointment. New directors must submit a declaration of assets, income and potential conflicts of interest to the federal Public Ethics Committee. During their term, members are bound by additional conflict of interest restrictions that, if violated, can be grounds for termination. These include disclosing or making use of privileged information for personal or third party benefit and engaging in activities implying the provision or services or the maintenance of a business relationship with an individual or legal entity with interest in the decision of the regulator. The law also defines situations that constitute conflict of interest after the term of employment. Along with a six-month cooling-off period, directors must not disclose or make use of privileged information obtained in the course of public duties.

Recommendations:

• Ensure that ANEEL’s code of ethics and approach to integrity count with a risk management perspective, are up to date and reflect any new risks and vulnerabilities, recognising that the integrity environment is not static. With this in mind, ANEEL could use data collected by the ethics committee to assess risks and potential vulnerabilities to misconduct and corruption in its workforce and activities. The ethics committee should also report on its activities to staff. In parallel, the agency can ensure that monitoring mechanisms effectively provide signals of risk to the board and ethics committee. Involving the board and other senior management in this “integrity check” along with the ethics committee will raise awareness and demonstrate high-level commitment to integrity.

• Communicate ANEEL’s values and commitment to integrity, in line with the OECD Recommendation of the Council on Public Integrity. Reporting on key integrity metrics is one way to signal ANEEL’s ongoing commitment to integrity, and ANEEL can encourage transparency about the effectiveness of its integrity processes while respecting confidentiality by reporting appropriately aggregated and anonymised data.

Regulatory management tools

Regulatory impact assessment

ANEEL, a frontrunner in systematically applying regulatory impact assessment in Brazil, is approaching its goal to complete RIA for all draft norms. ANEEL was an early adopter of regulatory impact assessment, implementing RIA systematically before it was a legal obligation for regulatory agencies. The technical team within the responsible unit develops the RIA, which is generally subject to consultation in the first phase of public hearing. ANEEL measures the proportion of draft norms going to public consultations with a completed RIA analysis and those without RIA available: while ANEEL has defined a 100% goal for this index, 94% of draft norms went to public consultation with RIA in 2020.

ANEEL ensures that RIA is proportional to the significance of the regulation, exempting certain norms, such as those of evident low impact, from analysis. ANEEL’s RIA norm details requirements for RIA, which standardises the RIA framework and serves to increase the uniformity of RIA conducted by different departments. Apart from certain defined exemptions, ANEEL must conduct RIA before the issuance of all regulatory acts. Furthermore, the RIA norm specifies that the methodology of the RIA should be appropriate for the subject of the norm and its complexity. The exemptions ensure that RIA focuses on the most important norms by excluding those of low impact and varying the depth of RIA, in line with the Best Practice Principles on Regulatory Impact Assessment.

A special commission increases in-house capacity to conduct RIA and improves the quality of the agency’s RIA. A Technical Commission (CT-REG) provides support for the use of RIA within the agency. The aim of CT-REG, which meets monthly, is to enhance the quality of ANEEL’s RIA. To this end, it developed a Q&A for RIA and a model RIA report and it organises training on RIA. Although it does not prepare RIA, it provides support to the Board in analyses of RIA waiver requests. CT-REG is composed of Directors’ advisors, members of the Director-General’s cabinet, and representatives from departments.

The Agency’s RIA norm includes requirements for monitoring and connecting the RIA to ex post analysis, an area that ANEEL is currently developing. Among the minimum requirements for RIA reports in ANEEL’s RIA norm is the requirement that the report includes information about monitoring results from the new normative act. In addition, the resulting norm must include a provision to prepare an ex post analysis at a later date.

Recommendations:

• Distil lessons on RIA to share with other regulators, including the use of the cross-cutting CT-REG to improve RIA quality and buy in across the organisation. This could take the form of a “RIA toolkit” to complement the handbook produced in 2018, sharing the specific methods and tools that ANEEL uses to improve the quality and effectiveness of its RIA programme.

• Integrate RIA fully with other regulatory management tools, in line with the Best Practice Principles on Regulatory Impact Assessment. ANEEL is currently developing its ex post evaluation, and has an appropriate framework in its draft norm to “close the loop” of the regulatory governance cycle as it strengthens its ex post programme.

Stakeholder engagement

Stakeholder engagement is a key expression of social accountability; for ANEEL, robust and comprehensive stakeholder engagement is critical as an influential independent regulator in an often-politicised sector. A previous OECD report highlighted social participation as a challenge in Brazil, which has historically lacked a strong presence of civil society in regulatory policy. In addition, a strong consumer voice has not always been present in Brazilian network sectors. Social participation is key to maintaining the “credible commitment” that the independent agency represents, and takes on greater significance in a country with a high level of inequality.

With procedures in place to consult with stakeholders, ANEEL’s challenge is now engaging effectively with affected citizens. ANEEL generally consults in two stages: first it solicits input on the draft RIA, and second it presents the draft normative act. While consulting on the draft RIA, ANEEL uses a range of instruments to engage with stakeholders to collect information and data: technical meetings with stakeholders, seminars, direct letters to stakeholders, as well as a formal instrument of public consultation (tomada de subsídios in Portuguese). During the consultation on the draft normative act, ANEEL generally offers public hearings. At this stage, the RIA report includes a section on comments collected from stakeholders indicating how they were taken into consideration. While ANEEL offers multiple opportunities for stakeholder input, it fails to systematically attract broad public participation. Several analyses have noted a strong presence of experts in ANEEL’s public hearings, with a smaller representation of non-expert stakeholders. The presence of political actors can also politicise discussions, diluting the effectiveness of the hearings as spaces to collect inputs from affected parties.

A committee to understand the consumer perspective on the regulatory process, established as an effort to broaden engagement in public participation processes, has not yet delivered improvements in levels of engagement. As part of its strategic objective to increase representation in decision-making processes, ANEEL created a commission to look at the regulatory process from the consumer perspective, the Regulatory Process Support Committee. The Committee has representation from the five classes of consumers and the research and legal fields. The Committee is tasked with evaluating the consumer needs in the regulatory process and assessing impacts on consumers, highlighting improvements for proposals under discussion in public hearings. It serves a consultative function, considering proposed regulations before they are brought to public consultation. However, levels of contribution to regulatory processes are still lagging behind ANEEL’s goals, suggesting that ANEEL should adjust its strategy to broaden its engagement.

A consumer council for each distributor institutionalises stakeholder engagement in the distribution segment, but their effectiveness could be enhanced. By law, each energy distributor must maintain its own consumer council. The consumer councils serve as consultative bodies regarding topics such as bills and quality of service. The councils are autonomous, funded through a tariff on distributors. The councils are composed of two representatives from each of the five main groups of consumers: residential, industrial, commercial, rural, and government (with the possible involvement of ProCon, the network of consumer agencies). The council nominates its new members and defines its own annual planning. The councils must provide regular feedback on the performance of the distribution companies, but their input into other stakeholder engagement processes is limited and often not reflected in the final output. The consumer councils must issue formal and non-binding comment on tariffs and the quality of electricity supply of the relevant distributor. The councils also work with the distribution company to conduct consumer outreach. ANEEL invites consumer councils to take part in ANEEL’s public participation processes. However, their input in ANEEL consultations could be strengthened: ANEEL reports that around 1/5 of public participation processes feature inputs from the councils and around 30% of these inputs are reflected in the final product. While ANEEL defines the general conditions for formation and operation of the councils, some councils are more active than others. ANEEL facilitates the meaningful contribution of the consumer councils by participating in meetings, providing relevant information, as well as holding technical meetings and trainings with the councils.

Recommendations:

• Assess participation in public consultations, and identify gaps of specific stakeholder groups in representation. Make use of the Regulatory Process Support Committee to identify opportunities (and consider commensurate allocation of resources) to increase representation of key stakeholders in ANEEL’s processes.

• Consider the creation of a channel for ANEEL to interact more directly with consumers, outside of the mechanism of consumer councils managed by market actors, to build awareness of ANEEL’s role and its consumer services. The Regulatory Process Support Committee could play a role in identifying opportunities for direct engagement.

• Ensure consistency and strategic use across consultative councils embedded in companies. This can involve the following actions:

  • ANEEL can identify consultative councils with lower-quality participation. Communicating relative results can add another behavioural incentive to improve the quality of participation. It could work with distribution companies to invest in bringing these councils to the same level of effectiveness as high performers;

  • ANEEL and the distributors may increase training to ensure that participants from all classes of consumers can have an equally informed voice in the proceedings of consumer councils;

  • ANEEL can encourage knowledge sharing and other interactions among councils to improve the overall quality of input. The agency can consider putting in place mechanisms to encourage exchange, such as a shared platform where councils can share good practices, templates, resources, etc.;

  • ANEEL can commit to state how consumer group and civil society input was taken into account in the final decision.

• Create a “safe space” environment in public hearings for stakeholders and affected parties without the politicisation of discourse by limiting participation by political actors. ANEEL can emphasise when it announces public hearings that it offers these events for affected parties. ANEEL’s rules for the public hearing should be clear to participants, along with the purpose of the hearing and the topic of the consultation.

Behavioural insights

The early use of new approaches such as behavioural insights to manage electricity demand and improve distribution company performance has been met with mixed success. ANEEL established a system of “tariff flags” to signal to consumers the real cost of generating electricity, accompanied by a surcharge when cost of generation is high. However, the TCU ordered ANEEL to revisit this behaviourally-informed demand management approach to ensure it is fulfilling the objectives. The innovation committee, made up of ANEEL staff members and board members, supports the efforts of departments to use innovative methods like behavioural insights.

ANEEL awards an Ombudsman Award to the three distribution companies with the best customer service and complaint management, a mechanism to incentivise companies to improve. The Ombudsman Award and Consumer Satisfaction Index are behaviourally-informed programmes that “name and fame” well-performing distributors to provide an additional motivation for distributor performance. The award (Prêmio ANEEL de Ouvidoria) is awarded to the companies with the best customer service and track record in handling complaints. Factors considered are the number of channels through which consumers can connect to the company, the specific design of the ombudsman within the company, the speed and clarity in dealing with complaints and the availability of monitoring reports. The publication of the top performers in customer service presents an additional motivation for distributors to improve services.

Recommendations:

• Promote the use of innovative approaches like behavioural insights where such approaches can improve the performance of ANEEL and the sector it regulates. This can be carried out via:

  • Partnering with research institutions conducting behavioural science research to identify opportunities for the use of behavioural insights in its processes and design high-quality behavioural interventions;

  • Providing internal training sessions to staff on approaches to regulation provided by more innovative tools and methodologies such as behavioural insights, ethical business regulation, etc., to share knowledge and collect ideas.

Ex post analysis

ANEEL is in the early stages of institutionalising the use of ex post analysis, and must take further steps to encourage widespread agency adoption of the practice. In a country where the complexity of regulatory procedures outstrips that of OECD countries, ex post evaluation can be an important tool allowing ANEEL to champion administrative simplification in the electricity sector. As of July 2018, all normative acts must include a deadline to implement an ex post evaluation (Avaliação de Resultado Regulatório – ARR), and ANEEL has produced four at the time of writing. In general, the department that produces the RIA for an act is also responsible for the ex post evaluation, and departments plan future expenses relating to the ex post analyses under their purview through the normal budget process. ANEEL does not yet define the minimum aspects that must be evaluated ex post, nor does it have a model for reports. Several pilot projects are elaborating ANEEL’s ex post programme, including by drafting a handbook defining good practice and outlining recommendations.

ANEEL has put in place an annual review to manage its stock of regulation, but the system could be strengthened by embedding ex post reviews as an integral element of the regulatory cycle. One of the strategic objectives in ANEEL’s Strategic Planning 2018-2021 is to “enhance, simplify and consolidate regulation,” with an initiative to “review the framework for regulation development and the regulatory stock.” To manage the regulatory stock, all technical areas evaluate annually the effectiveness of normative acts in force under their responsibility. They identify acts that are no longer effective to the General Secretariat. In turn, the General Secretariat submits the consolidated information to the Board who decides whether to update the legal status of the normative acts. These programmed reviews offer a strong foundation upon which to develop other forms of stocktaking.

Recommendations:

• Maintain momentum towards the full implementation of systematic ex post evaluation. While ANEEL has taken the first step to require ex post analyses in new normative acts, targeted support to ensure that ex post evaluations are of consistent high quality (such as that developed for RIA) will be a key determinant of the success of the programme. The programme should embed ex post evaluation as an integral part of the regulatory cycle by defining how evaluation will feed back into processes to adjust or re-design regulation. ANEEL could combine a formal training programme, as discussed under Human resources, with internal communication (through presentations and emails), to raise the awareness of staff regarding ex post evaluation.

• Review regulatory stock management procedures in line with the OECD Best Practice Principles on Reviewing the Stock of Regulation. ANEEL can aim for a stock management process that is both holistic and accountable. ANEEL can make use of the tool of public ‘stocktaking’ of regulation to provide an opportunity to identify challenges with stakeholder input, and to focus its regulatory stock management efforts on the most pressing issues. ANEEL could consider adding new features to increase the efficacy of stock management, such as providing advance notice of forthcoming reviews of regulation like an annual ‘forward regulatory review plan’.

• Consider targeting any regulation that is impeding the modernisation of the sector through a special themed regulatory modernisation initiative that collects information from departments and stakeholders. Such an initiative can help ANEEL identify regulation that is not keeping pace with the changing landscape and react accordingly. ANEEL could accept information on regulatory barriers on an ongoing basis by adding a “Report a barrier” page on ANEEL’s website where market actors can file information on barriers they face.

Box 8. Use of ex post assessment by economic regulators

Italy’s AGCOM

In the field of electronic communications, AGCOM is called by the EU regulatory framework to closely monitor the evolution of the markets, assess the impact of existing regulations – either asymmetric (imposed to Significant Market Power/SMP operators) or symmetric (applicable to all market players) – and to review them, if needed in order to pursue the sectoral regulatory goals, as lastly identified IN 2018 by the European Code for Electronic Communications (promotion of competition; pursuit of the EU Internal Market; protecting end users’ rights, promoting access and take up of very high capacity connectivity).

In general terms, since 2015, AGCOM conducts a regulatory fitness check in line with the relevant EU guidelines (European Regulatory Fitness and Performance programme) which covers the entire scope of its remit (electronic communications, audio-visual media and postal services). This ex post evaluation is carried out on a yearly basis on a monitoring system made of a set of predefined qualitative and quantitative indicators and periodically supervised by the competent bodies. This system is designed to allow periodic reviews with the purpose of gradually improving the quality of both the existing regulation and the case of new regulatory intervention, since it provides updated and relevant data sets useful for the ex-ante analysis and ex-post evaluation of the decision-making process. The results of the ex post evaluation are presented in the AGCOM Annual Report to the Parliament.

United Kingdom’s ORR

While an ex post assessment is not mandated for independent regulators, it is nevertheless considered best practice for regulators to follow an equivalent policy. In practice, ORR does conduct ex post assessments. The UK Treasury’s ‘Magenta Book’ provides consistent guidance and methodology for ex post impact assessment (which can be resource intensive).

Source: Information provided by AGCOM, CRE and ORR, October 2014.

Enforcement and inspections

Departments that conduct inspections and enforcement are among those hit hardest by staffing restrictions, which threatens a core function of the agency. As discussed in Human resources, the lack of public exams for ANEEL civil servants has resulted in a staffing deficit that affects certain departments most, notably the inspections departments. To keep pace with a large portfolio with a small staff, these departments have some tools at their disposal, including remote inspections and delegation to state regulators.

ANEEL’s inspections and enforcement efforts use a risk management approach, but this approach is not always standardised between departments and understood by the public. Three different ANEEL departments conduct enforcement activities, respectively focusing on economic and financial supervision, electricity services inspection, and generation services inspection. ANEEL monitors sector actors and selects agents for formal inspection and surveillance if it identifies a risk of non-compliance with any legal, regulatory or contractual obligation or quality standards in providing the service. Enforcement practices differentiate responses based on the type of regulated entities, by the size of the agent, by its history, type of grant and phase of the enterprise (in implementation or operation). While the three departments base their inspections and enforcement actions on risk, they do not share a common risk assessment process. Furthermore, recent critiques of ANEEL’s remote inspections after a security-of-supply incident suggest limited public understanding of ANEEL’s risk-based approach to inspections.

Limited database integration between inspections departments creates a risk of fragmentation in information, and ANEEL is still working towards a single procedure to share information within the organisation. ANEEL collects information directly from regulated entities and through web services and applications, and there is not yet an integrated central database consolidating this information. ANEEL has taken the first steps towards integrating the databases in an attempt to reduce duplicate information and inefficient data usage. To improve the digital infrastructure for data on generation agents, it also participates in the Energy and Mineral Sectors Strengthening project (Projeto de Assistência Técnica dos Setores de Energia e Mineral – META), a project funded by the World Bank under the responsibility of the MME.

Organising enforcement according to a compliance pyramid allows ANEEL to differentiate its enforcement within an appropriate framework for discretion. ANEEL takes enforcement actions that are proportional to the severity of the infringement. A compliance pyramid, divided into four levels in order of severity, guides ANEEL’s enforcement actions. ANEEL differentiates its response based on the type of regulated entities, the size of the agent, its history, type of grant and phase of the enterprise (in implementation or operation). ANEEL imposes a monitoring alert for most minor instances of noncompliance and a results plan is for more severe cases (discussed below). For the most severe cases and repeated non-compliance, ANEEL can impose sanctions.

ANEEL’s imposition of sanctions is in line with the principle of proportionality, and a clear procedure established in law makes the determination process transparent. The magnitude of the sanction ANEEL imposes is proportional to the severity of the infraction. ANEEL is empowered to impose a range of sanctions, from a warning to a fine, embargo of works, temporary suspension of participation in bids to obtain new concessions, permits or authorisations, revocation of authorisation, and an expiry of the concession or permit. The value of a fine is bound by an upper limit of 2% of the company’s revenues over the past year. To promote proportionality, the calculation of the fine takes into account the company’s income, the severity of the sanction, the extent of the infraction, the damage caused, economic advantages obtained and the existence of previous sanctions. These clearly-defined procedures and restrictions allow ANEEL to escalate sanctions, which lends to the credibility (and potential for deterrence) of the enforcement programme.

ANEEL has taken actions to make its enforcement and inspections regime more effective and efficient. A recent ANEEL normative resolution allows for greater compliance promotion and responsive enforcement, for example by allowing companies with deteriorating service provision or financial or economic position to enter into a results plan with ANEEL that defines which actions the company will take to address the situation, the deadlines for results and monitoring criteria. Departments do not always use the results plan tool in the same way; while SFE uses the tool more systematically, SFG uses results plans to advance specific campaigns. In recent years, ANEEL implemented the Responsive Surveillance Project, which uses new tools such as analytical intelligence and evidence-based enforcement techniques to make enforcement more responsive.

Recommendations:

• Relieve pressure on inspections teams, which are especially hard-hit by staffing shortages. ANEEL can consider lightening the workload of the inspections teams using remote inspections that supplement on-site inspections in lower-risk cases and expanding efforts to involve and delegate to state regulators. In addition, strengthening indicators used in the initial diagnosis of risk could help ANEEL make its enforcement programmes more efficient and effective.

• Ensure that risk-based responsive enforcement is standardised across and within the departments that conduct enforcement activities. Harmonising risk assessment processes and increasing database integration between different departments and teams can increase consistency in ANEEL’s risk analysis and enforcement activities. Knowledge sharing between departments could increase the consistency of enforcement approaches.

• Review the performance of inspection and enforcement programmes regularly. Consider tracking key indicators like stakeholder satisfaction, historical compliance and efficiency (in terms of ANEEL expenditure and burden to the regulated entities). While ANEEL tracks the compliance of regulated entities in the distribution and transmission sectors, performance indicators could go further to capture a holistic vision of inspection and enforcement performance.

• Communicate ANEEL’s risk-based approach to inspections and enforcement to increase stakeholder understanding of its actions. ANEEL could provide information on its approach to inspections and enforcement through a dedicated page on its website, using language that is non-legal and easy to understand for all stakeholders.

• Integrate existing databases to increase information and data sharing between different departments.

Box 9. Improving Regulatory Oversight Consistency and Outcomes: The Canada Energy Regulator’s Focus on Internal Process

The Canada Energy Regulator (CER) conducts compliance and enforcement oversight activities on the facilities it regulates. Deciding which companies to focus oversight attention on is guided by a risk model, and conducting oversight to ensure desired outcomes are achieved is guided by internal processes.

Improving consistency in oversight has been a key driver, leading to the establishment of a business unit and teams with a specific focus on process management. Building on existing CER process management practices, we have enhanced the foundational structure underlying Operations processes, including the development of process maps, simplified instructions and guidance, clear accountabilities, and mechanisms for sustainable ongoing oversight.

This enhanced rigour has created a clearer hierarchy of where processes fit within core responsibilities and programs, and clearer connections between processes, leading to the reduction of duplication of effort and improved management of change. The CER needs to be responsive to the evolving expectations generally and to our specific commitment in bringing Indigenous perspectives and participation into our oversight. This improvement in our oversight effectiveness has required the CER to adapt internal processes to manage change effectively. By creating focused process measures for each process, we are improving the consistency of outcomes and repeatability of processes

Source: Information provided by CER, 2020.

Appeals and complaints

A high incidence of appeals mobilises significant resources from ANEEL. Decisions of the regulator can be appealed before the board, and the board sees a high volume of appeals. One researcher finds that 41.5% of decisions made by the board in 2016 were appeals (far outnumbering decisions on other topics, such as rule-making). The high volume of appeals reduces the timeliness of resolution. There is not a body that accepts second-instance appeals, and the only remaining opportunity for appeal is the judiciary.

The appeals process, in combination with the introduction of highly-contested rules in the past decade, may contribute to the judicialisation of the sector. Around half of appeals do result in changes. However, for the great number of appeals that are denied, petitioners are left with only one remaining opportunity to revisit the decision. Without a second instance administrative appeal body apart from the board, the only remaining appeal opportunity for denied petitions is the judiciary. While the courts tend to show deference to technical aspects of ANEEL decisions, appeals to the courts are common. Indeed, ANEEL has experienced a high volume of legal procedures in recent years (with 451 legal procedures initiated in 2019 alone). While identifying an “optimal” number of appeals is difficult, ANEEL has set a strategic objective to limit the number of legal procedures to 170 in 2019. The volume of legal procedures remains well above ANEEL’s goal and calls into question the desirability of defining a quantitative goal regarding legal procedures. The causes of the judicialisation of the sector are manifold and complex. Notably, companies may appeal to the judiciary when they take issue with the regulatory framework itself. Some blame may also lie with the administrative appeal process: facing long processing times for administrative appeals and an unfavourable possibility for changes, companies may opt to appeal to the judiciary.

In most cases, ANEEL leaves it up to the consumer to resolve complaints directly with the company and provides conflict resolution mechanisms for unresolved complaints, but awareness of this role may require investment. The first line of defence for a consumer with a complaint is a direct complaint to the company. ANEEL facilitates direct exchange between consumers with complaints and companies. Consumers can submit a complaint through ANEEL’s webpage that is integrated with a federal government platform. Alternatively, consumers can liaise with the ombudsman of their distribution company, which must maintain access channels for consumers. ANEEL does not mediate at this stage, but collects information on service quality and trends. If the company and consumer are unable to resolve the problem directly, the consumer can register the complaint directly to ANEEL. ANEEL may provide mediation for conflict resolution between consumers and companies in cases where existing regulation does not clearly provide the answer. The volume of mediation of this type is very low. ANEEL can serve as an arbitrator, providing first instance decisions in administrative processes about consumer relationships and certain frustrated negotiations between market players. In light of low general awareness of ANEEL’s role (see Mandate, functions and powers), awareness of opportunities for complaint among the general public may be an area for further investigation.

Recommendations:

• Reassess the workflow for appeals to enhance efficiency, within legal parameters. Steps could involve:

  • Starting a dialogue with stakeholders to understand the common motivations and considerations behind appeals and explore alternative approaches;

  • Considering measures to improve trust and build less adversarial relationships between regulated entities, such as implementing principles of ethical business regulation.

  • Based on these assessments and dialogues, reconsider the use of a quantitative target to reduce appeals, focusing on the quality and outcome of processes instead.

• Seek to understand stakeholder experiences in appeals and complaints processes to identify strategies to improve the efficiency and effectiveness of these processes. For example, ANEEL could track progress in improving the timeliness of appeals by adding this metric to the strategic map. In addition, ANEEL could analyse the consumer experience of complaints process to understand whether consumers are aware of (and can take advantage of) opportunities for complaints.

• Conduct an audit of ANEEL’s website to ensure that internet users that are not aware of ANEEL’s offerings are still able to find and use ANEEL services. A Search Engine Optimisation audit can help the agency understand how to drive internet users using certain keywords (for example, those searching for “electricity complaint”) to the relevant pages on ANEEL’s website. An audit of the user experience of ANEEL’s website can help the regulator understand if the website is intuitive and easily navigable for all visitors (including, for example, those accessing the site on a mobile device, or those who are visually impaired), helping visitors find appropriate information in the easiest way possible.

Transparency and accountability

ANEEL’s decision-making processes show a strong emphasis on transparency. ANEEL makes its decision-making processes accessible to a broader public using several strategies. Before, during and after board meetings, ANEEL provides access to consumers to encourage transparency. At least five days before a board meeting, ANEEL releases the board meeting agenda to the public. The meetings themselves are open to the public and live-streamed online. After the meeting, ANEEL publishes a summary record of the board’s actions. ANEEL publishes decisions and supporting documents in the Official Gazette and ANEEL’s website.

Requirements on the federal level also support transparency. The federal government maintains a Transparency Portal providing information on the execution of public programmes and policies. ANEEL must implement a Charter of Citizens’ Services and an annual communication plan to inform the public about its opportunities for engagement and rights of consumers.

ANEEL has a high volume of information requests, and many requestors have long waits for responses. Brazil’s Law of Access to Information dictates rules for disclosing information. ANEEL has the third-highest number of requests for information among the 300 institutions covered by the law. While the median time ANEEL takes to respond to requests is between 6-7 days, the large volume of requests causes many requestors wait longer than the time limits established in the law to receive a response (more information on this study in Chapter 2).

Parliamentary oversight of ANEEL occurs with the help of the Federal Court of Accounts (TCU), and there has been tension between TCU’s oversight and ANEEL’s technical discretion. TCU has broad oversight over ANEEL, conducting routine inspections and overseeing concession auctions and contracts. TCU considers it can also review and challenge ANEEL determinations, making judgements on the results, the economy, efficiency and effectiveness of its activities. In some cases, ANEEL has pushed back on TCU decisions that it perceives as infringing on ANEEL’s technical discretion.

Recommendations:

• Build on ongoing efforts to further improve the transparency and accessibility of ANEEL’s processes. Using the experience of plain language materials produced to accompany RIA, implement such initiatives to accompany guides to explain key areas of ANEEL’s decision-making processes and regulatory decisions for non-expert stakeholders.

• Streamline processes to respond to information requests. Identify common requests and consider publishing this information proactively or making already-published material more accessible alongside efforts to implement ANEEL’s open data plan.

• Strengthen the level of interaction between ANEEL and TCU at a strategic level to increase mutual understanding of ANEEL’s role and competences.

Box 10. The discretion of courts when ruling on BNetzA decisions

While every regulated entity has the right to challenge the decision of the regulator before court, it needs to be well understood that the court is not the “better regulator” as no court will ever have the expertise of the regulator. Thus it is important to know how far the court is in a position to judge on the regulatory choices made by the regulator when exercising its discretion. In a recent decision of the Federal High Court of Justice of 26th January 2021 (Case No EnVR 7/20) regarding a BNetzA decision related to the incentive regulation for gas networks, the Federal High Court of Justice decided that BNetzA has a (small) margin of discretion uncontrollable by the Court regarding the choice of the methodology and the calculation of the general productivity factor for gas networks. This is only the case if certain strict requirements are met, namely there are several proven and state-of-the art methodologies available, there is an element of prognosis included in the decision, and the legal term leaves room for interpretation. If these criteria are met, the Court concluded that it can assess the criteria used to choose a certain method, but leaves the ultimate decision to the regulator as it is the regulator’s judgment on which methodology etc. is ultimately the most suitable to reach the objectives of the regulation.

Source: Information from BNetzA, 2021.

Output and outcome

Data collection

ANEEL supports its supervisory and regulatory activities by collecting a wide range of information, and put in place effort to improve data quality. ANEEL collects information on service quality, operational targets, dam safety and generation performance, amongst others. In its data collection effort, ANEEL created an accounting manual for the sector, together with stakeholders, consultants and associations of accountants, to improve data quality. Reporting of the information by companies includes monthly balance sheets, quarterly and annual reports and an annual social and environmental responsibility report.

However, issues with data quality sometimes complicate efficient data usage and integration. Despite ANEEL’s efforts to increase data quality through its data manual, data quality remains an issue. As ANEEL collects most of its information from external sources, the data originates from parties using different definitions. In other cases, data can be either incomplete or outdated, or there are inconsistencies between the data received by the different ANEEL departments. These issues complicate an efficient use of data in its supervision and regulation of companies in the electricity sector, as it reduces data comparability and reliability.

Monitoring and reporting on the performance of the sector

ANEEL has implemented measures to improve the dissemination of data and information to the wider public. To inform the public on the performance of distribution companies in customer service and handling of complaints, ANEEL awards Ombudsman Awards to well-performing companies (see Stakeholder engagement). ANEEL also publishes a significant amount of raw data on the performance of the regulated sector, such as monthly balance sheets, quarterly and annual reports and network reliability indicators. ANEEL does not publish all data, as some data is confidential and other data is only shared upon request. Through the publication of data, ANEEL also aims to enable ‘social auditing’ of data, by receiving input from society on potential inconsistencies or incorrect data. To improve data sharing and quality and support decision-making, ANEEL set up an open data plan (Plano de Dados Abertos 2020‑21).

ANEEL monitors sector outcomes against strategic indicators, which gives insights into some important elements of sector performance. ANEEL reports on two strategic objectives related to sector outcomes on an annual basis through its annual report (see Table 2.10). In doing so, it compares elements such as the bond default rate, an index on economic and financial sustainability, consumer satisfaction and network reliability. While the indicators do not directly measure ANEEL’s impact on sector outcomes, as they are influenced by other external factors, they provide insights into the overall performance of the Brazilian electricity sector.

Monitoring and reporting on the performance of ANEEL

ANEEL’s practice to define a target for each strategic indicator is a good practice to incentivise improvement, although some targets related to processes seem unrealistic. ANEEL includes nine strategic objectives related to its processes in its strategic planning (see Table 2.10 for ANEEL’s strategic objectives and indicators). For most indicators, ANEEL reports an improvement in the score over time. However, some targets may need to be revised to make them more realistic. For example, ANEEL aims to perform an RIA in 100% of the cases, to have 100% of its decision on time and to have a 100% success rating in legal cases. In practice, ANEEL did not achieve these targets. Furthermore, it set a target of 170 new legal procedures in 2019, while realisations were 451 cases. The gap between target and realisation for these specific indicators may indicate that ANEEL could adjust these targets to make them more realistic.

Recommendations:

• Draw on a more focused strategic framework to increase the focus in the strategic indicators, to enable easier tracking of the regulator’s performance. This would involve:

  • Prioritising key strategic objectives;

  • Selecting a smaller number of indicators for ANEEL to report on;

  • Providing guidance to the public on the interpretation of the different indicators.

• Assess whether all the targets for the strategic indicators are realistic, to improve the incentives that arise from them and review those that do not fall into this scope. ANEEL could use historical analysis to assess the appropriate level of the targets to make sure they are achievable.

• Increase the public availability of data through initiatives such as the open data plan, to ensure accountability of the performance of the sector and ANEEL. To match expectations and define needs, ANEEL should consult the data sharing processes with stakeholders through meetings and requests for input or opinions.

• Analyse ambiguities in data definitions that complicate data usage, collectively with the industry actors that regularly provide data to ANEEL, and update the accounting manual with more detailed definitions.

Box 11. Open Data at the Swedish Energy Markets Inspectorate

Open data at the Swedish Energy Market Inspectorate (Ei) are information available for anyone to use, re-use, and share, so others can develop it and create benefits for more people. The information is made available without restriction in the form of copyright, patents or confidentiality, by being free of personal data and otherwise secret information.

Ei works actively with open data in accordance with directives and recommendations from the EU and the government. The re-use of government information is regulated by the PSI Act (PSI stands for Public Sector Information, i.e. public information). The law is based on the EU PSI Directive (PSI Directive).

Ei's data sources are catalogued according to international standards in a directory service that, in addition to the reference/access point/API to the data itself, contains metadata description of the data sources according to the DCAT-AP standard. The catalogue is “harvested”, i.e. loaded and published on the national catalogue of open data (http://www.dataportal.se) and the EU open data catalogue (http://www.europeandataportal.eu).

The data catalogue lists all of Ei's open data and Ei's statistics portal contains the datasets published as statistics. Ei is continuously working to make more data available and will increase the range in the data catalogue. Currently the data catalogue includes open data on for example outage indicators, network tariffs and prices, customers per type of subscription, companies’ income statements and balance sheets, and technical data related to the electricity network (https://www.ei.se/om-webbplatsen/psi/).

Ei actively encourages the re-use and processing of its data and hopes that Ei's open data can be used as part of everything from research to new digital services. In this way, Ei can contribute to increased social benefit for all.

Source: Information provided by the Swedish Energy Markets Inspectorate, 2021.

References

[6] ANEEL (2018), A Missão, a Visão e os Valores da ANEEL, https://www.aneel.gov.br/missao-e-visao.

[7] ANEEL (2017), Portaria n° 4.823, de 28 de Novembro de 2017, http://www2.aneel.gov.br/cedoc/prt20174823.pdf.

[1] BnetzA (2020), Shaping the future for Germany’s key infrastructure, https://www.bundesnetzagentur.de/SharedDocs/Downloads/EN/BNetzA/PressSection/ReportsPublications/2020/ImageB.html (accessed on 22 March 2021).

[2] CTA (2020), Annual Report 2019-2020, https://www.otc-cta.gc.ca/eng/publication/annual-report-2019-2020 (accessed on 18 March 2021).

[3] CTA (2020), Departmental Plan 2020-2021, https://otc-cta.gc.ca/sites/default/files/departmental_plan_2020_2021.pdf.

[5] ICER (2015), Energy Connections: Engaging the consumer in building stronger systems, http://icer-regulators.net/wp-content/uploads/download-manager-files/i15-vwg3-report%20on%20consumer%20issues_for%20print.pdf.

[4] ICER (2009), Institutional Documents, http://icer-regulators.net/institutional-documents/ (accessed on 30 July 2020).

Notes

← 1.  For specifically the electricity sector, hydro, solar, wind and biofuels account for 82% of total electricity generation in 2018.

← 2.  The Real Plan (Plano real) restructured the economic landscape in Brazil in the early 1990s, after a long period of state intervention. The plan created a more favourable environment for economic openness, regulatory and institutional reform and stable inflation. The creation of the new independent regulatory agencies was inspired by international experience, especially the North American institutional model of independent regulatory agencies.

← 3.  The data on the population and the population share with access to electricity are figures for the year 2018 by the OECD and the IEA.

← 4.  Law 12.783/2013 introduced a fee remuneration regime set by ANEEL for hydro generation concessionaires with extended concessions, including an allocation of quotas of physical guarantee and quality standards.

← 5.  While consumers used to be eligible for the free market in case they had a load above 3 000 kW, this threshold decreased 2 500 kW as of 1 July 2019 and 2 000 as of 1 January 2020. Following a ministerial ordinance, this threshold will decrease further in the future to 1 500 kW as of 1 January 2021, 1 000 kW as of 1 January 2022 and 500 kW as of 1 January 2023.

← 6.  For example, pilot projects to test new technologies can support technological innovation in the sector, but potentially at the cost of cost efficiency in the short-run. This could pose a trade-off between strategic objectives 1 and 4.

← 7.  The CMSE consists of representatives of the MME, ANEEL, the Electric Power Trading Chamber (Câmara de Commercialização de Energia Elétrica – CCEE), the Energy Research Office (Empresa de Pesquisa Energética – EPE), the National Electric System Operator (Operador Nacional do Sistema Elétrico – ONS and the National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – ANP).

← 8.  The review is pending at the time of writing in March 2021.

← 9.  While the Federal Attorney’s Office is presented in these figures, employees in the Federal Attorney’s Office can be distinguished from other ANEEL employees. If employees from the Federal Attorney’s Office are excluded from staff counts, the proportion of staff devoted to administrative and management advisory remains similar at 38%.

← 10.  Including ANEEL, ANATEL, ANP, ANTT, ANTAQ and ANAC.

← 11.  ANEEL’s directors held 51 public meetings to consider more than 1 500 deliberations in 2019.