Economic regulators exist to support the efficient delivery of essential services such as energy, e-communications, water and transport to society. Often set up as independent bodies to signal a commitment to long-term policy goals, they occupy a unique position between consumers, operators and government. This is why their governance matters, including their resources. Resourcing arrangements can make or break their effectiveness and are crucial to the overall success of regulatory frameworks to improve sector outcomes.
Appropriate staffing and funding arrangements can empower a regulator to act autonomously and to respond with agility to dynamic markets and new roles. Transparent and accountable mechanisms to fund and staff regulators can bolster their effectiveness and enhance trust in regulatory institutions and systems. Moreover, the capacity and ability of regulators to execute their functions effectively depends on a well-qualified, inclusive workforce and sufficient funding.
A regulator relies on the expertise and skills of its staff to provide evidence-based analyses as a basis for regulatory decisions. This requires regulators to be able to recruit enough staff with the right qualifications, but in practice regulators sometimes face constraints to do so. For example, 6 out of 26 energy regulators in OECD countries (23%) are required to obtain approval from an external body (e.g. a line ministry) prior to the recruitment of staff (Figure 5.11). This figure is 5 out of 16 (31%) for e-communications regulators; 4 out of 17 (24%) for transport regulators; and 2 out of 13 (15%) for water regulators (Figure 5.11). Such a requirement does not necessarily reduce the regulator’s capacity and could ensure a match between the regulator’s staff count and its financial resources. However, without appropriate safeguards, it could provide an opening for undue influence in the regulator’s operations if hiring is restricted below the level of staff that is required.
Economic regulators also rely on adequate funding to carry out their mandates. Budget decisions should be transparent to support accountability and trust. In practice, for 19 out of 25 energy regulators in OECD countries (76%), budget decisions are explained by the body responsible for budget allocation (Table 5.12). The figure is 12 out of 15 (80%) for e-communications regulators; 14 out of 17 (82%) for transport regulators; and 8 out of 12 (67%) for water regulators. In most cases, this explanation is given through a public document, supporting the accountability of the budget appropriation process (Table 5.12).
