Economic regulators play a crucial role across sectors, driving the efficient delivery of essential services for the benefit of society. They balance often competing interests to find the optimal outcome. Regulators can ensure that decisions are made with evidence and integrity, promoting the predictability and stability that sectors need to develop. They work to improve the accessibility, affordability and quality of services for users.
Recent crises and transitions, such as those linked to the COVID-19 pandemic, the rising cost of living, and the green and digital transitions, have made the work of regulators both more challenging and more prominent in public debate. This context has arguably increased the value of the work of economic regulators and the importance of their governance, to keep sectors on track towards long-term objectives.
The OECD has developed the Performance Assessment Framework for Economic Regulators (PAFER) to support regulators in assessing their organisational performance and governance structures, based on the OECD Best Practice Principles on the Governance of Regulators. The framework analyses regulators’ internal and external governance, including their role and objectives, human and financial resources, processes, and outputs and outcomes.
In 2016, the OECD carried out a PAFER review of Latvia’s Public Utilities Commission (PUC) that resulted in the report Driving Performance at Latvia's Public Utilities Commission. Since then, the PUC has invited the OECD twice to assess its progress against the review’s recommendations. The progress review fulfils a legal requirement introduced in 2017 for the PUC to undergo an independent review of its activities every three years. A first progress review of the PUC was published in 2021. This second progress review focuses on the period from 2020 to 2023.
The review finds that the PUC has made good progress in several areas to improve its governance and performance. It did so while navigating significant changes in context and new challenges, which may warrant a broader governance review in the future to identify emerging areas of attention. Advancements include the introduction of key performance indicators to measure performance against strategic objectives, a fully operational Advisory Council and the use of interactive data-driven reports and tools to improve communication. At the same time, several areas of opportunity still exist. To continue its progress, the PUC should define targets for its performance, advocate for clear criteria and procedures to review the regulatory fee that funds the regulator, and use tailored and proactive communication to increase awareness and understanding on the role of the PUC and its regulatory decisions.
This report is part of the OECD work programme on the governance of regulators and regulatory policy, led by the OECD Network of Economic Regulators (NER) and the OECD Regulatory Policy Committee (RPC), with the support of the Regulatory Policy Division of the OECD Directorate of Public Governance. The Directorate’s mission is to help government at all levels design and implement strategic, evidence-based and innovative policies that support sustainable economic and social development. The report was presented to the NER for comments at its 22nd meeting in April 2024. It was approved by the Regulatory Policy Committee on 12 July 2024 and prepared for publication by the Secretariat.