Foreword

Economic regulators are key actors, ensuring the affordability, quality and accessibility of essential services. The stakes are high: regulators’ actions affect market outcomes and can have strong social and environmental implications. Fast-changing markets and exogenous shocks make balancing these outcomes even more challenging today. They are expected to provide stability to markets that are constantly changing, and to design regulations that protect public interests without impeding innovation. Remaining effective in a dynamic context requires mature regulators that are agile and forward-looking, comfortable in the use of their regulatory discretion to advance long-term policy objectives. It also requires more proactive dialogue and co-ordination to enhance role clarity and independence.

Good governance is an essential ingredient to ensure the effectiveness of the regulator and support better outcomes, even in the face of rapid or unexpected change. Economic regulators often operate with a certain degree of independence, which can signal a commitment to long-term goals and enhances the integrity of regulatory processes. At the same time, measures to maintain accountability and promote transparency provide external scrutiny of the regulator’s actions.

This report applies the OECD Performance Assessment Framework for Economic Regulators (PAFER) to Brazil’s Electricity Regulatory Agency (Agência Nacional de Energia Elétrica – ANEEL), upon invitation of the regulator. The OECD has developed the PAFER framework to support regulators as they face the significant challenges posed by changing sectors and short-term shocks, to assess and strengthen their organisational performance and governance structures. The framework, based on the OECD Best Practice Principles on the Governance of Regulators, analyses regulators’ internal and external governance, including their organisational structures, behaviour, accountability, processes, reporting and performance management, as well as role clarity, relationships, distribution of powers and responsibilities with other government and non-government stakeholders.

The review finds that ANEEL is a technically capable regulator, respected by stakeholders and actively enhancing the transparency of its processes. It has been a national leader in implementing Regulatory Impact Analysis (RIA) and shows an ambition to excel. It can build on these strong foundations to increase its positive impact. To do so, it should foster a culture of independence, implement more agile regulatory frameworks and use its maturity as a regulator to steer outcomes towards an overarching strategic agenda.

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 and the OECD Regulatory Policy Committee, 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 OECD Network of Economic Regulators for comments and approval at its 16th meeting in April 2021 and declassified by written procedure by the Regulatory Policy Committee on 8 June 2021. It was prepared for publication by the Secretariat.