Experience of multisectoral regulation: succeeded and achievable yet - electronic communications waste management
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Experience of multisectoral regulation:
succeeded and achievable yet
electronic
communications
waste
management
Prof. Edvins Karnitis
Public Utilities railway
Commission post
water
natural
gas district electricity
heating
Policy of the EU related to SGEI:
too soft aiming at unified approach
White Paper on services of general interest; COM(2004)374;
Services of general interest, including social services of general
interest: a new European commitment; COM(2007)725;
sectoral Directives – the first steps only:
electricity and gas;
electronic communications and post;
Treaty of Lisbon amending the Treaty on
European Union and the Treaty establishing the
European Community; Protocol on services of
general interest; 2007;
Multisectoral problems:
too little coordination and consistency in European Commission;
the result – inconsistency on national scale
Treaty of Lisbon amending the Treaty on EU
and the Treaty establishing the European Community
Protocol on services of general interest
The shared values of the Union in respect of
services of general economic interest …
include in particular:
the essential role and the wide discretion of national, regional
and local authorities in providing, commissioning and
organising services of general economic interest as closely as
possible to the needs of the users;
a high level of quality, safety and affordability, equal treatment
and the promotion of universal access and of user rights.
Advantages of the multi-sectoral model:
harmonized regulation
component of the national strategic issues: consistence with economy,
state intervention level, social policy, etc.;
unified essence: provision of services of general economic interest;
partial transition to competition;
service providers – multi-utility companies;
technological convergence of services;
consumers – users of various services;
small country factor: analogous environment on whole territory,
effective resource utilization – strong independent regulatory body;
knowledge management: unified strategy, methodology, principles
and instruments, adoption of methods and experience considering
sectoral peculiarities.
EU countries: looking for efficient regulatory model
historical experience – state regulators in USA;
Luxembourg – mechanical composition of
sectoral regulation;
UK – merging various subsectoral regulators;
Latvia – real multisectoral regulator;
Germany – joining energy and railways
regulation to electronic services regulator;
Estonia – joining all sectoral regulators with competition authority;
Lithuania, Hungary – merge planning;
Spain – united decision making board;
Stochastic changes or advanced trend?
Similar trend vs different level of sectors liberalization
sectoral Hirschmann-Hirfendal Indexes
Electronic communications 2405
– unified 1783
Electronic communications 3861 2006
– fixed 3283 2010p
Electronic communications 4815
– mobile 3802
4962
Post
4443
9828
Electricity
7727
10000
Natural gas
10000
0 2000 4000 6000 8000 10000
Concentrated market
Competitive market Moderately concentrated market Monopoly
Source: PUC
Quality of regulation:
unified microlevel regulatory procedures coupled with
observation of sectoral individualities
Regulations on issuing licenses for provision of services and general
authorisation;
Regulations on information submission by service providers;
Provisions on cooperation and consultation with service providers
and consumers;
Unified methodological principles for determination of tariffs for
services;
Procedure for acquaintance with tariff projects;
Future tasks:
Regulations on dispute solving;
Regulations on documents to submit for tariff approval;
Regulations on administrative costs that are included in tariffs;
Harmonisation problems or intersectoral benefits
unbundling in energetics (generation,
transmission, distribution) – structural separation
(electronic services);
critical infrastructure, transmission and
distribution networks (wires and pipelines) –
frequencies, secondary trading;
market analysis – energy supply, postal services;
universal service – unification of models and
algorithms (electronic communications, postal
services, energy supply);
Coordination problems of multisectoral regulation
are much lower than those with lot of sectoral regulationsUsage of SGEI and payments for them (2009)
100% 100% 100% 100%
100% 6,2% 7,0%
6,1%
Comparative
6,0% average
90%
5,3% 5,3% usage of
82%
5,0% services by
80% household
3,6% 4,0%
71% 71%
70% Payment for
65% used
3,0%
1,9% services, %
60% 2,7% from
2,0%
household
1,8% budget
50% 1,0%
All hou- 1st All hou- 1st All hou- 1st All hou- 1st
seholds quintile seholds quintile seholds quintile seholds quintile Average – 15,1%
Electronic Electricity Natural gas District heating 1st quintile – 17,8%
communications supply supply
Source: CSB LatviaUnified innovative universal service model
US fund
Obligations have to be Electronic services Combined
put on all providers: financing:
equality and solidarity Natural gas
providers > 90%
Service Post budget < 10%
P
provider 1 District heating
Government
Service (budget)
P Electricity
provider 2
Service Unified:
P
provider 3 principles, methodology,
US provider P procedures,
Standard management
US
customers Sector specific:
customer
services, indicators,
Advanced approach to set of services financingUS financing: prognoses 2014
Max rate
Sector Support Monthly Yearly Total of duty
principle (Ls) (Ls) (1000’Ls) (% of
turnover)
El. com. (low income) 1st quint. p.c. 7,30 87,60 7 538 1,56%
El. com. (invalid) Average p.c. 10,30 123,60 1 182 0,24%
Electricity (low income) Average p.c. 7,50 90,00 8 000 1,59%
Nat. gas (low income) Average p.c. 4,35 52,20 2 000 0,61%
Distr. heat. (low income) Average p.c. 10,90 130,80 8 140 2,61%
Post (all population) Per item 0,007 700 1,52%
strongly directed support;
any sectoral service provider (standard of quality!)
have a chance to become the US provider;
individual tendering; Source: PUCCombined structure of the PUC vs fragmented skills
5+5 Board
Electronic Municipal
52 Energetics Communications Services and
Department and Post Railway
Department Department
Economic Analysis Department Regional
25
branches
Legal Department
Dr. Sc. – 7
harmonized decision
Mg. Sc. – 53
Higher ed. – 37
making;
Others – 10 sectoral support;Capacity of the PUC vs
capacity of shareholders
90 bilj. EUR
78,2
80
70
Turnover of shareholders,
2010 or the latest available
60
51,0
50
40
30 GDP Latvia -
20,9
20 18,1
10,4 11,9
8,1 6,3
10 4,5
0
Dalkia E.ON Gaz- Fortum TNT DHL Tele2 Telia-
Ruhrgas prom Sonera
Sources: company reportsQuality of decisions:
court verdicts on PUC’s decisions (2002–2010)
District Court 10 23 10 12
Regional Court 6 11 3 9
Withdraw
Supreme Court 1 10 11 Won
Lost
Under process Complaints
0 5 10 15 20 25 30 35 40 45 50 55
Only one lost process in Latvia’s court
and another one in Stockholm arbitration
Source: PUCIndependence level of the PUC:
relatively high but has to be improved
independence of decision-makers – good;
institutional independence – worse;
supervision problems:
PUC decisions for third parties;
involvement in current activities non-
related to regulation;
normative initiative: long process, approach of the ME;
financial independence (0,17% of utilities’ turnover + chapter in the
national budget) – insufficient; autonomy problems:
budgetary autonomy is not implemented in the budgetary law;
lack of autonomy in spending of the allocated budget;
lack of adequate financial / human resources;
unachievable for sectoral regulator level of real independence;
necessity of higher level – changes in the Satversme (Constitution);Strong balanced regulation:
to keep equal distance from all involved parties
Problems erected by breach of the balance:
municipal regulators – the major
weakness of the Latvia’s Government
regulatory system in the past;
recently eliminated;
composition principles for PUC
electricity basket –high tariffs,
court processes; Utility Consumer
dilatory revaluation of
Latvenergo infrastructure – low
quality of services;
Could politically approved
overdue implementation of decision makers be experts
universal service principles – in regulated sectors?
debt payments for electricity, gas
and district heating; Yes, could be.Multi-sectoral model: functional imperfections
inharmonized political and normative environment;
follow-up problems:
tendency in sectoral ministries: to perform
regulatory functions and to be shareholder of
state-owned service providers;
lack of technological regulatory instruments in
framework of the PUC;
regular infringement proceedings against Latvia
concerning regulatory procedures;
tendency to decrease functionality of the PUC:
planning of spectrum and numbering;
setting of cogeneration tariffs;
reform of railway infrastructure;SGEI in EU and Latvia: consumers’ evaluation (2010)
90 Evaluation
85,3 85,6 88,6
86,8
85 83,4 81,7 82,9
81,1 80,2 80,7
79 77,9
80 77,3 77,1
75,1
73,6 74,4
75 72,6 72,6 72,9 71,4
70,8 69,9
70
65,4
65
60
Postal Water Network Fixed Electricity Mobile Railways Internet
services supply gas telephony telephony service
& couriers provision
EU 27 Latvia The highest in EU
Ranking of Latvia’s services:
Fixed telephony – 2 Internet services – 7
Railways – 4 Post – 10
Network gas – 6 Electricity – 13
Mobile telephony – 6 Water – 25 Source: ECBo
ok
s
Fi , p e
xe ri
d od
t e ic
60
70
80
90
le als
R
Fo ap ho
i 87
Cu od lw any
ltu - b ys 83,4
ra r
l s ead 82,9
Ne er
tw vic 81,3
or e s
k
Po ga 80,6
st s
No al 80,2
n- s
al e rvi
ko c
ho es
lic 79
be
v.
M 78,5
ob
ile Fu
te el
s
le
Al p ho 77,8
ko ny
ho
lic 77,1
be
ve
ra
In ge
te s
rn
et 76,2
se
rv
ic
es
E 74,4
Fo lec
od tric
- m ity
Re W C ea t 72,9
al a t lo t
e ser hin 71,5
ta su g
te p
sep ly 66,9
Services in Latvia: consumers’ evaluation (2010)
rv
. 65,4
Source: EC
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