The Relevance of Governance to Electricity Reform

PRAYAS- PUNE ENERGYGROUP

NATIONAL INSTITUTE OF PUBLIC FINANCE AND

POLICY

Navroz Dubash, NIPFPSmita Nakhooda, WRI

World Bank Energy Week 8 March 2006

Outline

I. Linking Governance and Electricity

II. An Introduction to the Electricity Governance Initiative (EGI)

III. Preliminary Insights IV. Conclusions

Reform: A Rocky Road

• Popular protest

- India, Philippines, Latinobarometro Polls

• Governments slowing and halting reform – South Africa,

Korea, Indonesia

Political Objectives of Economic Reform

• Privatization: Private sector more likely to resist government interference

• Corporatization: Shed political and bureaucratic control

• Public Ownership: Ensure commitment to commercial goals

These measures only partially successful

A Governance Diagnosis

• Financial considerations dominate reform

• Shrinking space for public debate• Inadequate scrutiny of prescriptions• Equity and environment neglected• Lack of democratic legitimacy

Objectives of the Electricity Governance Initiative

• Create space for democratic accountability– legislative, executive, regulatory processes

• Develop a common understanding of electricity governance

• Establish benchmarks of best practice• Build Capacity to practice good

governance– Government– Civil society

What do We Mean by Governance

• How we make decisions shapes what decisions get made

• Consider institutions and processes beyond the electricity sector

• Democratic Decision-Making– More than corporate governance or

incentives– Higher transactions costs, but greater

legitimacy

The EGI Toolkit

• A framework of research questions to generate qualitative indicators of governance

• Legislative, executive, regulatory levels

• Emphasize environmental and social concerns

• Transparency, participation, accountability and capacity (law and practice)

POLICY PROCESSES

I nstitutional/ Procedural-Legislative Committee-Executive-Independence -Reporting -Reform and policy change -Planning Agencies-Donor Agencies-Role of Consultants-Civil Society Capacity-Clarity of policy processes-Availability of supporting documentation - Media Coverage

Substantive I ssues-Asset Evaluation-Privatization -Subsidies-IPPs-Competition

REGULATORY PROCESSES

I nstitutional / Procedural -Authority + Autonomy-Financial + Human Resources-Function/ J urisdiction-Conflict of interest-Appeals-Training-Use of consultants-Procedural clarity-Disclosure-Basis for decisions

Substantive I ssues-Performance Reporting-Tariff Philosophy-Licensing-Consumer service and Quality of Supply

ENVIRONMENTAL+ SOCIAL ASPECTS

I nstitutional / Procedural -Clarity of environmental jurisdiction -Executive, regulatory & legislative mandates -Setting minimum environmental standards-Inclusion of environment in planning and reform- Access to redress on social or environmental grounds -Utility engagement w/ public-NGO capacity to address social + environmental issuesSubstantive I ssues-Labor impacts-Access to electricity -Affordability-Project affected people- Renewables-Environmental & social performance reporting-Greenhouse gas reporting

BASELINE INDICATORS: MAPPING THE ELECTRICITY SECTOR

Insights from the Assessments

INDIA

Center for Policy Research

INDONESIA

Indonesian Institute for

Energy Economics

THAILAND

Health Systems Research Institute

PHILIPPINES

Green Independent

Power Producers

Open and Inclusive Policy Processes

Participation in Electricity Policy Making

India

Indo Thai Phil

Legislative Electricity Committee

Clarity on process for decision-making

Quality of participation and government responsiveness

Inclusion of environmental considerations in reform

Attributes Assessed India Indo Thai Phil

Clarity of Process

Clarity about the decision-maker

Pre-laid out time-frame

Clear format for decisions

Timeframe for public input

Use of public input specified

Anticipation of feedback

Specification of recourse mechanism

Documentation of the process

Ease of Access Breadth of Info.

Information circulated with reasonable lead time

Information online and at least one more form

Efforts to reach disadvantaged communities

Decision-Making Process

Attributes Assessed India Thai Phil

Quality of Participation

Minimum number of stakeholder submissions

x x

Comments from a broad range of stakeholders

x x

GovernmentResponse

Decisions and accompanying documents note participation process

x

Summary of results of participation

Explanation of how public input was incorporated

Participation and Government Response

The Regulatory Process

India (TN)

Indo Thai Phil

Selection of regulatory body members

n/a

Disclosure of Documents

Procedure for Public Access

Reasoned orders and decisions of the regulatory body

Regulatory response to environmental and social petitions

n/a

Effective Regulatory Process

Selection of Regulatory Members

Attributes Assessed India Thai Phil

Independence

Well-defined procedure X x

Transparency

Composition and eligibility criteria x x

Differing tenures x x

Public Access to DocumentsAttributes Assessed India Indo Thai Phil

Well-indexed database of documents

x

Simple procedure to obtain x x

Reasonable cost x x x

Wide dissemination of information

Conclusions

• How decisions get made influences what decisions are made

• Electricity governance is tied to larger political processes and institutions

• Public engagement needs to be an explicit part of institutional design

The Electricity Governance Initiative

http://electricitygovernance.wri.org

Contact: Smita Nakhooda snakhooda@wri.org

Navroz Dubashndubash@nipfp.org.in