What will be covered?
- To introduce the concept of regulation and provide some different definitions of regulation
- To show that there is no “ideal” way to regulate.
- To outline the major bodies involved in the regulation of energy.
- To outline the new issues raised by the need to develop sustainable energy.
This module addresses the underlying basis for regulation with regard to the energy industries, although it will focus mainly on the electricity industry rather than other energy industries such as gas. It outlines the aims, design and degree of regulation to provide a basic introduction to the main issues and to establish a foundation for the following modules.
It is worth highlighting that the module concentrates on the rationale and the role of the economic regulator, which in turn assumes a degree of liberalization in a system. In a non-liberalized or state-owned system, many of the regulator’s functions will be performed by the government.
In most African countries utilities are still state owned, and although many countries have committed themselves to a programme of liberalization and privatization of the electricity sector, only Cameroon, Côte d’Ivoire, Egypt and South Africa, have made significant advances in the liberalization of their electricity sectors.
Similarly, although this paper deals with economic regulation, some of the mechanisms outlined can be employed by environmental regulators to control or limit environmental pollution. While some points may therefore not seem directly relevant, they may have a more general value for different regulators or types of systems.