Enforcement Reforms at ANEEL: The implementation of OECD’s Best Practice Principles for Regulatory Enforcement and Inspections
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The document outlines enforcement reforms at ANEEL aimed at implementing OECD’s best practice principles for regulatory enforcement, transitioning from a traditional command-and-control mindset to a more risk-focused and evidence-based approach. It highlights the challenges faced in regulatory enforcement, including increased complexity and societal expectations, and emphasizes the importance of transparency, selectivity, and compliance promotion. Key results include improved reporting obligations and fault identification in transmission lines, while future steps involve enhancing stakeholder engagement and integrating information management practices.
Enforcement Reforms at ANEEL: The implementation of OECD’s Best Practice Principles for Regulatory Enforcement and Inspections
- 1. Enforcement Reforms at ANEEL The implementation of OECD’s Best Practice Principles for Regulatory Enforcement and Inspections. ISSAO HIRATA Regulatory Specialist 2017, 9th November – Paris, France
- 2. The Challenge 174 auditors / inspectors 93 (ANEEL) + 82 (state level) More than 80 million consumer units 101 distribution companies 130000 km of Transmission lines 235 Companies 154 GW of installed Capacity More than 5000 Power plants
- 3. Previous Enforcement Model Traditional Command and Control Mindset: Lack of Risk Focus or Evidence-Based Analysis Inspect everything – attempt to inspect each and every company Enforce of every rule – attempt to cover every topic subject to regulation Punish “too many times” – Sanctions as the “go-to” instrument to enforce regulation Accountability based on internal indicators: Number of Inspections, Number of Sanctions
- 4. Ok, we need to change... Regulation is getting more complex. More and more agents are joining the market. Society expectations are increasing. Excessive burdens on the regulator and on regulated companies Lack of satisfactory results General dissatisfaction EFFECTIVE ENFORCEMENT: Still a challenge in many countries
- 5. ... but how?
- 6. Applying the Principles ALREADY APPLIED 7 Transparent governance 9 Clear and fair process FOCUSED ON THE REFORM 1 Evidence-based enforcement 2 Selectivity 3 Risk-focus and proportionality 4 Responsive Regulation 10 Compliance Promotion NEXT STEPS 5 Long-term vision 6 Co-ordination and consolidation 8 Information integration 11 Professionalism PAST PRESENT FUTURE
- 7. Enforcement Model DETECTPROMOTE / PREVENT ACT Risk Focus, responsive regulation Evidence-based, responsive regulation, clear and fair processSelectivity, compliance promotion Publicity Alerts Improvement Plans Evidence-based, risk focus, responsive regulation Investigation (qualitative) Warning Fines Suspension Intervention Monitoring (analytical intelligence) Evidence-based, risk focus, responsive regulation, information integration*
- 8. Example: Analytical Intelligence VOLTAR Consumers’ complains Quality and safety indicators Consumers’ attendance indicators Initialforecast updates Error in forecasting delivery of new transmission lines
- 9. Enforcement Model DETECTPROMOTE / PREVENT ACT Risk Focus, responsive regulation Evidence-based, responsive regulation, clear and fair processSelectivity, compliance promotion Publicity Alerts Improvement Plans Evidence-based, risk focus, responsive regulation Investigation (qualitative) Warning Fines Suspension Intervention Monitoring (analytical intelligence) Evidence-based, risk focus, responsive regulation, information integration*
- 10. Enforcement Model DETECTPROMOTE / PREVENT ACT Risk Focus, responsive regulation Evidence-based, responsive regulation, clear and fair processSelectivity, compliance promotion Publicity Alerts Improvement Plans Evidence-based, risk focus, responsive regulation Investigation (qualitative) Warning Fines Suspension Intervention Monitoring (analytical intelligence) Evidence-based, risk focus, responsive regulation, information integration*
- 11. Example: Publicity and Alerts VOLTAR www.aneel.gov.br
- 12. Enforcement Model DETECTPROMOTE / PREVENT ACT Risk Focus, responsive regulation Evidence-based, responsive regulation, clear and fair processSelectivity, compliance promotion Publicity Alerts Improvement Plans Evidence-based, risk focus, responsive regulation Investigation (qualitative) Warning Fines Suspension Intervention Monitoring (analytical intelligence) Evidence-based, risk focus, responsive regulation, information integration*
- 13. Enforcement Model DETECTPROMOTE / PREVENT ACT Risk Focus, responsive regulation Evidence-based, responsive regulation, clear and fair processSelectivity, compliance promotion Publicity Alerts Improvement Plans Evidence-based, risk focus, responsive regulation Investigation (qualitative) Warning Fines Suspension Intervention Monitoring (analytical intelligence) Evidence-based, risk focus, responsive regulation, information integration*
- 14. Results - 1) Reporting Obligations 71% Success Rate (information on time) August 2016 95% Success Rate (24% increase) August 2017 Delivered on time:71% DELAYED:9% MISSING:20% Delivered on time:95% DELAYED:2% MISSING:3%
- 15. Results - 1) Reporting Obligations 95% Success Rate (24% increase) August 2017 Delivered on time:95% DELAYED:2% MISSING:3% Self-Correction Mechanisms Guidelines on website Alarms and reminders (email) Publicity to the Market. Hotline support. 20% Selectivity and Compliance Promotion Traditional Enforcement Notifications and Fines. 4% Responsive Regulation and Proportionality
- 16. IMPROVEMENT PLANS 41% reduction in two years Results - 2) Identifying faults in transmission lines 29% 22% 17% 2014/15 2015/16 2016/17 % of faults with unknown cause in the transmission system
- 17. 36% improvement in company A (state owned) 54% improvement in company B (privately owned) Results - 3) Quality of Service IMPROVEMENT PLANS 0 10 20 30 40 50 60 State ownedPrivately owned 20162014 Continuity Indicator that correspond to the frequency and duration of outages
- 18. Main Challenges and Lessons Learned FRAGMENTED AND MULTICULTURAL ENFORCEMENT STRUCTURE • Top-down support: Board of directors (Strategic Planning) • Formalize the new model (new regulatory act for the enforcement process) DAY TO DAY TASKS vs. INNOVATION EFFORTS • Innovation teams: isolated and focused DIFFICULTY IN ENGAGING STAKEHOLDERS (STAFF, RULEMAKERS, COMPANIES, GOVERNMENT) • Communication efforts, alignment at all levels, from operational to strategic. • Changing from culture of effort to culture of result CONFLICT BETWEEN LEGALITY/ISONOMY AND RESPONSIVE REGULATION • Make it clear to the market that behavior matters.
- 19. NEXT STEPS INFORMATION INTEGRATION • Design and implementation of Enterprise Information Management practices. • Invest in a new skillset: Data Analytics LONG-TERM VISION • Promote Enforcement “Best-Practices” as part of the policy maker agenda’s. CO-ORDINATION AND CONSOLIDATION • Replicate the strategy at the state level agencies, • Partnerships with other national regulators (water, oil, nuclear, etc.) PROFESSIONALISM • Design dedicated training programs
- 20. NEXT STEPS CLOSURE OF THE REGULATORY GOVERNANCE CYCLE • Improve systematic evaluations of the implemented regulation to enhance the Regulatory Impact Assessment process.
- 21. To provide favorable conditions for the electric power market to develop a balance among the agents and the benefit of society! ANEEL’s MISSION
- 22. w w w. f a c e b o o k . c o m / a n e e l g o v b r w w w. t w i t t e r. c o m / a n e e l _ n o t i c i a s w w w. y o u t u b e . c o m / u s e r / a n e l W W W. A N E E L . G O V. B R ISSA O HIRATA REGUL ATO RY SPECIA L IST ADDRESS: SGAN 603 Módulos I and J - Brasília/DF, Brazil Zip Code: 70830-110 GENERAL PHONE: +55 61 2192 8931 SECTOR OMBUDSMAN:167