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Regulatory agencies are key actors in the delivery of good regulatory outcomes. Their role brings together several powers: rule-making, market monitoring, enforcement and sanctioning. Regulators are at the delivery end of the policy cycle and their job is a complex one, as it requires neutral engagement with actors that may well have inherently competing interests (such as government, current and future actors in the markets, and consumers). At the same time, markets are changing at a significant pace, due to new technologies, shifts in consumer needs and preferences, new policy priorities and the profound changes brought by the coronavirus pandemic. These changes are accompanied by high public expectations that independent economic regulators will be transparent and accountable in their decisions and actions.
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The Energy Services Regulatory Authority (Entidade Reguladora dos Serviços Energéticos, ERSE) is Portugal’s independent economic regulator for the energy sector. The regulator was established in 1997, concurrently with the liberalisation of the Portuguese electricity market. Throughout its existence, ERSE has provided stability and predictability to the sector. By virtue of technical expertise and capacity, it is currently highly regarded by stakeholders.
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This performance assessment review looks at the external and internal governance arrangements of Portugal’s Energy Services Regulatory Authority (Entidade Reguladora dos Serviços Energéticos, ERSE) and presents policy recommendations that aim to improve the performance of the regulator. The document builds on the work of a virtual peer policy mission that took place from 15 to 19 June 2020. Three peer reviewers participated in the mission: Darryl Biggar, Special Economic Adviser, Australian Competition and Consumer Commission (ACCC), Australia; Laura Brien, Director of Water and Compliance, Commission for Regulation of Utilities (CRU), Ireland; and Emma Närvä, Deputy Director for International Affairs and Senior Policy Adviser, Swedish Post and Telecom Authority (PTS), Sweden. It was presented for discussion by the OECD Network of Economic Regulators (NER) at its meeting on 17 November 2020.
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The Performance Assessment Framework for Economic Regulators(PAFER) was developed by the OECD to help regulators assess their ownperformance. The PAFER structures the drivers of performance along aninput-process-output-outcome framework. This chapter applies theframework to the governance of Portugal’s Energy Services Regulatory Authority (ERSE) and reviews the existing features, the opportunities and challenges faced by ERSE.
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Measuring regulatory performance is challenging, starting with defining what to measure, dealing with confounding factors, attributing outcomes to interventions and coping with the lack of data and information. This chapter describes the methodology developed by the OECD to help regulators address these challenges through a Performance Assessment Framework for Economic Regulators (PAFER), which informs this review. The chapter first presents some of the work conducted by the OECD on measuring regulatory performance. It then describes the key features of the PAFER and presents a typology of performance indicators to measure input, process, output and outcome. It finally provides an overview of the approach and practical steps undertaken for developing this review.