Independence of the Energy Regulatory Agencies

Energy regulatory agencies have a significant role in the restructuring of the electricity and natural gas markets. The role of the regulator is to direct, regulate and monitor the processes of liberalization and competition improvement. The current report is focused on “Independence of the energy sector regulatory agencies“. The EU defines the role of the energy sector regulator for the first time in 1996 (for the electricity sector) in Directive 96/92/EC, which requires the formation of an independent regulatory agency, separated from the executive power and isolated from its influence. Independent regulatory agencies (IRAs) currently regulate a large number of sectors. They balance interests in telecommunications, energy, financial markets, medicines and food safety, nuclear technologies, antitrust, etc. Researchers point out, that independence of regulatory agencies is a source of institutional power. Two major types of regulatory independence have been defined in previous academic works: de jure (formal) and de facto (informal) independence. There are also three main aspects of independence, defined by authors in this field: independence from elected officials; relations with regulated companies; the decision process.