34478 W O R L D B A N K W O R K I N G P A P E R N O . 6 6
Consumer Participation in
Infrastructure Regulation
Evidence from the East Asia and Pacific
Region
Elisa Muzzini
THE WORLD BANK
W O R L D B A N K W O R K I N G P A P E R N O . 6 6
Consumer Participation in
Infrastructure Regulation
Evidence from the East Asia and Pacific Region
Elisa Muzzini
THE WORLD BANK
Washington, D.C.
Copyright � 2005
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ISBN-10: 0-8213-6380-8 ISBN-13: 978-0-8213-6380-5
eISBN: 0-8213-6381-6
ISSN: 1726-5878 DOI: 10.1596/978-0-8213-6380-5
Elisa Muzzini is currently with in the Infrastructure Sector Department of the East Asia and
Pacific Region at the World Bank.
Library of Congress Cataloging-in-Publication Data
Muzzini, Elisa, 1975-
Consumer participation in infrastructure regulation: evidence from the East Asia and
Pacific region / Elisa Muzzini.
p. cm.--(World Bank working paper ; no. 66)
Includes bibliographical references.
ISBN 0-8213-6380-8
1. Consumer protection--East Asia. 2. Consumer protection--Pacific Area. 3.
Infrastructure (Economics)--East Asa. 4. Infrastructure (Economics)--Pacific Area. I.
Title. II. Series.
HC460.5.Z9C636 2006
363.6--dc22
2005052342
Contents
Foreword v
Acknowledgments vii
1. Introduction 1
2. Institutional Requirements for Effective Consumer Participation 5
Regulatory Independence 5
Consumer Representation 7
3. Performing Regulatory Functions vis-�-vis Consumers 15
Informing Consumers 16
Disclosing Information 16
Raising Consumer Awareness 16
Resolving Consumer Complaints 18
Soliciting Consumer Input 20
4. Contracting Out Regulatory Functions vis-�-vis Consumers 23
Informing Consumers 23
Resolving Consumer Complaints 24
Soliciting Consumer Input 27
5. Involving the Poor in the Regulatory Process 29
Pro-poor Awareness Campaigns 31
Partnership Arrangements 32
6. Conclusions 33
Appendixes 37
A. Sample Description 39
B. Survey 43
References 51
iii
iv Contents
List of Figures
2.1. Options for Consumer Representation in the EAP Region 11
3.1. Measures to Enhance Transparency 17
3.2. Channels of Communications with Consumers 18
3.3. Resolving Consumer Complaints--The Role of the Regulator 19
3.4. Consumer Input to the Regulatory Process 21
3.5. Mechanisms to Solicit Consumer Input 21
4.1. Effectiveness of Intermediaries in Raising Consumer Awareness 24
4.2. First Port of Call for Handling Consumer Complaints 26
5.1. Pro-poor Regulatory Framework 31
List of Tables
2.1. Mechanisms for Consumer Representation 10
6.1. Consumer Participation in Infrastructure Regulation 35
List of Boxes
1. Ladder of Consumer Participation in the Regulatory Process 2
2. Independence of the Regulatory Agency 6
3. Examples of Consumer Representation in the EAP Region 12
4. Designing a Pro-poor Regulatory Strategy 30
5. Papua New Guinea Community Service Obligations 32
Foreword
O n April 5�7, 2004, more than 70 officials representing infrastructure regulators
from 20 East Asia and Pacific (EAP) countries gathered in Manila for the second
meeting of the East Asia and Pacific Infrastructure Regulatory Forum (EAPIRF).
Regulators came from the infrastructure sectors of energy, telecommunications, transport,
water and sanitation. The Manila meeting was hosted by the Asian Development Bank
(ADB) and co-funded by the World Bank, the ADB, and the Public-Private Infrastructure
Advisory Facility (PPIAF). The role of infrastructure regulators in involving consumers
in the regulatory process was discussed and debated in the first half of the meeting. The
findings of a World Bank survey of EAP regulators were first presented. Participants and
invited speakers then shared their experiences of how infrastructure regulators can most
effectively interact with users of utility services, especially low-income customers. This
report presents the results of the survey of EAP regulators and discusses lessons of
experience in consumer participation that emerged during the Manila meeting.
The East Asia and Pacific Infrastructure Regulatory Forum was launched in 2003 with
support from the World Bank, PPIAF and the ADB. The objective of the Forum is to pro-
mote good regulatory practices in infrastructure in the region by creating a cross-sectoral
and multi-country platform in which regulators can share and learn from each other's
experiences and knowledge. Experience of recent similar networks of infrastructure regu-
lators supported by PPIAF, such as the South Asia Forum of Infrastructure Regulators
(SAFIR) in South Asia and the African Forum of Utility Regulators (AFUR) in Africa, sug-
gests that such fora are invaluable platforms to promote exchanges of experience and infor-
mation between practitioners of regulation and foster the transfer of best regulatory
practices across sectors and countries.
Christian Delvoie
Director, Infrastructure Department
East Asia & Pacific Region
The World Bank
v
Acknowledgments
T his report was funded under a grant from the Public-Private Infrastructure
Advisory Facility (PPIAF). The author would like to thank Michel Kerf, Apurva
Sanghi, Philip Gray, Lorenzo Bertolini, Demetrios Papathanasiou, Marc Shotten, and
Richard Franceys for their advice and helpful comments during the preparation of the
report. Special thanks are due to Melissa Morris and Geline Sucgang for their assistance
with the preparation of the survey.
vii
CHAPTER 1
Introduction
C onsumer protection is a primary mandate of infrastructure regulators. To fulfil
this mandate, regulators must ensure effective consumer participation in the
regulatory process. First, consumer participation is essential to hold service
providers accountable for the delivery of the "regulatory contract." The bargaining
power is indeed unequally distributed among stakeholders: consumers are composed of
diffuse interest groups, who are not resourced to "voice" their concerns effectively, while
service providers have the capacity to negotiate directly with the regulator the terms of
the regulatory contract. Second, consumer participation provides the "checks and bal-
ances" required to ensure that the regulator does not stray from its mandate of protec-
tor of consumer rights. Depending on how effectively regulators fulfil their mandate
vis-�-vis consumers, the regulatory process will benefit from a different degree of con-
sumer involvement--as discussed in Box 1 below, three progressively higher rungs can
be identified in the ladder of consumer engagement, namely information, consultation,
and partnership.
Most East Asia and Pacific (EAP) countries are in the process of reforming their infra-
structure industries, focusing on strengthening the regulatory framework and making the
investment climate more predictable. In this context, assessing the status of consumer par-
ticipation in infrastructure regulation is essential to ascertain whether regulatory reforms
in the region are supported by adequate mechanisms to safeguard consumer interests.
This study assesses consumer participation in infrastructure regulation in the EAP
region, by addressing the following four issues:
Does infrastructure regulation in the EAP region meet the main institutional
requirements for effective consumer participation?
1
2 World Bank Working Paper
Box 1: Ladder of Consumer Participation in the Regulatory Process
The literature exploring citizen participation in government policy-making depicts each level of
citizen involvement in the political process as a distinct rung in the "ladder of citizen engagement,"
with successive rungs of the ladder corresponding to progressively higher degrees of citizen
empowerment in determining the outcome of the decision-making process (Arnstein 1969). Sim-
ilarly, there are different gradations of consumer participation in the regulatory process, varying
to a significant extent across countries and sectors and depending on the type of regulatory model
in place. The following levels of involvement could be identified as four critical rungs of the lad-
der of consumer participation in the regulatory process:
Information. Information is the first step toward legitimate consumer involvement in the reg-
ulatory process. At this rung of the ladder, emphasis is placed on one-way flows of communi-
cation (from regulators to consumers) with no channel provided for feedback. Hence, when
consumer participation is limited to information, consumers have little opportunity to influ-
ence the outcome of the decision-making process.
Consultation. Regulators rely on consultation with consumers and other interest groups as a
valuable source of non-binding advice to inform the regulatory process. Consultations can
either be conducted on an ad hoc basis on specific consumer issues or throughout the regula-
tory process. However, if not combined with other modes of consumer involvement, consulta-
tion may not be sufficient to ensure effective consumer participation, as it offers no assurance
that consumer input will be taken into account in the decision-making process.
Partnership (acting and deciding together). The third rung of the ladder, partnership, involves some
degree of "redistribution" of decision-making power as consumers are granted the right to nego-
tiate with the regulator and the other stakeholders the outcome of the regulatory process. Given
the diffuse interests of the consumer constituency, effective partnership with consumers hinges
on the appointment of consumer spokespersons fully accountable to the consumer constituency.
Empowerment (delegating decision-making power to consumers). At this rung of consumer
engagement, consumers are empowered to manage their own infrastructure. Consumer
empowerment works best when infrastructure networks are small and can be within the con-
trol of a single community--for example, small town water supply systems are often ideal can-
didates for local community management. However, consumer empowerment is generally
unfeasible in the case of large-scale infrastructure, due to the complexity of managing diffuse
consumers groups with conflicting interests.
Empower
Consumer
Power in
Partner
Decision-making
Consult
Advisory Role
Inform
Consumer Participation in Infrastructure Regulation 3
Box 1: Ladder of Consumer Participation in the Regulatory Process (Continued)
At the first two rungs of the ladder of consumer engagement (information and consultation), con-
sumer participation plays an advisory role. At the topmost rungs of consumer engagement (part-
nership and empowerment), consumer participation leads to some degree of sharing of the
decision-making power. However, given that the topmost rung of the ladder (empowerment) is
seldom feasible in large infrastructure industries, this study adopts a three-rung ladder (informa-
tion, consultation, partnership) to illustrate the different levels of consumer participation in infra-
structure regulation.
Depicting different forms of consumer participation as ladder rungs is a useful tool to capture dif-
ferent gradations in consumer participation in the regulatory process. However, the tool presents
limitations. First, the ladder is a simplification, as the distinction between the different levels is
often blurred. For example, even when consumer advice is not binding, consumers' opposition to
regulatory reforms may be strong enough to de-legitimize the role of the regulator. Second, higher
rungs of consumer participation may not necessarily lead to better regulatory outcomes, in par-
ticular in newly-established regulatory frameworks without a tradition of consumer representa-
tion. In fact, ascending the ladder of consumer participation is a lengthy and difficult process,
which needs to be supported by an enabling institutional environment--the higher the rung of
consumer participation, the more sophisticated the institutional environment needs to be to
accommodate additional layers of consultations.
Source: Arnstein 1969, Franceys 2004.
Howeffectivelydoregulatorsperformtheirfunctionsvis-�-visconsumers?
To what extent do EAP regulators rely on stakeholders and intermediaries to
involve consumers in the regulatory process?
DoEAPregulatorshaveinplacemechanismstoinvolvethepoorintheregulatory
process?
The assessment draws on the results of a survey questionnaire conducted among 45 infra-
structure regulators in the region.1 Because both current and potential customers are
equally important stakeholders in the regulatory process, the study broadly defines con-
sumers, including the population not yet served by regulated service providers.
The survey results indicate that EAP regulators have successfully begun to involve con-
sumers in the regulatory process: consumer representation is a well-established practice in
the region; in addition, most regulators draw on standard mechanisms to raise consumer
awareness, resolve consumer complaints and solicit consumer input. Regulators rely sig-
nificantly on stakeholders (government and service providers) and intermediaries (in par-
ticular rural community leaders, NGOs and journalists) to engage consumers in the
regulatory process. However, further regulatory actions are needed to move from inform-
ing to actively consulting with consumers. In particular, more reliance should be placed
on two-way channels of communication (for example, workshops) to reach out to con-
sumers. Further regulatory interventions may also be warranted to enhance disclosure of
1. The results of the survey questionnaire were presented during the second meeting of the East Asia
and Pacific Forum of Infrastructure Regulators (EAPIRF), which was held in Manila April 5�7, 2004. The
questionnaire covered 45 regulatory bodies from 21 countries. Among the 45 surveyed regulators, 17 are
established as independent agencies. See Appendixes A and B for a more detailed description of the sam-
ple and the survey questionnaire.
4 World Bank Working Paper
information to consumers, to hold service providers accountable for addressing consumer
complaints, and to promote consumer awareness among the poor.
The study is structured as follows:
Chapter 2 draws on survey results to discuss the extent to which EAP regulators
meet institutional requirements for consumer participation.
Chapter 3 discusses three key regulatory functions related to consumer participa-
tion, namely (i) informing consumers; (ii) resolving consumer complaints; and (iii)
soliciting consumer input into the regulatory process.
Chapter4assessestheextenttowhichregulatorscontractoutregulatoryfunctions
to non-regulatory entities.
Chapter5outlinesthestrategiesadoptedbyEAPinfrastructureregulatorstoover-
come the specific challenges of involving the poor in the regulatory process.
Finally,Chapter6summarizesthekeyfindingsofthesurveyquestionnaire,high-
lighting the main conclusions on the status of consumer participation in infra-
structure regulation in the EAP region.
CHAPTER 2
Institutional Requirements for
Effective Consumer Participation
C onsumer participation in infrastructure regulation must be supported by an ade-
quate institutional environment. While there are different institutional options
available to support consumer participation in infrastructure regulation, any insti-
tutional environment would need to meet the following two requirements:
The entity performing regulatory functions vis-�-vis consumers is independent
from political pressure and vested interests.
Effectivemechanismsareinplacetorepresentconsumerinterests.
This chapter assesses the extent to which these institutional requirements for effective con-
sumer participation are met by regulatory regimes in the EAP region.
Regulatory Independence
Responsibility for protecting consumer interests must be conferred to an independent reg-
ulatory agency. Insulating the regulating entity from political interference and service
providers' interests is essential to ensure a fair deal for consumers, in particular in coun-
tries that have only begun the process of reforming their infrastructure industries. Only
entities operating at arm's length from service operators and the government are indeed
able to act as impartial referees among all the stakeholders.
Regulatory independence is not widespread in the EAP region. Only 38 percent of the
surveyed regulators have so far been established as independent agencies (see Appendix A
5
6 World Bank Working Paper
for a detailed sample description).2 In the EAP region, the diffusion of the independent
regulatory model is lower than in Africa, where 60�77 percent of the countries (as of 2001)
have established separate regulators (not part of a ministry, government department or
operator), and Latin America, where the model of regulation by an independent agency is
adopted widely (AFUR 2002, Foster 2003). However, this regional comparison needs to be
treated with caution, given that the true extent of regulatory independence is difficult to
assess. Formal regulatory independence does not guarantee per se the insulation of the reg-
ulatory body from vested interests.3 Given that regulatory independence is a relative rather
than an absolute concept, formally independent regulatory agencies do in practice achieve
different degrees of regulatory independence, depending on the types of safeguards in place
against political interference--see Box 2 below for a discussion of the definition of regula-
tory independence in the context of infrastructure regulation.
When an independent regulator is not established, the line ministry retains direct con-
trol over the regulatory process, with the exception of most of the Pacific Islands, where
provision of infrastructure services is in public hands and self-regulation is the norm. In
this regulatory model, publicly-owed service providers are in charge of regulating their
own activities, with the line ministries performing an oversight and monitoring role. In
Box 2: Independence of the Regulatory Agency
Independence for infrastructure regulators consists mainly of two elements: (1) an arm's-length
relationship with regulated service providers, consumers and political authorities and (2) the orga-
nizational autonomy necessary to attract the required expertise to perform regulatory functions
effectively. However, independence is a relative rather than an absolute concept. Progress must
be measured against the counterfactual scenarios where ministers would retain direct control over
regulatory decision-making. In addition, the level of independence of a regulatory agency depends
on the types of safeguards in place to promote its autonomy. There is consensus that the follow-
ing formal safeguards are key to achieving regulatory independence:
Providing the regulator with a distinct legal mandate, free of ministerial control;
Prescribing professional criteria for appointment;
Involving both executive and legislative branches in the appointment process;
Appointing regulators for fixed terms and protecting them from arbitrary removal;
Staggering terms so that they do not coincide with the election cycle;
Exempting the regulating agency from civil service salary rules that make it difficult to attract
and retain well-qualified staff;
Providing the agency with a reliable source of funding, usually earmarked levies on regulated
firms or consumers.
Source: Smith 1997.
2. Seventeen out of 45 regulatory entities are established as independent agencies.
3. Formal independence is not always a guarantee for effective regulation: a government regulator
operating in a transparent environment could indeed be more effective in delivering benefits to consumers
than an independent regulator prone to capture.
Consumer Participation in Infrastructure Regulation 7
this model, achieving regulatory independence may present specific challenges given the
small-scale of the regulated markets and the prevalence of self-regulation, two factors that
complicate the process of disentangling the conflicting interests entrenched in the regula-
tory process. Setting up "umbrella regulatory agencies" in charge of overseeing different
infrastructure sectors is a possible solution to contain the risk of regulatory capture in small-
scale infrastructure markets (Ayres and Braithwaite 1992). Being accountable to more than
one line ministry and different consumer constituencies, multi-sector regulators are indeed
less prone to regulatory capture. For example, a multi-sector independent economic reg-
ulator, the Independent Consumer and Competition Commission (ICCC), has been estab-
lished in Papua New Guinea in 2002. Multi-sector self-regulated agencies in charge of
service provision are also in place in other Pacific Islands, namely Micronesia, Fiji, and
Kiribati.
Consumer Representation
Shielding regulators from the influence of vested interests is necessary but not sufficient to
guarantee a fair distribution of the welfare gains generated by the regulatory process. In
any institutional environment conducive to effective consumer participation, consumers
must have the option to rely on spokespersons that can articulate their interests, and coun-
terbalance the industry perspective, which is usually very strongly represented by service
providers. The responsibilities and scope of actions of consumer representatives increase
as one moves up the ladder of consumer empowerment. Depending on the level of con-
sumer engagement in the regulatory process, consumer representatives may be entrusted
with a wide range of powers, encompassing the right to take judicial actions against regu-
latory decisions, access commercially sensitive information on service providers, take the
stance of consumers during public hearings, and exercise voting rights in the decision-
making body of the regulating entity. Regardless of their specific mandate, consumer
spokespersons must be perceived as beginning the process towards accountability to the
consumer constituency. Without the countervailing influence of consumer representatives
accountable to the consumer constituency, regulators are indeed more at risk of capture
by specific interest groups. This chapter discusses three of the most common mechanisms
for consumer representation:
Setting up in-house consumer affairs bureaus. One mechanism is to establish in-
house consumer affairs bureaus (within the regulatory agency) with the mandate
of representing consumer interests. Economies of scope can often be achieved by
entrusting the same agency with consumer representation and regulatory func-
tions. For example, in-house consumer departments may benefit from direct access
to consumer-related information that could be used to inform the representation
function. On the downside, relying solely on in-house consumer bodies for con-
sumer representation may be insufficient to give consumers some bargaining
power over the outcome of the decision-making process. In-house consumer bod-
ies indeed lack the independence required to challenge regulatory decisions and, as
a result, may prove to be ineffective in their advocacy role.
8 World Bank Working Paper
Appointingconsumerrepresentativesintheregulatoryboard.Anothermechanismisto
appoint a consumer representative in the board of directors, the decision-making
body of the regulating entity. This mechanism is adopted in several African countries
(such as Burundi, Ghana and Senegal) and in a few countries in Latin America (Laz-
zarini 2004, Foster 2005). Board representation has the advantage of giving con-
sumers access to relevant information on service providers, provided that consumer
representatives are not bound by a duty of confidentiality (they are able to use the
information disclosed to them to the best interest of consumers). Moreover, this
mechanism for consumer representation may have the advantage of establishing a
direct channel for feeding consumer input into the decision-making process. When
the consumer spokesperson appointed to the regulatory board is truly accountable
to the consumer constituency, consumer input indeed becomes an integral part of
the decision-making process. However, the cost of this mechanism for consumer rep-
resentation often far outweighs its benefits. First, board representation may have the
undesirable effect of trapping consumer representatives in a conflict of interest situ-
ation, by making them accountable to both the regulatory body and consumers. Sec-
ond, consumer representation in the regulatory board may bring the reform process
to a standstill, by empowering consumer representatives to exercise their right to halt
the decision-making process. Finally, the top-down appointment of consumer rep-
resentatives to the regulatory board may undermine their accountability to the con-
sumer constituency. For example, in Papua New Guinea, the Chamber of Commerce
appoints consumer representatives to the utility board of PNG Waterboard; as a
result, consumer representatives may risk to be perceived by public opinion more as
an advocate of vested interests of industrial customers than as representatives of the
whole consumer constituency (Asian Development Bank 2002).
Relying on external advisory bodies. An alternative mechanism is to entrust con-
sumer representation to external entities (for example, non-institutionalized con-
sumer associations or statutory consumer councils). This mechanism is currently
adopted in the UK, where EnergyWatch (the gas and electricity consumer watch-
dog) is established as an independent statutory body, whose relationship with the
regulator is defined by a Memorandum of Understanding agreed between the par-
ties. Similarly, in England and Wales, an independent Consumer Council for
Water is expected to be appointed under the Water Act 2003 to replace Water-
Voice, the existing water consumer watchdog funded and appointed by Ofwat, the
economic regulator.4 Being independent from the regulator itself, external con-
sumer bodies are better positioned than in-house consumer departments to take
a stance against regulatory decisions perceived as unfair to consumers. As a down-
side, independent consumer bodies risk being captured by specific interest groups
at the expenses of the marginalized segments of the customer base. This risk is par-
ticularly high in developing countries, where independent consumer associations
may be taken over by middle-class consumer groups whose interests are not
necessarily aligned (and in fact are often conflicting) with those of the poorest
customers.5 Moreover, consumer associations may not be able to access sufficient
4. The Consumer Council for Water will commence operation on October 1, 2005.
5. Middle-income customers advocating against tariff increase may indeed jeopardize the possibility
to expand access.
Consumer Participation in Infrastructure Regulation 9
funding to build the internal capacity to engage in complex regulatory debates.
This suggests that countries without a history of civil society engagement
may not be ready for handling sophisticated mechanisms of consumer repre-
sentation such as consumer councils. In developing countries, which seldom
have the long tradition of civil society organizations encountered in the UK,
the onus is therefore on the government and/or regulator to support capacity
building activities to empower consumer organizations in their advocacy role
(Arnstein 1969).
Table 2.1 below summarizes the pros and cons of the three institutional mechanisms for
consumer representation outlined above. These mechanisms are not mutually exclusive--
for example, in-house consumer offices can be complemented by independent advisory
bodies in their mandate to represent consumer interests, especially when regulatory capac-
ity is constrained.
As underlined in Table 2.1, identifying the best mechanism for consumer representa-
tion poses the following two challenges:
Optingforintegratedversusindependentconsumerrepresentatives.Itisanopendebate
whether independence of consumer representation with respect to the regulatory
agency is a more effective avenue for consumer representation than integration. Two
mechanisms for retaining the consumer representation function within the regula-
tory body are relying on in-house consumer affairs bureaus or appointing consumer
representatives to the agency board. A mechanism for separating regulation from
the representation function is opting for independent consumer associations to
represent consumers. One school of thought stresses that placing consumer repre-
sentatives within the regulatory agency would deliver significant synergies and
economies of scope. Moreover, a regulator with the specific mandate of represent-
ing consumers in the regulatory process would benefit from stronger public support
and may be less prone to regulatory capture by other stakeholders. In addition, the
"integrated" option may be the only feasible solution for consumer representation
when there are no external bodies with the capacity to represent consumers in the
regulatory process. Another school of thought argues that consumer representatives
with a separate voice from the regulatory agency can campaign more effectively for
consumers. This school of thought has been embraced in the UK, where the Depart-
ment of Trade and Industry (1998) has recently advocated in favour of independent
statutory consumer councils to represent consumers on the grounds that: "The
councils will be powerful consumer advocates at the heart of the regulatory system,
working constructively with the regulators, but from a position of independence
[emphasis added] and a real concern for consumers' interests."
Ensuring the accountability of consumer representatives vis-�-vis the consumer con-
stituency. Consumer representatives must be held accountable to the whole con-
sumer constituency, including poor customers who are the least equipped to
promote their own interests in the regulatory process. However, there is the risk
that consumer spokespersons, far from safeguarding the interests of consumers as
a whole, will be captured by the most influential consumer groups. This risk is par-
ticularly high when consumer representatives are appointed through a top-down
approach to the regulatory board, although independent consumer organizations
Table 2.1: Mechanisms for Consumer Representation 10
Examples Pros Cons World
In-house EAP region: Easy access to reliable information Limited scope of action to
consumer Community Opinion Investigation Committee, Jakarta Water on the regulatory process. challenge regulatory deci- Bank
affairs Supply Regulatory body, Indonesia sions due to lack of inde-
bureau Synergies between consumer repre-
One Stop Public Assistance Centers, National Telecommuni- sentation and regulatory functions-- pendence from the Working
regulatory agency itself.
cation Commission, Philippines in-house consumer affairs bureaus
are well placed to solicit consumer
Other regions:
information that can be used to Paper
Office of Consumer Advocacy, Karnataka Electricity Regula- inform the representative function.
tory Commission (KERC), India
Board EAP region: Powerful channel of information for Inadequacy of representa-
representation Korean Electricity Commission (Korea); consumer groups (if there is no duty tion, if the board members
PNG Waterboard (Papua New Guinea), of confidentiality). in charge of consumer repre-
sentation are captured by
Tonga Water Board (Tonga), Very fluid exchange of views
between consumers and regulators, special interest groups
Department of Mines and Energy (Solomon Islands) if consumer input becomes an inte- and/or they are not fully
accountable to the con-
Other regions: gral part of the decision-making
sumer constituency.
Consumer Association of Ghana, representing consumers in process.
Ghana's public utility regulatory board. Too many conflicting inter-
ests within the regulatory
The Association de Defense des Usagers de l'Eau (Senegal), sit- body may result in stale-
ting on the water regulatory council and on the board of the
mate of the regulatory
national water holding company.
process.
A few cases in Latin America, such as the state regulator in
Rio Grande do Sul in Brazil, the provincial regulator in Cor-
doba, Argentina, and (for a brief period) the telecom regula-
tor in Peru.
External EAP region: Capacity to challenge regulatory Inadequacy of representa-
advisory body Consumer Forum of Malaysia. decisions, due to the body's inde- tion, if the advisory body is
pendence from the regulatory captured by the most influ-
Other regions:
agency itself. ential consumer groups.
Energywatch (UK), Watervoice (England and Wales),
Electricity Consumers' Network (Karnataka--India)
Source: EAPIRF Survey 2004; Foster 2003.
Consumer Participation in Infrastructure Regulation 11
are also not shielded from this risk. To counter this risk, regulators need to ensure
that the interests of the marginalized segments of the customer base are adequately
represented. In countries with a tradition of well-established consumer associa-
tions, making representation of vulnerable customers a statutory duty of con-
sumer councils is an option. For example, this option has been adopted in the UK,
where independent Consumer Councils have the legal mandate of "ensuring that
the interests of the disadvantaged are safeguarded" (DTI 1998).
Consumer representation is a common practice in infrastructure industries in the EAP
region; two-thirds of the surveyed regulatory regimes have indeed established a specific
entity responsible for consumer representation. The following mechanisms are mostly
adopted to represent consumers in the regulatory process in the EAP region:
Housing consumer representatives within the regulating entity is the most wide-
spread institutional mechanism for consumer representation. As shown in Figure
2.1 below, in half of the surveyed regulatory regimes, responsibilities for consumer
representation lie with in-house consumer affairs bureaus (including decentralized
offices of the regulatory body). For example, the Jakarta Water Supply Regulatory
Body recently established one in-house decentralized consumer department to
Figure 2.1: Options for Consumer Representation in the EAP Region
Does your agency have any of the following institutional features in place for engaging
consumers in the regulatory process?
100%
90%
80%
70%
60%
51%
50%
40%
31%
29%
30%
22%
20%
10%
4%
0%
In-house consumer Formal Consumers Specialized Not applicable
affairs bureau/regional advisory/consultative represented on agency Ombudsman person
office group board
Source: EAPIRF Survey 2004. Multiple-answers allowed.
12 World Bank Working Paper
represent consumers in the regulatory process, as detailed in Box 3 below. Reliance
on in-house bureaus may however suggest that consumer spokespersons have lim-
ited capacity to challenge regulatory decisions.
Entrusting consumer representation to an external body, either consumer associ-
ations (31 percent) or Ombudsmen (4 percent), is the second most common mech-
anism for consumer representation in the region. Box 3 discusses the case of the
Malaysia's Consumer Forum, one of the most advanced mechanisms for consumer
representation in the EAP region.
Appointingaconsumerrepresentativetotheregulatoryboardisanunusualprac-
tice, although more common in the Pacific Islands, where service providers are
largely self-regulated.6 As discussed above, appointing a consumer representative
to the regulatory board is at high risk of regulatory capture and can significantly
limit the scope of consumer involvement in the decision-making process.
Finally, 38 percent of the surveyed regulators rely on more than one mechanism
for consumer representation--the most common arrangement being the combi-
nation of an in-house consumer affairs bureau with an external advisory body as
in the Jakarta water sector (see Box 3).
Box 3: Examples of Consumer Representation in the EAP Region
Indonesia (water): The Jakarta Model for Consumer Representation
In Jakarta, consumer involvement was initiated soon after the Jakarta Water Supply Regulatory
Body (JWSRB) was established in November 2001. In January 2002, the JWSRB facilitated a stake-
holder meeting that led to the establishment of the Consumer and Community Communication
Forum (CCC Forum) which aimed to synergize the efforts of all water stakeholders in enhancing
reliability of water supply in Jakarta. Since then, the Forum has become a valuable platform for
information-sharing among water stakeholders, including the JWSRB, community and consumer
representatives, NGOs, government officials, PAM JAYA (the local government-owned service
provider), and water operators. In parallel, the JWSRB established an in-house consumer bureau,
the Community Opinion Investigation Committee (COIC), tasked with the responsibility of facili-
tating the functioning of the Forum, administering consumer satisfaction surveys and soliciting
input from all stakeholders.
In addition, in March 2003, the JWSRB facilitated the establishment of Water Supply Customer
Advisory Committees (WCCs) in five municipalities of the Jakarta province. WCCs are NGO-type non-
statutory organizations with the mandate to voice consumer interests. WCCs' responsibilities
include: (i) monitor level of service; (ii) raise consumer complaints on service quality; (iii) facilitate
communication between consumers and water utilities on service improvement; (iv) promoting
access for the poor. The JWSRB retains responsibility for disseminating the information received
from the WCCs and the CCCF through the media.
The Figure below summarizes the institutional linkages between the JWSRB, the in-house COIC,
the CCC Forum, and the five WCCs.
(continued)
6. Pacific Islands account for most of the cases (7 out of 10) where consumers are represented in the
regulatory boards.
Consumer Participation in Infrastructure Regulation 13
Box 3: Examples of Consumer Representation in the EAP Region (Continued )
JWSRB
COIC
WCCs
Recommendations
CCC-Forum
Meetings every 3
months
Stakeholders
Mass media:
. Newspaper
. Website
. TV
PAM
. Radio Water
JAYA Operators
Malaysia (telecom): The Consumer Forum of Malaysia
The Consumer Forum of Malaysia (the "forum") has been established in February 2001 under the
requirement of the Communications and Multimedia Act 1998 as an independent forum in charge
of representing consumer interests in the regulatory process. The forum is composed of members
representing both service providers (telecommunications companies and broadcasting stations)
and consumer interests (NGOs and public interest groups). Membership to the forum is open to all
stakeholders upon payment of a membership fee. The forum has been entrusted with responsi-
bilities for processing complaints, resolving disputes, promoting consumer awareness, and draft-
ing a code of practice binding for all licensees (the General Consumer Code of Practice registered
in October 2003). Among the key objectives of the code is to provide a common framework for con-
sumer complaint handling, consumer compensation in case of a breach of the code, self-regulation
and protection of consumer rights.
Source: EAPIRF survey 2004.
CHAPTER 3
Performing Regulatory Functions
vis-�-vis Consumers
T his chapter discusses three core functions performed by regulators to ensure con-
sumer participation in the regulatory process, without aiming to be exhaustive:
Informingconsumers.Regulatorsplayacriticalroleininformingconsumersbydis-
closing relevant information and raising consumer awareness. Informing con-
sumers is a prerequisite to engage consumers further in the regulatory process: only
well-informed consumers are indeed in the position to understand the benefits
arising from the regulatory contract and participate effectively in consultation
processes.
Resolving consumer complaints.Regulators must have in place a complaint resolu-
tion mechanism to hold regulated service providers accountable to consumers for
delivering the regulatory contract. The process of resolving consumer complaints
entails some basic form of consultation with consumers through follow-up mech-
anisms to ensure consumer satisfaction with the outcome of the resolution process.
Soliciting consumer input. Regulators must also solicit consumer input through
consultations to take regulatory decisions perceived as fair and legitimate by all
stakeholders.
Each of these three functions can lead to progressively higher rungs of consumer partici-
pation�from information to consultation. However, the factor ultimately determining the
rung of consumer involvement in the regulatory process is how effectively regulators per-
form each of these functions. For example, in principle consumer awareness campaigns
conducted through public meetings can provide consumers with a platform for discussion,
15
16 World Bank Working Paper
leading to a higher rung of consumer involvement than media campaigns. However, if not
effectively utilized consultations may be far from providing consumers with a real oppor-
tunity to influence the outcome of the consultation process, and thus turned into a one-
way form of communication.
Informing Consumers
Informing consumers is necessary to guarantee the legitimacy of the regulatory process.
Any regulatory regime would be politically unsustainable if consumers failed to understand
their benefits under the regulatory contract. Regulators can effectively inform consumers
by disclosing relevant information and raising consumer awareness of their rights and
obligations under the regulatory regime.
Disclosing Information
Regulators must disclose relevant information to the public to guarantee the transparency
of the regulatory process. The disclosure policy of the regulating entity largely determines
the degree of transparency of a regulatory regime. Essential information that regulators
ought to release encompasses regulatory procedures and decisions as well as licenses and
contracts awarded to service providers. In addition, disclosing benchmarked performance
of service providers can enhance consumer understanding of how service providers are far-
ing relative to each other--this piece of information being crucial when consumers have
the possibility to switch to alternative service providers.
The survey results indicate that most EAP regulators adopt fairly open disclosure poli-
cies. As shown in Figure 3.1 below, 71 percent of the surveyed regulators disclose proce-
dures and decisions; in addition, half of the regulators release to the public performance
indicators of regulated service providers. However, regulators could take further steps to
enhance the transparency of the regulatory process--indeed only a minority of the sur-
veyed regulators disclose licenses and contracts awarded to service providers.
Figure 3.1 below shows that the surveyed independent regulators tend to have more
open disclosure policies than government regulators. However, any comparison between
government and independent regulators must be treated with caution, given that the two
sub-samples are not balanced.
Raising Consumer Awareness
Regulators are responsible for raising consumer awareness, defined as consumer under-
standing of the role of the regulating entity as well as their rights and obligations under the
regulatory regime. Public awareness campaigns are instrumental to educate consumers to
exercise their rights, among others the right to raise complaints about service provision
and participate in consultation processes. Awareness campaigns are also pivotal to the suc-
cess of sector reforms, by contributing to promote consumer acceptance of private sector
participation and consumer understanding of the benefits of sector reforms. For instance,
in the water sector hygiene education campaigns are vital to make consumers aware of the
health or environmental externalities associated with safe water provision; in addition, they
Consumer Participation in Infrastructure Regulation 17
Figure 3.1: Measures to Enhance Transparency
Which actions does your agency take to ensure the promotion of
consumer awareness?
100%
Government
Independent Agency
82%
Total sample
80%
71%
64% 65% 65%
60%
51%
44%
43%
40%
32%
20%
0%
Disclose procedures and Disclose benchmarked Disclose licenses and
decisions performance of service contracts
operators
Source: EAPIRF survey 2004. Multiple-answers allowed.
can contribute to enhance demand for better services and the related benefits accrued to
end-users. For example, in Papua New Guinea, PNG Waterboard, the public water utility,
runs education campaigns through the media with the objective of informing consumers
of the dangers of drinking untreated water.
The surveyed regulators in the EAP region are faring relatively well in raising consumer
awareness of the role of their agency, allowing for the fact that most of the agencies have
been recently established. The role of the regulator and its areas of responsibility is indeed
reported to be "very well known" to consumers by more than a third of the respondents
(17 out of 45) and "somewhat known" by the rest of the surveyed regulators--with the
exception of two regulators that considered their role "not known" to consumers.7
Raising public awareness of consumer rights and obligations requires the establish-
ment of effective channels of communication between consumers and the regulatory
agency. Awareness campaigns can lead to different rungs of consumer involvement in the
regulatory process depending on the selected vehicle of communication. For example,
workshops and one-to-one meetings have the advantage of opening up "two-way" forms
of communication with consumers; as a result, they may lead to a higher rung of consumer
engagement than awareness campaigns based on "one-way" forms of communication,
such as the media.
7. EAPIRF survey 2004. Question: `How well do you think the role of your agency in your areas of
responsibility is known to consumers? Very well known--Somewhat known--Not known.'
18 World Bank Working Paper
The surveyed regulators mainly rely on one-way forms of communication to raise con-
sumer awareness. As shown in Figure 3.2 below, the media is the prevailing channel of
communication with consumers. The practice of including information materials in util-
ity bills is common in the Pacific Islands, where publicly owned service providers are often
in charge of regulating their own activities. In addition, half of the regulators rely on "two-
way" channels of communication (either workshops or one-to-one meetings) to reach out
to consumers. If effectively utilized, two-way channels of communication can provide a
platform for both information sharing and consultation with consumers.
Figure 3.2: Channels of Communications with Consumers
Which channel(s) does your agency employ to promote consumer awareness?
100%
90%
80%
70% 64%
64 %
60% 56%
53%
50% 47%
40% 36% 36%
30%
20%
13%
10%
0%
nts
ements inbills uth
nkiosks
advertisemeadvertis e/EmailsWorkshopsne meetings ed
Web-sit includ Word-of-mo
Informatio
Press One-to-oMaterial
Radio/television
Source: EAPIRF survey (2004). Multiple-answers allowed.
Resolving Consumer Complaints
Regulators must establish effective complaint resolution mechanisms to provide con-
sumers with simple and accessible procedures for complaint resolution on all aspects of
service provision. Regulators perform several tasks as part of their obligation to resolve
consumer complaints, such as handling consumer complaints, monitoring service
providers' performance in solving complaints and resolving consumer disputes (unre-
solved consumer complaints).8 Effective complaint resolution mechanisms must deal
with both individual complaints and systemic issues and result in fair and binding deci-
sions for all the involved parties. If the complaint resolution scheme is set up on a vol-
8. Handling consumer complaints involves processing complaints received by consumers and direct-
ing them to the attention of service providers for resolution.
Consumer Participation in Infrastructure Regulation 19
untary basis by service providers, consumers must be given the possibility to pursue legal
actions in a court.
Complaint resolution mechanisms are a standard feature in most EAP regulatory
regimes. In fact, more than two-thirds of the surveyed EAP regulators have established a for-
mal procedure to deal with consumer complaints, the percentage being slightly higher among
independent regulators (15 out of 17 regulators) than government regulators (18 out of 28).9
Half of the surveyed regulators are directly involved in handling consumer complaints. (In
the other regulatory regimes, responsibility for handling consumer complaints lies in the first
instance with service providers, as discussed in more detail in Chapter 4.)10
The survey results suggest that regulators may need to intervene more actively to hold
service providers accountable for resolving consumer complaints. Half of the regulating
agencies maintain responsibilities for monitoring the responsiveness of service providers in
addressing complaints; another half retain the right to step in if the complaint is not resolved
(see Figure 3.3 below); however, only six regulators have introduced financial incentives to
reward/penalize service providers on the basis of their performance in resolving consumer
complaints. In addition, 20 percent of the agencies do not exercise specific regulatory powers
Figure 3.3: Resolving Consumer Complaints--The Role of the Regulator
If service providers are responsible for dealing in the first instance with
consumer complaints, which mechanisms does your agency have in place to
ensure that consumer complaints are handled effectively?
100%
90%
80%
70%
60%
49% 49%
50%
40%
30%
20%
20% 13%
10%
0%
Review of the Your agency is Financial incentive Not applicable
complaint records involved if the scheme to
maintained by the complaint is not reward/penalize
service providers resolved within a service providers on
certain period of time the basis of their
performance in
handling complaints
Source: EAPIRF survey 2004. Multiple-answers allowed. Note: the sample includes all surveyed regulators.
9. However, the results need to be treated with caution given the limited number of observations
available for independent regulators.
10. Twenty-two regulators represent the first port of call for handling consumer complaints.
20 World Bank Working Paper
vis-�-vis service providers to enforce complaint resolution. In this respect, infrastructure reg-
ulators in the EAP region lag to some extent behind regulators in Latin America, where reg-
ulators commonly act as an appeal body for customers, whose complaints have not been
adequately resolved by the regulated company (Foster 2005).
Soliciting Consumer Input
In non-monopolistic markets, consumers reveal their preference or "voice" their dissatis-
faction by exercising the option of switching to substitute products. This "check and bal-
ance" mechanism ensures that service providers do value consumer information to enhance
their competitiveness against rival firms. In infrastructure markets with monopoly charac-
teristics, where such a mechanism is not in place, customers are often locked in to the
incumbent service provider. To substitute for market-based mechanisms, regulators must
therefore solicit consumer input to inform the regulatory process.
Consumer satisfaction is an essential piece of information that regulators ought to
solicit from consumers to make well-informed regulatory decisions. In addition, quality of
service provides regulators with relevant information for setting standards of service. Infor-
mation on affordability is critical for regulators directly involved in social policy issues, espe-
cially when the poor constitute a significant segment of the customer base. However, this
may not be the case when there is a clear institutional separation between regulatory and
policy-making functions, with the latter being performed by the relevant line ministry.
Information on consumption patterns is also key for regulators to assess investment
requirements. Finally, information on billing-related matters can be instrumental to assess
whether the payment system responds to customers' needs, although this piece of infor-
mation is often more helpful to service providers, which are directly responsible for billing
customers, than to regulators.
Quality of service and consumer satisfaction are the two pieces of information most
often solicited by the surveyed regulators to inform the decision-making process (see Fig-
ure 3.4 below). The survey results also suggest that most surveyed regulators are involved
in social policy issues, as they actively solicit information on affordability from consumers.
Informal consultations with consumer representatives are the most common mecha-
nism in place to solicit information from consumers, being adopted by almost 80 percent
of the surveyed regulators. Almost two-thirds of the surveyed regulators draw on formal
channels (either public hearings or formal consultations with consumer advisory bodies) to
consult with consumers.11 In addition, half of the surveyed regulators rely on both formal
and informal channels to interact with consumers.12
Figure 3.5 below sheds more light on the different types of channels used by the sur-
veyed EAP regulators to solicit consumer input. For example, formal consultations with
consumer advisory bodies and public hearings are adopted by respectively 44 percent and
47 percent of the surveyed regulators. Designing consumer surveys to solicit input from
consumers is also a very common practice among regulators in the region.
11. 78 percent (35) and 64 percent (29) of the surveyed regulators rely respectively on informal and
formal mechanisms to interact with consumers.
12. 47 percent (21 regulators) rely on both formal and informal mechanisms of consultations.
Consumer Participation in Infrastructure Regulation 21
Figure 3.4: Consumer Input to the Regulatory Process
Which of following information does your agency elicit from consumers for
making regulatory decisions?
71%
Quality of service 76%
68%
69%
Consumer satisfaction 82%
61%
49%
Affordability 59%
43%
47%
Billing-related issues 59%
39%
Total sample
Independent Agency
40%
Government
Consumption patterns 29%
46%
0% 20% 40% 60% 80% 100%
Source: EAPIRF survey (2004). Multiple-answers allowed.
Figure 3.5: Mechanisms to Solicit Consumer Input
Which procedure(s) does your agency employ for soliciting consumer input?
100%
90%
80%
73%
70% 64%
60%
50% 47% 47%
44%
40%
30%
20%
10%
0%
Informal Consumer Public hearings Informal public Formal
consultations surveys outreach (e.g. consultations
with consumer informal with advisory
representatives meetings) bodies
Source: EAPIRF survey (2004). Multiple-answers allowed.
CHAPTER 4
Contracting Out Regulatory
Functions vis-�-vis Consumers
ontracting out regulatory functions has both benefits and limitations. Regulators
C often contract out regulatory functions to stakeholders (for example, government,
service providers or consumer associations) or intermediaries (for example,
NGOs, rural community leaders or journalists) to reduce regulatory costs and supplement
in-house regulatory capacity. However, several challenges arise when regulatory functions
are contracted out. First, delegating regulatory functions can jeopardize consumer pro-
tection, if the delegated entities are not fully accountable to the regulator. To avoid loss
of accountability, the regulator must keep an oversight role over the external entities per-
forming regulatory functions. Second, the scope for contracting out may be limited in
countries without a tradition of consumer organizations in infrastructure industries. In
these circumstances, the regulator must dedicate significant internal resources to ensure
effective consumer participation in the regulatory process.
This chapter discusses the extent to which regulators contract out their regulatory
functions vis-�-vis consumers to external entities. Overall, the survey results suggest that
contracting out regulatory functions vis-�-vis consumers is a relatively widespread prac-
tice in the region.
Informing Consumers
Regulators can effectively inform consumers by disclosing relevant information and raising
consumer awareness. While the regulators are primarily responsible for disclosing infor-
mation, stakeholders and intermediaries can play an instrumental role in raising consumer
awareness, in particular when the regulatory agency is centralized.
Overall, surveyed regulators highly value the role of government and service providers in
raising consumer awareness (see Figure 4.1 below). Moreover, regulators rely on a wide range
23
24 World Bank Working Paper
Figure 4.1: Effectiveness of Intermediaries in Raising Consumer Awareness
On a scale from 1 and 5, how would you rank the role of the following
intermediaries in promoting consumer awareness?
5
Energy
Water and sanitation
Telecom
Multi-sector
4 Total sample
Importance
3
Relative
of
Scale 2
1
iates
leaders offices NGOs zations
providers assoc Journalists institutions
Government organi
Service regulatory
community
Consumer Religious
Local
Rural
Bilateral/Multilateral
Source: EAPIRF survey 2004. Note: 1--insignificant, 2--fairly significant; 3--significant; 4--important;
5--very important; NA = Not applicable.
of intermediaries to reach consumers. Intermediaries are to a large extent sector-specific.
Energy regulators tend to leverage the influence of rural community leaders to reach con-
sumers; water and sanitation regulators rank NGOs as the most effective intermediaries, while
multi-sector agencies consider journalists the most valuable intermediary. On the contrary,
consumer associations are not perceived as playing an important role in informing costumers.
This may indicate that only a few consumer associations in the EAP region have so far built
the capacity required to play a significant role in the regulatory process.
Resolving Consumer Complaints
Effective complaint resolution hinges on the concerted effort of regulatory agencies and
stakeholders, including service providers and consumer organizations. The first issue to be
addressed in designing a formal complaint system is to identify the role of different stake-
holders at each stage of the complaint resolution process. The following entities may be
involved in resolving consumer complaints:
Regulatedserviceproviders.Serviceprovidersoftenrepresentthefirstportofcallfor
handling consumer complaints. This is for example the case in the UK, where in
1992 the Competition and Services Utilities Act made consumer complaint provi-
sions part of license requirements.
Regulatorybodies.Regulatorscanalsoactasfirstportofcallforhandlingconsumer
complaints and directing complaints to the attention of service providers for timely
Consumer Participation in Infrastructure Regulation 25
resolution. The advantage of this option is to give regulators access to information
on service providers' performance, without the need for retrieving consumer com-
plaint data from the service providers. However, handling consumer complaints is
a resource-intensive task that may require the establishment of a dedicated in-
house consumer office. This option may therefore be unfeasible when there are sig-
nificant constraints in regulatory capacity, as it is often the case for newly
established regulators in developing countries. Even if regulators contract out com-
plaint-handling functions, they must retain an oversight and monitoring role over
service providers' performance and the right to step in should service providers not
deal with the complaints effectively.
Consumer associations. Consumer associations often play a key role at different
stages of the complaint resolution process, for example by acting as a first port of
call for collecting consumer complaints and facilitating resolution of consumer dis-
putes. Based on Consumer International's experience, involving consumer associ-
ations in the complaint resolution process can deliver significant economies of
scope if consumer associations also act as consumers' spokespersons in the regula-
tory process, because the complaints received from consumers can be effectively
used to inform consumer representation (Lazzarini 2004). For example, this
arrangement is currently in place in the UK, where independent Consumer Coun-
cils are meant to provide "one stop shops" for consumer complaints not resolved
by utility companies (DTI 1998).
Ombudsmen. Ombudsmen can also be involved in the complaint resolution
process. This is for example the case in several Latin American countries (Peru,
Argentina and El Salvador) and in Macedonia, where the jurisdiction of Ombuds-
men, originally conceived as defenders of human rights, has started to extend to
infrastructure industries. For instance, in Macedonia, the Ombudsman recently
ruled against the practice of random customer disconnection from electricity sup-
ply in areas where the billing system does not enable service providers to detect
delinquent customers. Consumer International is currently assessing whether the
Ombudsman model could be exported to other Eastern European countries (Laz-
zarini 2004). As discussed below, Ombudsmen have also been established in Aus-
tralia with the specific remit of solving disputes between consumers and electricity
businesses.
Service providers represent the first port of call for handling consumers' complaints in
most of the surveyed EAP regulatory regimes (see Figure 4.2 below). For example, in the
Philippines, the Energy Regulatory Commission (ERC) has mandated the largest distrib-
ution utility in the country, the Manila Electric Company (MERALCO), to establish Con-
sumer Welfare Desks in all its branch offices to handle consumer complaints; only
un-resolved complaints are submitted to the in-house consumer department of the regu-
latory agency, the Consumer Affairs Service. Similarly, in the Malaysian electricity sector,
Consumer Welfare Desks have been established within each service provider to handle
consumer complaints.
Overall, half of the surveyed regulatory bodies are directly involved in the process of
handling consumer complaints: 18 percent of the regulators represent the first and
(unique) port of call for handling consumer complaints; in addition, 33 percent adopt a
26 World Bank Working Paper
Figure 4.2: First Port of Call for Handling Consumer Complaints
Consumer complaints are directed in the first instance to . . .
100%
90%
80%
70%
60%
50% 44%
40%
30% 24%
18%
20%
10% 7%
4%
2%
0%
Service Service Regulator only Service Consumer Not available
provider only provider and provider, Association
regulator regulator and only
consumer
association
Source: EAPIRF survey 2004. Multiple-answers allowed.
"mixed" complaint handling procedure, where consumers have the choice as to whether
to direct complaints to regulators, service providers or consumer associations. For exam-
ple, the National Telecommunication Commission of the Philippines has set up local One
Stop Public Assistance Centers in collaboration with telecom companies to address con-
sumer complaints and public concerns. There are currently 14 regional centres nationwide,
providing decentralized complaint-resolution assistance to consumers.
Consumer associations do not play a significant role in resolving consumer com-
plaints; on the other hand, a few significant exceptions are to be acknowledged, namely the
Consumer Forum in Malaysia and the Yayasan Lembaga Konsumen Indonesia (YLKI) in
Indonesia:
Consumer Forum (Malaysia). In the Malaysian telecom sector, the complainant
must first give the opportunity to the relevant licensee to provide resolution for the
complaint; however, the consumer, if not satisfied with the resolution of the com-
plaint by the licensee, can ask for referral to the Consumer Forum, an independent
consumer organization (see also Box 3). If the Consumer Forum does not succeed
in resolving the complaint, the consumer may then lodge a complaint to the
Malaysia Communications and Multimedia Commission (MCMC).
Yayasan Lembaga Konsumen Indonesia (Indonesia). In Indonesia, the YLKI has
devised a quasi-judicial mechanism of intervention to resolve consumer com-
Consumer Participation in Infrastructure Regulation 27
plaints. YLKI collects complaints from consumers across all infrastructure sectors
over a 3�4 month period; once a sufficient number of consumer complaints are
gathered, YLKI organizes a joint meeting with the regulator, the service providers,
the complainants and the media, where YLKI acts as a mediator, in order to facil-
itate the resolution of the complaints.
Similarly, Ombudsmen hitherto have not played an active role in resolving complaints in
EAP infrastructure industries. However, sector-specific Ombudsmen have been estab-
lished as autonomous dispute resolution offices of last resort in two Australian regions,
Tasmania and South Australia.13 In these two regulatory regimes, consumer complaints
are directed in the first instance to licensed service providers and referred to the Electric-
ity Industry Ombudsman only if unresolved. Although the regulatory agencies do not han-
dle individual consumer complaints, they retain responsibility for investigating systemic
complaints.
Soliciting Consumer Input
There is limited scope for contracting out responsibilities for soliciting consumer input.
The regulatory body is the entity best placed to identify the type of consumer input
required to inform the regulatory process. However, there are best practice examples of
partnerships between the regulator and stakeholders in conducting joint research on con-
sumer issues�for example, in the water sector in England and Wales, Ofwat, the economic
regulator, commissioned in partnership with various stakeholders a joint national survey
on consumer priorities to inform the 2004 price review.14 The joint investigation was
intended to address the coordination problems that arose at the 1999 price review, when
each stakeholder conducted its own consumer survey using different methodologies. As a
result, the differences in methodology significantly limited the scope for comparing results
and reaching mutual agreement on consumer priorities.
13. Tasmania and South Australia are respectively under the regulatory jurisdiction of the Office of
the Tasmanian Energy Regulator and the Services Commission of South Australia (ESCOSA).
14. The consumer survey was jointly commissioned by the Department for Environment, Food and
Rural Affairs (Defra), the Welsh Assembly Government, Ofwat, WaterVoice, the Environment Agency,
the Drinking Water Inspectorate, English Nature, Wildlife and Countryside Link.
CHAPTER 5
Involving the Poor in the
Regulatory Process
S hould regulators be called upon to pursue socio-political objectives, even when there is
a clear structural separation between policy-making and regulatory functions? There
may be an argument for pursuing social policy objectives through the political process,
leaving the regulatory framework unfettered, on the grounds that social interventions involve
redistribution of resources. However, a clear demarcation between regulatory and social pol-
icy is often impossible. Inevitably, regulators are confronted with technical decisions that
have key social implications, especially in sectors where the priority is expanding access to the
un-served population. The demarcation between regulatory and social interventions is par-
ticularly blurred in the EAP region, where most regulators (in particular government agen-
cies) are actively involved in designing pro-poor policies, as highlighted in Box 4 below.15
Accounting for the perspective of the poor involves specific regulatory challenges,
which need to be addressed within the frame of a coherent pro-poor strategy. Key chal-
lenges include, among others:
Reachingouttothepoorbyconductingpro-poorawarenesscampaigns;
Consultingthepooronabroaderrangeofissuesthantherestofthecustomerbase,
including affordability issues; and
15. Based on the survey results, government regulators tend to be more involved in pro-poor policies
than independent regulators, with 75 percent of the surveyed government being responsible for designing
pro-poor policies, against 59 percent of independent regulators (see Figure 5.1). However, the fact that only
59 percent of government regulators solicit information on affordability (see Figure 3.4), while 75 percent
design pro-poor policies, suggests that government regulators may need to scale up their effort to solicit
information from vulnerable customers. The results need however to be treated with caution, given the
limited number of independent regulators in the sample.
29
30 World Bank Working Paper
Accounting for the needs of the poor, by partnering with stakeholders and inter-
mediaries in designing the regulatory regimes.
Without aiming to be exhaustive, this chapter discusses two instruments EAP regulators
rely on in pursuing a pro-poor regulatory strategy, namely pro-poor awareness campaigns
and partnership arrangements.
Box 4: Designing a Pro-poor Regulatory Strategy
Addressing the needs of the poor requires an integrated approach cutting across different areas of
intervention. Regulators have a number of instruments available to shape a pro-poor regulatory
strategy, including:
Designing pro-poor policies. Regulation is often set within a broader strategy of social policy
interventions. Figure 5.1 below indicates that most regulators are actively involved in the
design of pro-poor policies; main areas of intervention include subsidy schemes, universal ser-
vice obligations and access policies.
Setting minimum standards of service. Regulators must ensure that quality of service provision
is in line with users' expectations and meet minimum standards. Seventy percent of the sur-
veyed regulators are involved in setting minimum quality standards. Regulators concerned
with the welfare of the poor may also consider setting lower quality standards in areas under-
served by traditional utilities to expand access.
Fostering competition. Competition can deliver benefits to customers by widening the range of
products available on the market, constraining price increases and improving quality of ser-
vice. As shown in Figure 5.1 below, 56 percent of the surveyed regulators in the EAP region take
actions to facilitate the development of competition. However, the scope for competition dif-
fers significantly across sectors. For example, all telecom regulators have taken steps to develop
competition in the market, against 50 percent of the regulators in the electricity sector. In the
water sector, the nature of local monopoly of the industry significantly restraints the scope for
introducing competition, although some forms of competition can be introduced by bench-
marking service providers' performance or allowing unregulated service providers to compete
with regulated utilities. However, in the EAP region, only 3 out of 11 surveyed water and sani-
tation regulators have so far taken steps to introduce forms of competition in water supply.
Partnering with service providers to introduce pro-poor payment schemes. Introducing payment
schemes tailored to the needs of low-income customers is critical to solve affordability issues, in
particular in relation to connection fees. Forty-two percent of the surveyed regulators partner
with service providers to design payment methods suitable for the poor. For example, the Office
of the Tasmanian Energy Regulator, Australia require service providers to develop credit policies
for customers willing to pay for service provision but unable to access commercial credit lines.
Designing disconnection policies. Bans on disconnection are not to the benefit of low-income
consumers, as they fail to distinguish between customers in financial hardship from those sim-
ply unwilling to pay their bills. Companies do need the threat of disconnection to secure pay-
ment from those who are able to pay but choose not to. However, a balance must be struck
between ensuring timely debt recovery and protecting the rights of those customers who gen-
uinely cannot pay. Customer disconnection for non-payment of bills ought indeed to be com-
plemented by safeguards to protect consumer rights during the disconnection process, such as
adequate notice periods before disconnection. Seventy percent of the surveyed regulators in
the EAP region do allow disconnection for non-payment of bills, while the remaining 30 per-
cent do not have a specific disconnection policy in place. The survey results indicate that inde-
pendent regulators tend to set slightly stricter disconnection policies than government
regulators, requiring an average notice period of 2.3 weeks to disconnect delinquent cus-
tomers, compared to an average notice period of 3.2 weeks for government regulators.
Consumer Participation in Infrastructure Regulation 31
Figure 5.1: Pro-poor Regulatory Framework
What action(s) does your agency promote to pro-actively defend consumer
interests?
100%
Government
Independent Agency
80% 76%
75% Total sample
69% 69%
64%
59%
60% 57% 56%
53%
47%
42%
39%
40%
20%
0%
Design pro-poor Set minimum Facilitate Partnership with
policies standard of service competition service providers
Source: EAPIRF survey 2004. Multiple-answers allowed.
Pro-poor Awareness Campaigns
Raising consumers' awareness is even more important in the context of a pro-poor regu-
latory strategy. For example, poor consumers, when served by non-traditional service
providers, are often unaware of the advantages of switching to regulated service providers
in terms of better quality of service and cost savings. However, reaching out to the poor is
complicated by the geographical isolation of low-income communities, which are often
located in the most remote areas within the regulatory jurisdiction. Regulators must there-
fore devise specific awareness campaigns targeted to the poor.
The survey results suggest that regulators in the region may have to scale up their effort
in reaching out to the poor: as yet, the majority of the regulators have not devised specific
strategies to promote consumer awareness among the poor. However, a minority (40 per-
cent) of surveyed regulators do target the poor with specific awareness campaigns. Most of
these regulators tailor their awareness campaigns according to whether the poor are located
in rural or urban areas of their jurisdiction. Pro-poor consumer awareness strategies can be
classified in the following three categories on the basis of the selected vehicle of communica-
tion:
Developinginformationstrategiesbasedonthemedia,byrunningpro-poormedia
campaigns (for example, Philippines, telecom).
Taking active steps in involving local communities in the regulatory process, by
organizing road shows and informal meetings in local communities (for example,
Cambodia and the Philippines, water; Solomon Islands, energy), conducting occa-
32 World Bank Working Paper
sional one-to-one visits (Indonesia and Tonga, water), reaching out to communi-
ties through local religious groups (Solomon islands, energy).
Establishingspecialconsultativebodiestoreachouttothepoor,byfundingcom-
munity groups (Australia) or relying on water and sanitation committees (Lao).
The picture emerging from the survey results is that a flexible and informal approach is
mostly used to reach out to the poor among the surveyed regulators. However, the feasi-
bility of this approach depends on the size of the regulatory jurisdiction as well as on the
structure of the regulating agency. An informal approach may indeed be unfeasible when
the regulatory agency has a large jurisdiction and a very centralized structure. This is con-
sistent with the fact that informal pro-poor awareness campaigns are mostly conducted in
small countries (such as the Pacific Islands) or in the water sector, where regulation is often
decentralized at the municipality level given the local nature of service provision.
Partnership Arrangements
Given the specific challenges of involving the poor in the regulatory process, broader part-
nerships between regulators and stakeholders are crucial to effectively involve them in the
regulatory process. There are examples of successful partnerships between regulators and
governments in the EAP region. For example, in Papua New Guinea, the Independent Con-
sumer and Competition Commission (ICCC), an independent regulatory agency, is work-
ing in partnership with the government in the implementation of community services
obligations (see Box 5 below for a more detailed description of this partnership arrangement).
Partnerships between regulators and service providers are also a relatively common practice:
42 percent of the surveyed regulators work in partnership with service providers to design
methods of payment more suitable to the needs of the poor (see Figure 5.1), including nego-
tiation of deferred connection fees or payment discounts for poor consumers.
Box 5: Papua New Guinea Community Service Obligations
Although in Papua New Guinea all consumers are under the ICCC's regulatory responsibility, part of
the population is not directly supplied by the regulated service providers because of affordability or
availability issues. As part of its overall privatization program, the Government of Papua New Guinea
has set in place binding Community Services Obligations (CSO) for all major State-owned service
providers to the benefit of consumers in underserved areas. Under this arrangement, major utility ser-
vice providers, such as Telikom PNG and PNG Power, are required to connect rural households to their
network at their own cost and recover these expenses through tax credits from the Government. For
example, under its revised regulatory contract in the telecommunications industry, Telikom PNG is
required to connect a phone for every 500 persons in the rural areas, including villages with less than
500 persons who have special needs.1 The regulatory functions of the ICCC in this arrangement are:
Promoting the effective operation of the CSO scheme in accordance with the CSO Principles for
the benefit of consumers;
Monitoring and reporting on the performance of regulated entities in complying with CSO
obligations;
Administering CSO funding and conducting appropriate audits to ensure compliance with CSO
obligations.
Source: EAPIRF survey 2004.
1Although finalized, the arrangement will be implemented upon conclusion of Telikom's partial sale.
CHAPTER 6
Conclusions
T he paper has discussed consumer participation in infrastructure regulation in the
EAP region, drawing on the results of a survey questionnaire completed by 45 reg-
ulators in the region. The assessment of consumer participation in the EAP region
has been informed by the following conceptual framework.
Three main rungs can be identified in the ladder of consumer engagement in infrastruc-
ture regulation, namely information, consultation and partnership. Moving up the ladder of
consumer participation is a lengthy and difficult process, which needs to be supported by an
enabling institutional environment. In addition, higher rungs of consumer participation may
not necessarily lead to better regulatory outcomes, in particular in developing countries where
regulators do not have yet the capacity to handle sophisticated consultation processes.
Among the key institutional requirements for effective consumer participation are the
independence of the regulatory agency from political interference and vested interests and
reliance on consumer spokespersons to represent consumers' interests. The institutional
mechanisms for consumer representation can be classified into two broad categories, depend-
ing on whether the representative entity is located within or outside the regulatory agency. It is
however an open debate whether integration or independence of consumer representation
with respect to the independent agency is a preferable option for consumer representation.
Key regulatory functions vis-�-vis consumers include: (i) informing consumers; (ii)
resolving consumer complaints and (iii) soliciting consumer input. Each of these functions
may in theory lead to a progressively higher rung of consumer participation in the regula-
tory process, from information to partnership. However, the level of consumer participa-
tion in the regulatory process is ultimately determined by how effectively regulators
perform their functions vis-�-vis consumers.
There is scope for contracting out regulatory functions vis-�-vis consumers to stakehold-
ers and intermediaries. For example, government and service providers can play an important
33
34 World Bank Working Paper
role in raising consumer awareness, while service providers and consumer associations can
function as a first port of call for resolving consumer complaints. On the other hand, there is
limited scope for delegating responsibilities for soliciting consumer input to external entities,
as regulators are expected to possess better knowledge than other stakeholders on the type of
information required from consumers to inform the regulatory process.
The demarcation between regulatory and social intervention is often blurred, as reg-
ulatory decisions inevitably have key social implications. Regulators have therefore the
obligation to involve the poor in the regulatory process to ensure that their needs are ade-
quately addressed. However, regulators face specific challenges in reaching out to the poor.
Targeted awareness campaigns and broader partnerships between regulators and stake-
holders are among the instruments regulators often deploy to meet the challenges of engag-
ing the poor in the regulatory process.
In light of this conceptual framework, the following conclusions can be drawn from
the survey results on the status of consumer participation in infrastructure regulation in
the EAP region.
Institutional requirements for consumer participation. Regulatory independence and
consumer representation are among two main institutional requirements for consumer
participation:
Regulatory independence. Regulatory independence is not widespread in the EAP
region, with less than 40 percent of the surveyed regulators being established as inde-
pendent agencies. However, formal independence may not be an accurate measure
of the true extent of autonomy of the surveyed agencies. Indeed, independence is a
relative rather than absolute concept and, as such, matters more in the long- than in
the short-term.
Consumer representation. Consumer representation is a common practice in the
region. The onus of consumer representation is mostly on in-house consumer
bureaus. Only a minority of regulatory regimes rely on external advisory bodies
(such as consumer councils or consumer associations) to represent consumers.
Reliance on in-house consumer representation suggests that consumer spokesper-
sons may have limited capacity to challenge regulatory decisions, being located
within the regulating agency.
Performing regulatory functions. The following main conclusions can be drawn on the role of
the regulators in engaging consumers in the regulatory process (see summary in Table 6.1):
Informingconsumers.ThemajorityofthesurveyedEAPregulatorsadoptfairlyopen
disclosure policies as far as procedures, decisions and benchmarked performance
of service providers is concerned. As yet, only a minority disclose to the public
licences and contracts with service providers. Regulators could therefore take fur-
ther steps to enhance the transparency of the regulatory process by ensuring that
licenses and contracts are also made available to the public. The media is the pre-
vailing communication channel for raising consumer awareness among the sur-
veyed regulators. In addition, half of the regulators conduct awareness campaigns
using two-way communication channels (for example, workshops, or one-on-one
meetings). Two-way forms of communication, if effectively utilized, can potentially
lead to a higher rung of consumer engagement than media campaigns.
Table 6.1: Consumer Participation in Infrastructure Regulation
Function Scope of Regulatory Action Channels Responsible Entity
Informing (1) Enhancing the transparency of the regulatory process. Informa- One-way channels: Regulator supported by
consumers tion disclosed to the public includes: Media (64%) Government and service
Procedures and decisions (71%) providers
Benchmarked performance of service providers (51%) Two-way channels: Sector-specific intermedi-
Licenses and contracts (44%) Workshops (53%) aries (for example, NGOs in
water, rural community
(2) Running consumer awareness campaigns. The role of the regu- One-to-one meetings (47%)
leaders in energy)
lator is reported to be "Very well known" (1/3 of surveyed regula-
tors) or "Somewhat known" to consumers (2/3)
Resolving (1) Half of the regulators are directly involved in handling con- Formal complaint resolution mech- Service provider only (44%)
consumer sumer complaints. anisms (2/3 of the surveyed regulatory Service provider and regula- Consumer
complaints agencies)
(2) Regulators not directly involved retain responsibilities for: tor (24%)
Reviewing the complaint records maintained by the service Regulator only (18%)
providers (49%) Service provider, regulator Participation
Stepping in if the complaint is not solved within a specific and consumer associations
period (49%) (7%)
Setting a financial incentive scheme to reward/penalize service Consumer associations only
providers on the basis of their performance in handling com- (2%) in
plaints (13%) Infrastructure
Soliciting Input elicited includes: Informal consultation / outreach Regulator
consumer Quality of service (71%) strategies (78%)
input
Consumer satisfaction (69%) Formal meetings and/or public
hearings (64%)
Affordability (49%) Both formal and informal channels Regulation
Billing related issues (47%) (47%)
Consumption pattern (40%)
Note: Percentage of regulators within bracket. 35
Source: EAPIRF survey 2004.
36 World Bank Working Paper
Resolvingconsumercomplaints.MostofthesurveyedEAPregulatorshaveinplace
formal procedures to deal with consumer complaints. However, almost one-third
of the surveyed agencies do not exercise any regulatory power vis-�-vis service
providers to enforce complaint resolution. This suggests that regulators may need
to intervene more actively to hold service providers accountable for resolving con-
sumer complaints.
Solicitingconsumerinput.Qualityofserviceandconsumersatisfactionarethetwo
inputs most often solicited from consumers to inform regulatory decisions. Infor-
mal channels (either informal consultations or informal outreach strategies) are
mostly used to consult with consumers, although more than half of the surveyed
regulators also rely on formal channels (either public hearings or formal consul-
tations with consumer advisory bodies) for consumer consultations.
Contracting out regulatory functions. The practice of contracting out regulatory functions
vis-�-vis consumers is relatively widespread in the EAP region. For example, the surveyed
regulators highly value the role of government and service providers in raising consumer
awareness. In most of the regulatory regimes, service providers also represent the first port
of call for handling consumer complaints. Moreover, regulators tend to leverage the exper-
tise of sector-specific intermediaries (such as NGOs in the water sector and community
leaders in the energy sector) to reach out to consumers. The available evidence also sug-
gests that consumer associations may not be actively engaged in the regulatory process in
infrastructure industries in the region. As yet, consumer associations do not appear to play
a significant role in either informing consumers or resolving consumer complaints.
Involving the poor in the regulatory process. Almost two-thirds of the surveyed regulators
are directly involved in setting pro-poor policies. This implies that EAP regulators must
take active steps to involve the poor in the regulatory process to ensure that their needs are
adequately addressed. However, the survey results suggest that regulators in the region may
have to scale up their effort in reaching out to the poor. As yet, only a minority (40 per-
cent) of the surveyed regulators do target the poor with specific awareness campaigns.
Moreover, most rely on informal strategies (mainly based on-to-one meetings and occa-
sional visits to local communities). On the other hand, there are examples of successful
partnerships between regulators and stakeholders in designing pro-poor policies. In par-
ticular, half of the surveyed regulators rely on partnerships with service providers to design
pro-poor payment schemes.
Overall, EAP regulators have successfully begun to involve consumers in the regula-
tory process. The available evidence indeed indicates that the surveyed regulators are mov-
ing from merely informing to actively consulting with consumers. However, regulators
must take further actions to move up to the rung of consultation in the ladder of consumer
engagement depicted in Box 1. In particular, consumer participation would benefit from
the following regulatory actions: more systematic reliance on two-way channels of com-
munication for awareness campaigns, more open disclosure policies, tighter regulatory
interventions to hold service providers accountable for resolving consumer complaints and
more effective strategies to reach out to the poor.
APPENDIXES
APPENDIX A
Sample Description
T he results of the survey questionnaire were presented during the second meeting
of the East Asia and Pacific (EAP) Forum of Infrastructure Regulators held in
Manila April 5�7, 2004. The survey questionnaire covered 45 regulatory bodies
from 21 countries and from all infrastructure industries (15 energy regulators; 11 regula-
tors in water and sanitation; 10 regulators in telecom; 1 transport regulators and 8 multi-
sector regulators). Among the 45 surveyed regulators, 17 are established as independent
agencies.
Regulators contacted for EAP Survey
Energy [15]
1. Office of the Tasmanian Energy Regu- 8. Ministry of Industry and Handicraft,
lator, Australia Lao
2. Electricity Authority of Cambodia, 9. Energy Commission, Malaysia
Cambodia 10. Energy Regulatory Authority, Mongolia
3. Fiji Electricity Authority, Fiji Islands 11. Energy Regulatory Commission,
4. Ministry of Energy and Mineral Philippines
Resources, Indonesia 12. Energy Market Authority, Singapore
5. The Oil and Gas Downstream Regula- 13. S.I. Electricity Authority, Solomon
tory Body, Indonesia Islands
6. Energy Planning Unit, Kiribati 14. Energy Policy and Planning Office,
7. Korean Electricity Commission, Thailand
Korea 15. Ministry of Industry, Vietnam
39
40 World Bank Working Paper
Transport [1] Multi-sectoral [8]
16. Maritime Industry Authority, 38. Essential Services Commission of
Philippines South Australia (ESCOSA), Australia
39. Commerce Commission, Fiji Islands
Water and sanitation [11] 40. Ministry of Domestic Trade and Con-
17. Department of Potable Water Supply, sumer Affairs, Malaysia
Cambodia 41. Chuuk Public Utility Corporation,
18. National Urban Water Quality Micronesia
Centre, China PR 42. Kosrae Utilities Authority,
19. Water Supplies Department, Micronesia
Hong Kong 43. Yap State Public Service Corporation,
20. Jakarta Water Supply Regulatory Micronesia
Body, Indonesia 44. Department of Transportation, Com-
21. Water Supply Authority, Lao munications and Infrastructure,
22. PNG Waterboard, Papua New Guinea Micronesia
23. MWSS Regulatory Office, Philippines 45. Independent Consumer and Compe-
24. Samoa Water Authority, Samoa tition Commission, Papua New
25. Department of Mines and Energy, Guinea
Solomon Islands
26. Department of Water Resources, Countries
Thailand 1. Australia
27. Tonga Water Board, Tonga 2. Cambodia
3. China PR
Telecommunications [10] 4. Fiji Islands
28. Telecom Regulation MPTC, 5. Hong Kong
Cambodia 6. Indonesia
29. Ministry of Information Industry, 7. Kiribati
China PR 8. Korea
30. Office of the Telecommunications 9. Lao
Authority, Hong Kong 10. Malaysia
31. Department of Post and Telecommu- 11. Micronesia
nications, Lao 12. Mongolia
32. Malaysian Communications and 13. Papua New Guinea
Multimedia, Malaysia 14. Philippines
33. Communications Regulatory 15. Samoa
Commission, Mongolia 16. Singapore
34. National Telecommunications 17. Solomon Islands
Commission, Philippines 18. Thailand
35. Post and Telegraph Department, 19. Tonga
Thailand 20. Vanuatu
36. Department of Communications, 21. Vietnam
Tonga
37. Ministry of Infrastructure & Public
Utilities, Vanuatu
Compulsory Licensing for Public Health 41
Detailed Sample
Agencies Sector
Water and Multi-
Total Independent Energy Sanitation Telecom Transport sector
Australia 2 2 1 1
Cambodia 3 1 1 1 1
China PR 2 1 1 1
Fiji Islands 2 1 1 1
Hong Kong 2 1 1
Indonesia 3 2 2 1
Kiribati 1 1
Korea 1 1 1
Lao 3 1 1 1
Malaysia 3 2 1 1 1
Micronesia 4 2 1 3
Mongolia 2 2 1 1
Papua New Guinea 2 1 1 1
Philippines 4 1 1 1 1
Samoa 1 1
Singapore 1 1
Solomon Islands 2 1 1 1
Thailand 3 1 1 1 1
Tonga 2 1 1
Vanuatu 1 1
Vietnam 1 1
Total 45 17 15 11 10 1 8
APPENDIX B
Survey
EAP Country Survey on Consumer Issues in Utility Regulation
1. Please give us the following background information on your regulatory agency
A. Country _________________________________________
B. Name of regulatory agency _________________________________________
C. Year of establishment _________________________________________
D. Type of organization
Government Independent agency
E. Sector(s) of responsibility
Energy Water and sanitation
Telecom Transport
Other (please specify)
________________________________________________________________
F. Please list the primary duties / objectives of your agency
1. _____________________________________________________________
________________________________________________________________
2. _____________________________________________________________
________________________________________________________________
3. _____________________________________________________________
________________________________________________________________
43
44 World Bank Working Paper
G. How many service providers does your agency regulate?
- Privately owned companies _________________
- Publicly owned companies _________________
- Mixed ownership companies _________________
- Not applicable (please specify why)
___________________________________________________________________
H. How many customers (approximately) are supplied by regulated service providers?
Total customers ________ of which: Households __________
I. How many households are under your regulatory responsibility but are not directly
supplied by regulated service providers?
________________________________________________________________
________________________________________________________________
2. Is the protection of consumer rights explicitly mandated in legislation?
Yes No
(Only if you answered Yes to the previous question) Consumer protection is
mandated in:
Generalconsumerlaw
Utility-specificlaw
Sectorlaw(e.g.electricitylaw)
Decrees/contracts/licenseswithlegalstatus
Thelawunderwhichyouragencyisestablished
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
3. On a scale from 1 to 5, how would you rank the following stakeholder groups in terms
of importance to your agency's role? (1--very low, 2--low, 3--medium, 4--high, 5--
very high)
Representativesof
Industrial/commercial consumers
Domestic consumers/households
Representativesofserviceproviders
Othergovernmentofficials
4. On average, what percentage of your agency's time is spent dealing directly with con-
sumers?
0�5%
6�10%
11�25%
26�50%
Over50%
Compulsory Licensing for Public Health 45
5. What action(s) does your agency promote to pro-actively defend consumer interests?
Designingpro-poorpolicies(e.g.subsidyschemes)
Please describe briefly the actions taken
________________________________________________________________
________________________________________________________________
________________________________________________________________
Settinglegallybindingminimumstandardofservice
Facilitatingthedevelopmentofcompetitionamongserviceproviders
Please describe briefly the actions taken
________________________________________________________________
________________________________________________________________
________________________________________________________________
Workinginpartnershipwithserviceproviderstointroducemoreflexible
payment schemes targeted to poor consumers
Please describe briefly the actions taken
________________________________________________________________
________________________________________________________________
________________________________________________________________
Notapplicable
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
6. Does your agency have a specific customer disconnection policy for non-payment
of bills?
Yes No
(Only if you answered Yes to the previous question) Customer disconnection for non-
payment of bills is
Banned
Alwaysallowed,withnonoticerequirement
Allowedwhenanoticeof__weeksisprovidedtothecustomer
7. Which of following information does your agency elicit from consumers for making
regulatory decisions?
Affordability(e.g.utilitybillasapercentageoftotalincome)
Consumptionpattern
Consumersatisfaction
Qualityofservice
Billing-relatedmatters
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
46 World Bank Working Paper
8. Which procedure(s) does your agency employ for soliciting consumer input?
Publichearing
Informalconsultationwithconsumerrepresentatives
Informalpublicoutreach(e.g.informalmeetings)
Formalconsultationwithadvisorybodies
Consumersurveys
Notapplicable
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
9. Does your agency have any of the following institutional features in place for engag-
ing consumers in the regulatory process?
In-houseconsumeraffairsbureau/staff
SpecializedOmbudsmanperson
Regionaloffices
Consumersrepresentedonagencyboard
Formaladvisory/consultativegroup
Notapplicable
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
Please provide further information on any of these features:
________________________________________________________________
________________________________________________________________
________________________________________________________________
10. On the average, how would you rate the importance of consumer input for:
Very Somewhat Not
helpful helpful helpful
Making regulatory decisions
Educating consumers on their rights
Building public support for the agency and its decisions
Other (please specify)
__________________________________________
11. Which actions does your agency take to ensure the promotion of consumer aware-
ness--consumer understanding of their rights and obligations under the regulatory
system, as well as of the role of your agency?
Disclosinglicensesandcontracts
Disclosingproceduresanddecisions
Disclosingbenchmarkedperformanceofserviceoperators
vis-�-vis consumers
Notapplicable
Compulsory Licensing for Public Health 47
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
12. Which channel(s) does your agency employ to promote consumer awareness?
Web-site/Emails
Radio/televisionadvertisements
Pressadvertisements
Materialincludedinbills
Word-of-mouth
Workshops
Informationkiosks
One-to-onemeetings
Notapplicable
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
13. Does your agency have a specific strategy to promote consumer awareness among the
poorest rural members of society?
Yes No
(Only if you answered Yes to the previous question) Which communication medium does
your agency employ to interact with this consumer group?
________________________________________________________________
________________________________________________________________
________________________________________________________________
14. Does your agency have a specific strategy to promote consumer awareness among the
poorest urban members of the society?
Yes No
(Only if you answered Yes to the previous question) Which communication medium does
your agency employ to interact with this consumer group?
________________________________________________________________
________________________________________________________________
________________________________________________________________
15. On a scale from 1 and 5, how would you rank the role of the following intermediaries
in promoting consumer awareness? (1--insignificant, 5--very important)
Journalists
NGOs
Religiousinstitutions
Serviceproviders
Government
Ruralcommunityleaders
48 World Bank Working Paper
Bilateral/Multilateralorganizations
Localregulatoryoffices
Consumerassociations
16. How well do you think the role of your agency in your areas of responsibility is known
to consumers?
Verywellknown
Somewhatknown
Notknown
17. On the average, how many complaints about the quality of utility service are received
each year:
Intotal? ___________
Fromdomesticcustomers/households? ___________
18. Is there a formal standard procedure in place to deal with consumer complaints?
Yes No
(Only if you answered Yes to the previous question) Please describe the main features of
the complaint handling procedure.
________________________________________________________________
________________________________________________________________
________________________________________________________________
19. Consumer complaints are directed in the first instance to:
Regulatoryagency
Centraloffice
Localoffices
Serviceproviders
Localcourts/arbitrators
Consumerassociation
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
20. If consumer complaints are directed in the first instance to your agency, what mech-
anism(s) does your agency employ for eliciting/processing complaints?
Dedicatedtelephoneline
Complainthandlingformwithfollow-upmechanism
through telephone or mail
Web-site/E-mails
Informationincludedinbills
Notapplicable
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
Compulsory Licensing for Public Health 49
21. If service providers are responsible for dealing in the first instance with consumer
complaints, which mechanisms does your agency have in place to ensure that con-
sumer complaints are handled effectively?
Reviewofthecomplaintrecordsmaintainedbytheserviceproviders
Financialincentiveschemetoreward/penalizeserviceprovidersonthe
basis of their performance in handling complaints
Youragencyisinvolvedifthecomplaintisnotresolvedwithinacertain
period of time
Notapplicable
Other(pleasespecify)
________________________________________________________________
________________________________________________________________
________________________________________________________________
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51
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Consumer Participaton in Infrastructure Regulation is part of
the World Bank Working Paper series. These papers are pub-
lished to communicate the results of the Bank's ongoing
research and to stimulate public discussion.
This paper assesses consumer participation in infrastructure
regulation in the East Asia and Pacific region (EAP). The
assessment draws on the results of a survey questionnaire
conducted among 45 infrastructure regulators in the region. It
finds that EAP regulators have successfully begun to involve
consumers in the regulatory process: consumer representa-
tion is a well-established practice in the region; and regulators
draw on standard mechanisms to inform consumers, resolve
consumer complaints, and solicit consumer input. However,
regulators must take further actions to firmly move up the
"ladder of consumer engagement," from merely informing to
actively consulting with consumers. In particular, consumer
participation would benefit from more open disclosure poli-
cies, more effective strategies to reach out to the poor, and
tighter regulatory intervention to hold service providers
accountable for resolving consumer complaints.
World Bank Working Papers are available individually or by
subscription, both in print and online.
ISBN 0-8213-6380-8
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