MONTREAL, Canada – Beyond ensuring fair and dynamic competition in electricity markets, energy regulators are expected to face more complex challenges as climate change concerns are factored into the equation.

According to Sir John Mogg, president of the Council of European Energy Regulators (CEER), “the regulatory landscape will change as a result of the global challenge of climate change, and in many countries is already changing substantially.”

He emphasized that “regulators have an important role in providing expert advice which assists policy makers in making better decisions on how to tackle clime change most effectively.”

With the industry’s structural shift, experts are noting that policy and regulatory approaches must also transform, hence, attempts at cut-and-paste decision patterns will no longer work.

“Regulation of electricity and gas – and in particular the way we encourage investments in infrastructure – can have a significant impact on our ability to connect new low carbon sources of energy and in providing information to consumers to enable them to make informed choices on things like energy saving,” the CEER chief said.

In the menu of policy and rate-setting frameworks thrown into laps of regulators are ones that underpin low-carbon investments, such as those on renewable energy projects as well energy efficiency and conservation programs. It is also worth monitoring how regulators would balance the regulatory set-up so the ‘green alternative’ can successfully infiltrate the energy domain -- on the investment side and how the consumers would eventually accept the option.

Mr. Mogg added that regulators have a very crucial role “to play in encouraging companies to make the right and timely investment decisions, and in encouraging research and development.”

For any regulatory set-up to be effective and become investment-enticing though, he noted that the framework must thrive strong enough so competitive forces are stimulated to work efficiently. In the long run, he averred that consumers “wish” for cheaper prices may also roll up.

“Effective competition is the best way to ensure that over the long run consumers get the best prices. Against that background, regulators have an important role in ensuring that the market rules operate fairly and that any changes to them, or regulatory decisions based on them, are taken in an independent and predictable way,” he stressed.

The chief of the European regulatory group further opined that “uncertainty in these core areas will reduce confidence in the operation of markets and will help to drive up prices unnecessarily.”

The long-standing challenge for governments, he enthused, still rests on establishing “the confidence to ensure that regulators are truly independent, have the tools to do their job, and to resist intervention in energy markets for short-term political reasons.

The diversity of markets though exhibits a reality that there’s no “one-size-fits all” solution to the regulatory dilemmas of various jurisdictions.

“It is simplistic to think that the practices that have worked well in one country can simply be transplanted to another and that they will work just as well. The reality is much more complex. Each country has specific circumstances which can affect the way things operate – so what works in the United Kingdom may not work in Africa, for example,” he said.