Enforcement Reforms at ANEEL: The implementation of OECD’s Best Practice Principles for Regulatory Enforcement and Inspections

Enforcement Reforms at ANEEL
The implementation of OECD’s Best Practice Principles
for Regulatory Enforcement and Inspections.
ISSAO HIRATA
Regulatory Specialist
2017, 9th November – Paris, France

The Challenge
174 auditors / inspectors
93 (ANEEL) + 82 (state level)
More than 80 million consumer units
101 distribution companies
130000 km of Transmission lines
235 Companies
154 GW of installed Capacity
More than 5000 Power plants

Previous Enforcement Model
Traditional Command and Control Mindset: Lack of Risk Focus or Evidence-Based Analysis
Inspect everything – attempt to inspect each and every company
Enforce of every rule – attempt to cover every topic subject to regulation
Punish “too many times” – Sanctions as the “go-to” instrument to enforce regulation
Accountability based on internal indicators: Number of Inspections, Number of Sanctions

Ok, we need to change...
 Regulation is getting more complex.
 More and more agents are joining the
market.
 Society expectations are increasing.
 Excessive burdens on the regulator
and on regulated companies
 Lack of satisfactory results
 General dissatisfaction
EFFECTIVE ENFORCEMENT:
Still a challenge in
many countries

Applying the Principles
ALREADY APPLIED
7 Transparent governance
9 Clear and fair process
FOCUSED ON THE REFORM
1 Evidence-based enforcement
2 Selectivity
3 Risk-focus and proportionality
4 Responsive Regulation
10 Compliance Promotion
NEXT STEPS
5 Long-term vision
6 Co-ordination and consolidation
8 Information integration
11 Professionalism
PAST
PRESENT
FUTURE

Enforcement Model
DETECTPROMOTE / PREVENT ACT
Risk Focus, responsive regulation
Evidence-based, responsive
regulation, clear and fair processSelectivity, compliance promotion
Publicity
Alerts
Improvement
Plans
Evidence-based, risk focus,
responsive regulation
Investigation
(qualitative)
Warning
Fines
Suspension
Intervention
Monitoring
(analytical intelligence)
Evidence-based, risk focus,
responsive regulation,
information integration*

Example: Analytical Intelligence
VOLTAR
Consumers’
complains
Quality and safety
indicators
Consumers’
attendance
indicators
Initialforecast
updates
Error in forecasting
delivery of new
transmission lines

Example: Publicity and Alerts
VOLTAR
www.aneel.gov.br

Results - 1) Reporting Obligations
71% Success Rate
(information on time)
August 2016
95% Success Rate
(24% increase)
August 2017
Delivered
on time:71%
DELAYED:9%
MISSING:20%
Delivered
on time:95%
DELAYED:2%
MISSING:3%

Results - 1) Reporting Obligations
95% Success Rate
(24% increase)
August 2017
Delivered
on time:95%
DELAYED:2%
MISSING:3%
Self-Correction Mechanisms
 Guidelines on website
 Alarms and reminders (email)
 Publicity to the Market.
 Hotline support.
20%
Selectivity and Compliance Promotion
Traditional Enforcement
 Notifications and Fines.
4%
Responsive Regulation and Proportionality

IMPROVEMENT PLANS
41% reduction in two years
Results - 2) Identifying faults in transmission lines
29%
22%
17%
2014/15 2015/16 2016/17
% of faults with unknown cause in the
transmission system

36% improvement
in company A
(state owned)
54% improvement
in company B
(privately owned)
Results - 3) Quality of Service
IMPROVEMENT PLANS
0
10
20
30
40
50
60
State ownedPrivately owned
20162014
Continuity Indicator that correspond to the
frequency and duration of outages

Main Challenges and Lessons Learned
 FRAGMENTED AND MULTICULTURAL ENFORCEMENT STRUCTURE
• Top-down support: Board of directors (Strategic Planning)
• Formalize the new model (new regulatory act for the enforcement process)
 DAY TO DAY TASKS vs. INNOVATION EFFORTS
• Innovation teams: isolated and focused
 DIFFICULTY IN ENGAGING STAKEHOLDERS (STAFF, RULEMAKERS, COMPANIES, GOVERNMENT)
• Communication efforts, alignment at all levels, from operational to strategic.
• Changing from culture of effort to culture of result
 CONFLICT BETWEEN LEGALITY/ISONOMY AND RESPONSIVE REGULATION
• Make it clear to the market that behavior matters.

NEXT STEPS
 INFORMATION INTEGRATION
• Design and implementation of Enterprise Information Management practices.
• Invest in a new skillset: Data Analytics
 LONG-TERM VISION
• Promote Enforcement “Best-Practices” as part of the policy maker agenda’s.
 CO-ORDINATION AND CONSOLIDATION
• Replicate the strategy at the state level agencies,
• Partnerships with other national regulators (water, oil, nuclear, etc.)
 PROFESSIONALISM
• Design dedicated training programs

NEXT STEPS
 CLOSURE OF THE REGULATORY GOVERNANCE CYCLE
• Improve systematic evaluations of the implemented regulation to enhance the Regulatory Impact
Assessment process.

To provide favorable conditions
for the electric power market to
develop a balance among the
agents and the benefit of society!
ANEEL’s MISSION

w w w. f a c e b o o k . c o m / a n e e l g o v b r
w w w. t w i t t e r. c o m / a n e e l _ n o t i c i a s
w w w. y o u t u b e . c o m / u s e r / a n e l
W W W. A N E E L . G O V. B R
ISSA O HIRATA
REGUL ATO RY SPECIA L IST
ADDRESS: SGAN 603 Módulos I and J - Brasília/DF, Brazil
Zip Code: 70830-110
GENERAL PHONE: +55 61 2192 8931
SECTOR OMBUDSMAN:167

Enforcement Reforms at ANEEL: The implementation of OECD’s Best Practice Principles for Regulatory Enforcement and Inspections

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