Regulators help ensure access to and quality of public utilities, facilitate investment and protect market neutrality. Good internal and external governance of regulators is crucial to ensure that they fulfil these functions and perform effectively. Internal governance includes organisational structures, behaviour, accountability, business processes, reporting and performance management, while external governance entails the roles, relationships and distribution of powers and responsibilities with other government and non-government institutions. The OECD has developed an innovative framework that supports good external and internal governance by helping regulators assess functions, practices and behaviour, and identify drivers of performance.

The Agency for Safety, Energy and Environment (Agencia de Seguridad, Energía y Ambiente, or ASEA) is a technical regulator responsible for industrial and operational safety and environmental protection in Mexico’s hydrocarbons sector. It oversees activities throughout the hydrocarbons value chain, from upstream exploration and extraction to midstream and downstream transformation, production and storage, as well as distribution and retail at petrol station level.

This assessment focuses on the internal governance arrangements of the Agency for Safety, Energy and Environment (Agencia de Seguridad, Energía y Ambiente, ASEA). It is the result of a review of the Agency led in parallel with reviews of Mexico’s National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos, CNH) and Energy Regulatory Commission (Comisión Reguladora de Energía, CRE). The assessment and recommendations on the external governance of the three agencies are presented in Driving Performance of Mexico’s Energy Regulators (OECD, 2017), focusing on co-ordination and relations with other federal actors and sector stakeholders. The internal governance reviews of CNH and CRE are presented separately in other reports.

Measuring regulatory performance is challenging, starting with defining what to measure, dealing with confounding factors, attributing outcomes to interventions and coping with the lack of data and information. This chapter describes the methodology developed by the OECD to help regulators address these challenges through a Performance Assessment Framework for Economic Regulators (PAFER), which informs this review. The chapter first presents some of the work conducted by the OECD on measuring regulatory performance. It then describes the key features of the PAFER and presents a typology of performance indicators to measure input, process, output and outcome. It finally provides an overview of the approach and practical steps undertaken for developing this review.

This chapter describes the main features of Mexico’s federal institutional set-up and regulatory framework. It provides an overview of the energy sector reform in 2013 and ensuing institutional sector transformations.

The Performance Assessment Framework for Economic Regulators (PAFER) was developed by the OECD to help regulators assess their own performance. The PAFER structures the drivers of performance along an input-process-output-outcome framework. This chapter applies the framework to the internal governance of Mexico’s Agency for Safety, Energy and Environment (ASEA) and reviews the existing features, the opportunities and challenges faced by the regulators in developing an effective performance assessment framework.