Well-designed and well-implemented regulations provide standards and guidelines for industry practices, and promote a level playing field, encouraging competition, innovation and efficiency. Regulatory policy establishes the practical and institutional arrangements to design, implement, enforce and review regulations. Practical arrangements refer to the tools policy makers need to develop regulations that work well in practice and deliver the expected outcomes. Institutional arrangements refer to the oversight of the use of these tools, and co-ordination at all levels of government to ensure their consistent use and implementation.

Engaging with stakeholders is key for gathering information and feedback on policy problems, identifying solutions, and developing robust policies to improve their livelihoods. Policy makers should facilitate a range of means of engagement to accommodate diverse stakeholders, as this can both provide better information about the design of regulatory proposals and increase trust and buy-in for regulations. However, trust and buy-in only comes when stakeholders have a feeling of ownership, which happens if comments received in consultations are actually taken into account in the development of final regulations (OECD, 2021).

Regulatory impact assessment (RIA) is a tool that helps policy makers to identify and assess the potential costs and benefits of regulatory proposals to society. RIA can identify potential impacts on different sectors and groups among those likely to benefit and those likely to bear costs. It can assist policy makers in identifying the best solutions for responding to the problem at hand. By assessing the potential impact of regulations, governments can improve the regulatory environment and reduce regulatory uncertainty, ensuring that they strike a balance between economic growth and the long-term well-being of the planet and future generations. In addition, RIA promotes transparency in the regulatory process by publicly stating the evidence base behind regulatory decisions, in turn increasing the likelihood of compliance.

Countries enact regulations to achieve specific objectives, but even careful assessment cannot always accurately predict the impact they will have on society. Periodic reviews are needed to determine whether the predicted effects have been realised or to establish how regulations are performing if no impact assessments were conducted during their development. As the 2012 OECD Recommendation on Regulatory Policy and Governance highlights, evaluating existing regulations against clearly defined policy goals cannot only ensure that they deliver the intended policy objectives, but also that they remain up to date, cost justified, cost effective and consistent (OECD, 2012). Reviews also help identify any unintended consequences of existing regulations or administrative processes and, if they find any unnecessary burdens, can lead to administrative simplification exercises. Reviews of regulations also have broader benefits, including enhancing policy learning and improving regulatory coherence.

Economic regulators play an important role in the achievement of social, economic and environmental goals in utility sectors. Their work helps ensure the efficient delivery of essential services such as energy, e-communications, transport and water. They bring stability, predictability and confidence to markets that are constantly evolving, and occupy a unique position among consumers, operators and government. Often set up as independent bodies, their governance is extremely important, including their resourcing. Staff and budget arrangements can make or break economic regulators’ performance and affect their autonomy, agility, accountability, transparency, ability and capacity.