Good governance in public utility administration prescribes that the role of policy-making, regulation and service provision should be clearly delineated. Policy-making should rest with the line ministries, regulatory work with independent agencies and service providers with the private sector. But ministries are often loath to relinquish their regulatory grip over public utility service providers. As a result, the 1997 Constitution of the Kingdom of Thailand mandated an independent regulator to allocate radio spectrum and regulate communication services in Thailand.
So in 1998, laws establishing the very first two independent utility regulators: the National Telecommunication Commission (NTC) and the National Broadcasting Commission (NBC) were passed. These organisations later merged to become the National Broadcasting and Telecommunications Commission (NBTC).
The energy sector followed suit in 2007. The Energy Industry Act B.E. 2550 established the Electricity Regulatory Commission (ERC). However, the scope of regulatory authority was circumscribed to allow the Ministry of Energy to retain its regulatory power over upstream activities such as petroleum exploration. The water and transport sectors do not yet have independent regulatory bodies.
Two decades later, many Thais have become very sceptical about the merits of independent regulatory agencies. Why?
First, it is questionable whether the agencies have acted in the interest of consumers. A case in point would be the NBTC’s lack of enforcement of some of its own price regulations. For example, many mobile phone service packages still impose per minute charges above the 0.99 baht ceiling price and telecom operators have failed to cut the prices of their 3G service packages by 15% as required in the standard service contract.
As for the ERC, it has been extremely slow to introduce regulations that would help dislodge PTT’s (the national petroleum company) dominant market position such as third-party access to its gas pipelines and LNG receiving stations. Its gas pipeline tariffs have also come under public criticism for being excessive as they allow a generous rate of return on investment for the service provider.
Second, there have been several governance issues surrounding the independent agency. For example, the NBTC came under heavy criticism for its travel extravaganza that cost over 200 million baht in 2012 according to Pornthep Benjaapikul, the “NBTC Policy Watch of the Thailand Research Fund” researcher. This sum is even more ludicrous when compared to that of the FCC, the (much bigger) US telecom regulator, which was only 57 million baht in the same year. In another episode, the organisation accepted iPhone 4S’s as gifts from a service provider and used them as lucky-draw awards at the organisation’s New Year party.
These problems occurred because too much attention was paid to making the agency independent, and too little in making it accountable by ensuring integrity and transparency of its the decision-making process. As a principle, the more independent an organisation, the more accountable it has to be. So, how can we restore confidence in these independent agencies? Overseas experience reveals that the integrity of the officers and the administration of the agency are at stake.
First, the commissioners and executives of the regulatory body should be required to disclose the details of the nature and value of each of the gifts or hospitality that they receive or give to others on their website. For example, the public can monitor the gifts received or handed out by each individual Ofcom (the UK telecom regulator) commissioner on its website. The table specifies the name of the commissioner, the date the gift/hospitality was received, the name of the organisation or the person offering the gift/hospitality and the reason for the gift such as an interview. (See http://www.ofcom.org.uk/about/annual-reports-and-plans/gifts-and-hospitality-register/)
Second, details governing the remuneration of the individual commissioners and executives of the independent organisation should be disclosed online. For example, the Alberta Energy Regulator discloses cash and non-cash benefits for each of its board of directors and executives. The Government of Alberta also instituted the Public Sector Compensation Transparency Act requiring that public sector bodies, including the Energy Regulator, disclose the names, positions, earnings, non-monetary benefits and severance for all current and former employees whose total 2015 earnings were more than $125,000 (about 3.4 million baht).
Third, the agency, too, should disclose in detail itemised expenditures in order for the public to track the allocation of its financial resources on questionable expenses such as overseas trips, donations and publicity.
Fourth, the organisations should introduce ex parte rules, or rules governing communication between employees of an independent body and regulated businesses. For example, high-ranking officers should not be allowed to meet privately with executives from a regulated business to discuss concerned regulatory issues without formally reporting the event and submitting information and documents received from the meeting to the office. If the matter is sensitive, the private meeting may be prohibited as is the case for commissioners and executives of the FCC. This will help project the image of impartiality.
Finally, these agencies need to conduct a more effective public hearing process to vet their rules and regulations. In the past, some of the hearings are more of a show than of any real substance. Draft regulations are rarely amended according to valid comments or concerns raised from these events. Without due process in rule-making, regulations may not serve the public interest.
There are many more measures that can help lift the credibility of our independent regulatory agencies. Despite the shortcomings of these agencies as elaborated, the author will still prefer independent agencies over non-independent ones as at least they are less prone to political manipulation. But if we want a good independent regulatory body, we need to demand much more integrity and transparency from such an organisation – in exchange for its independence.
Deunden Nikomborirak, PhD, is research director for economic governance at the Thailand Development Research Institute (TDRI).
First published: Bangkok Post on Wednesday, September 7, 2016
This article is based on the research project: ‘Disseminating Knowledge on Good Governance and the Reduction of Corruption’, funded by the Thailand Research Fund (TRF).