WATCHDOG POWERS:THE GOVERNMENT is seeking to curb the powers of independent regulators, such as those overseeing telecommunications and energy, according to Dr Paul L Gorecki of TCD and the Economic and Social Research Institute.
This would reverse a trend that has seen regulatory functions taken out of Government departments and placed in new, independent specialist institutions, largely due to EU obligations.
If regulatory decisions become excessively influenced by short-term political considerations, this could have negative long-term implications for consumers and economy-wide competitiveness, according to his presentation to the Kenmare conference.
Dr Gorecki identified the beginnings of this reversal as October 2009 when, following a stock-taking exercise on the performance of independent regulators, a “Government Statement on Economic Regulation” was issued.
The economist said this statement provides “little, if anything, by way of justification or rationale for the erosion of the independence of regulatory agencies”. However, he found much that was positive in the statement and believed a number of its proposals would improve regulatory performance.
Dr Gorecki suggested some possible explanations for the Government’s curbing of the power of regulators, including the tradition of highly centralised government. In this context he suggested that the period of independent regulation since the 1990s could be seen as anomalous.
He also suggested that social partnership structures may work against independent regulators. These structures give interest groups more power over government, to the detriment of independent regulators, he said.
Denis Cagney of the Commission for Energy Regulation said the relationship between his organisation and the Government has been “very sound”, something that had not always been the case between corresponding parties in other EU countries, he added.
The energy market in Ireland has been “radically” transformed over the last decade, he said. This happened without the break-up by the Government of the larger players, such as the ESB, as has happened elsewhere. The transformation came about largely owing to market forces.
Demographics and geography explained much of the high energy prices in Ireland, and little could be done about this. He noted Ireland was among the European countries most dependent on imported fossil fuels. Despite this he saw no economic case for nuclear power generation here.
The integration of the wholesale energy market on the island of Ireland was unique, with only Spain and Portugal coming close to creating a similar single market in the EU, Mr Cagney said. That energy was excluded from the Belfast Agreement was a good thing, preventing it from being held hostage to the on-off political negotiations, he concluded.
