institutional design and structure that allows it to carry its functions as an independent regulator. Based on selected literature on the subject, we define and assess electricity’s agencies governance through four main characteristics: 1) autonomy from political authorities and of their management and regulatory competencies; 2) transparency before institutional and non-institutional stakeholders; 3) accountability to the three branches of government (Executive, Legislative, and Judiciary); and 4) tools and capacities for the conduct of the regulatory policy and the improvement of its institutional development.

Our assessment of the governance of regulatory agencies is based on the regulatory and institutional inputs agencies need to implement their procedures and tools and does not consider the outputs or outcomes of agencies’ regulation.<sup>2</sup> In other words, our measurement of agencies’ governance is not an indicator of the effectiveness of the use of their regulatory instruments (such as the methodology to calculate tariff readjustment) or the quality of stakeholders’ involvement in public consultations. It is aimed at capturing the institutional conditions necessary to achieve good regulation regardless of their scope and impact on the sector’s performance (Correa _et al_ , 2006). Although we consider some practices (informal regulation) of agencies’ governance, these indicators are referred to the operationalization of particular aspects of agencies’ governance but do not reflect their full effectiveness. For instance, although we asked agencies whether they met their obligation in preparing an annual report of their activities (formal regulation) and their actual publication and means of publicizing it (informal regulation), this indicator does not imply that the report is well written and comprehensive. Similarly, although we use the number of Board directors that have left their positions due to resignation or dismissal as a proxy for agency’s independence from political authorities, this is not a judgment on the full independence of the agency from the Executive. Moreover, the undue influence of political authorities may be exerted by no visible (and most importantly not subject to be reflected in a survey) de facto mechanisms.

The final goal is to benchmark the electricity regulatory agencies of the region based on the quality of their regulatory governance, which is given by the presence of selected procedures and tools. The benchmark model through which regulatory agencies are assessed is an “independent regulatory agency” with political and technical autonomy from government authorities and adequate mechanisms for achieving a transparent resource management and accountability. Our benchmarking tools are 18 indexes that measure different aspects of agencies’ governance.

Data was collected through a survey submitted by nineteen electricity regulators of the region (Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Peru, Trinidad and Tobago, and Uruguay) composed of 97 questions related to the characteristics of the country’s electricity markets and the agency’s governance design (See Appendix 2).

A potential criticism of this research is that the data has been self-reported by the agencies. Although this might affect the impartiality and veracity of some responses, several factors allow us to still consider this approach sufficiently robust. First, the majority of the questions are related to legal provisions or factual circumstances with little space for subjective interpretations. Second, in the few cases of questions that are subject to agencies’ interpretations, biased answers should not

> 2 This has been the overwhelming mechanism used by the literature on the subject to assess the independence and other attributes of regulatory agencies. Although, ideally, we would like to include the effectiveness of the different institutional arrangements on sector performance and on institutional quality outcomes, the cross-regional nature of our research and the limited resources to undertake this task convinced us of this approach as the most convenient.

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