This is particularly reflected in Factor 2, where informal autonomy, transparency, accountability and tools account for 15 percent of the variance. In this index Trinidad and Tobago remains the leading country. Nevertheless, Tier 1 countries change considerably and countries below Tier 2 become the largest among all three factors. El Salvador and Mexico, together with Trinidad and Tobago, present the best scores.

The case of Mexico is particularly striking if we compare its low position with the rest of the factors and in the aggregate index. When it comes to several aspects of informality (autonomy, transparency, accountability) and the agency’s tools/capacities, Mexico is among Tier1 countries. Nevertheless, it holds a relatively low position in factors 1 and 2, both the manifestations of formal governance and of the competence of the agency to regulate tariffs.

The second observation from Factor 2 is the significant number of countries that are below Tier 2 agencies. Seven countries, almost double in the other factors and in the aggregate index, do not meet the minimum criteria in terms of some of the practices related to autonomy, transparency, accountability, and tools. Although factor 2 only explains 15 percent of the governance variations in the region, it is also an interesting observation to highlight the paradoxical situations of countries such as Guatemala that are among Tier 1 in terms of formal attributes, particularly transparency and accountability, but which have a low performance in terms of its governance practices.

Factor 3 reflects governance aspects related to the design of the agency’s procedures to guarantee its autonomy and the agency’s power to regulate tariffs. Both aspects are related to the Formal Autonomy Index and have no correlation with the agency’s practices. Factor 3 shows the largest number of agencies among Tier 1 countries (Nicaragua, Peru, Bolivia, Brazil, Panama, the Dominican Republic, El Salvador, and Barbados).

A possible interpretation to results in Factor 3 could be the emphasis given by regulatory frameworks of the region to the autonomy of the agency from political authorities, particularly in terms of the determination of tariffs. This assumption can be confirmed by the positions of countries such as Mexico and Uruguay. Both in Mexico and Uruguay, the government has significant powers in the regulation of the sector, particularly in the determination of prices. Although separate from the government, regulatory agencies in these two countries are typically under the administrative hierarchy of the line Minister and, hence, subject to its authority in the decision of relevant issues. A similar explanation applies to Chile. This said, factor 3 only explains formal attributes and is not a reflection of the agency’s practices which is particularly addressed by Factor 2.

# **6. CONCLUSION:**

The governance assessment of LAC electricity regulatory agencies analyzed regional trends in terms of four dimensions of their institutional design: autonomy, transparency, accountability, and tools. In doing so we used one main methodology and tested its robustness with positive results. The main methodology involved the consideration of autonomy, transparency, accountability, and tools as variables with equal weights, giving each of them and their indicators a value between 0 and 1. We created a main aggregated index (ERGI) and different indexes according to the different aspects of governance. In order to test the robustness of that approach, we used Principal Component Analysis (PCA) and assigned variables different weights. We created a main index, Aggregate Principal Index (API), composed of the governance variables with the highest variance. Results were similar in both approaches. Countries at the top and the bottom of the ERGI kept their positions in the API, with small variations among countries in the middle of the ranking.

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