Tariff settingTS3BApply sanctions under the terms set out in legislation

Regulators penalize operators who do not comply with tariff directives.

Possible sanctions include fines, prosecution, changes to operator’s management teams, license removal, or transferring licenses to other operators. However, prior to actual application, sanctions must be made transparent through regulatory policies and acts.

Predefined penalty systems allow for the imposition of adequate penalties on utilities for acts or omissions that infringe legal provisions in terms of tariff collection, fulfillment of key performance indicators established in concessions, or other social or environmental regulations. Transparently outlined sanction mechanisms ensure the integrity of regulatory infringement actions.

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Objective: Administrative infringement proceedings against uncompliant operators are in place
Area:
Tariff setting
Cost:
High
Frequency:
One time
Target group:
Regulators, Service operators, Service clusters
Region:
Eastern Africa
Date:
Oct 31, 2022
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Expected outcomes

  • Transparent sanctions are applied within the rule of law.
  • Non-complaints cannot continue their operations without aligning to agreed tariff regulations.
  • Affected consumers and other relevant parties are satisfied, morally and financially.

Example

In Kenya, following its enforcement strategy, the regulator WASREB enforces tariff-related decisions through the following actions.

  • Issuing of fines.
  • Ordering the payment of penalties by licensees to third parties aggrieved by action or inaction of licensees.
  • Levying of penalties for non-payment of regulatory levies.
  • Prosecution of offences committed by licensees under the Water Act or recommending prosecution of culprits to other concerned public agencies for offences in relation to any other Act.
  • Use of court action in judicial review proceedings.
  • Recommending to the Ministry the removal of the top management and board of directors of the water services board if inspection reports are not followed up by licensee.
  • Order the removal of top management team of Water Service Provider and board of directors.
  • Cancellation of the Service Provision Agreement (SPA).
  • Transfer of licenses to another licensees.

Internal capacities needed and the role of partners

Imposing sanctions require regulators to have certain judiciary and administrative skills. These could also be sustained and supported by best practices from other regulators.

Potential partners include national judiciary and disciplinary institutions, and development partners who can train regulators’ staff on how to apply and manage sanction measures within their regulatory mandates.