The development of the energy sector has economical, social and environmental implications, particularly for developing countries.

The widespread change actually occurring in the electricity sector creates a big challenge for regulators which have to continue to meet the strategic goals of energy policy, namely, efficiency, energy security and environmental protection. Ten years of reform have shown that changing rules are not enough to address market power issues and that supporting the transition to competition is required.

Energy has made the wealth of industrial countries during past years, but today people in these rich countries are not satisfied by what they're getting, while people in poor countries are not satisfied by what they're not getting. Today, despite a dynamic energy sector in industrial countries, companies are not enough environmentally-oriented. Also there is a need for technological breakthrough as to find new roads to regulators in regulating markets to achieve full competition and regulating transition to prevent market power abuses. We must see in the future further development of the energy sector in developing countries and development of regulatory knowledge in industrial ones.

Furthermore, energy has a critical role to play in meeting poverty alleviation and sustainable human development. While addressing the lack of access to modern energy supplies by developing countries, we must concern ourselves with the environmental dimensions of energy production and use. Findings ways to widen and expand access to energy services while addressing environmental impacts represents a critical challenge to humanity. Experience has shown that carefully designed regulatory approaches can effectively address issues on how to achieve wider diffusion of new technologies, on how to address the needs of those outside the market economy, on how to mobilize capital for bringing modern energy supplies to rural areas and how to address other inadequacies of the market. Key options include measures to widen competition, allowing prices reflecting marginal costs of supply, obligation to serve captive customers, obligation to buy green energy, imposing energy efficiencies and reporting requirements to ensure transparency.

Slightly more than one billion people in industrialized countries consume nearly 60% of the total energy supply whereas just under five billion people in developing countries consume the other 40%. In Africa less than 20% of the population have access to electricity.

Today, in any country, the number one priority in sustainable energy development for all decision making is to extend access to energy services to the people who do not have it now.

To reach the three energy goals of Accessibility, Availability and Acceptability in the context of promoting sustainable development, we face three challenges :

• Need for accountability and improvement in the training of regulator's management
• Capacity building for developing country
• Take anti-corruption actions

Throughout the world and particularly Africa, there is no "one regulation model". Proper regulation requires a complete and accurate understanding of the issues in the country or in a region and how to solve them. The only reliable way of gaining such understanding and to avoid regulatory malpractice is to work closely with people in the region and to improve qualification of regulators.

The commitment to sustainable development by many governments is often in the form of statement of principle without any practical consequence. Governments should take legislative actions and define the rules like pollution taxes on the "polluter pays principle" or tradable pollution permits.

The energy sector has a major role to play in global and sustainable development and the regulation models have to be adopted to the particular characteristics of the country.

The presidents of three major energy companies explained what they expect from regulation. Their involvement in energy projects in numerous countries is proof that the energy sector is not immune from the world-wide trend toward market globalization.

Invited speakers at this session pointed out that within a constantly changing context, regulation must be transparent and consistent. Those two factors, which involve less risk for investors, are required to attract companies and encourage them to make long-term commitments.

Harmonization of rules across jurisdictions must be pursued to create opportunities to deliver new products like multi-energy solutions. Clarity and stability of rules is essential.

Opening of wholesale markets is key to allow competition to take place. If deregulation can create depth and liquidity in the market, some forms of regulation are nevertheless necessary to ensure an orderly energy markets.

They also said that the energy sector has an important role to play in sustainable development. As one participant said, "Poverty is not sustainable!" Moreover, greater use of hydroelectric power would assist some countries in achieving their environmental objectives. Companies must be devoted to the public interest to succeed.

Finally, they pointed out that within a competitive context where consumers are no longer a captive audience, a decisive factor in the success of companies is the quality of customer service. Companies strategic responses must ensure benefits for all stakeholders and work towards changing attitudes.

In plenary, the three main rapporteurs confirmed the high degree of delegate participation, energy and enthusiasm in discussion of the key issues identified in the nine interactive workshops.

A consensus emerged among the interactive workshops that broader policy considerations (e.g., income distribution; regional development; the environment; sustainable development) are relevant to energy regulation. However, the specific influence they have on specific decisions is a situational matter best addressed on a case-by-case basis, depending on the legal and institutional framework in place in a specific jurisdiction.

Consensus was not achieved on whether regulation of energy production, in terms of supply and price, should be confined to the case of vertically?integrated utility (electric or gas). Substantiated views on the two opposite sides of the spectrum were expressed in the nine workshops. The question of the extent to which market power in energy production does exist, how to measure it effectively when it exists, whether a given degree of market power is sufficient to warrant regulation, and the optimal style and scope of regulation to be applied to specific situations were raised, but obviously not resolved at the Forum. If there was one consensus, it was that this issue required further discussion and research.

Workshop participants identified a number of challenges for tomorrow's regulators. The main one was the need for regulators around the world to keep in touch so that best practices, new ideas, lessons learned and emerging issues are shared broadly and effectively. In this respect, it was the view of the plenary that a second World Forum on Energy Regulation should be held in two to three years. Participants expressed the hope that someone somewhere will take the lead on this idea and make it a reality!

The main goal of regulation is to give to independent and specialised boards the means to take decisions in the energy sector which favour results conform to the public interest. In their decisions, regulators must take into account, for the public interest, their statutory obligations, the current economic and energy policies of the government, the political context and public values and preferences. In all cases, regulators must apply their informed judgement and be accountable to the general public.

The experience of restructuration in Mexico proved that political context is important. The restructuration in the gas industry was done by following a logical sequence of procedures. The new legal reform allows private investments and financing, promotes pipeline expansions and ensures a reliable, high quality and competitively price supply. Natural gas infrastructure expansion, in turn, has prompted the development of electricity projects.

The challenge for the regulatory entities is to create a workable and efficient market to supply social benefits to society through competitiveness of energy markets. The second challenge is the expansion of electricity markets and finally, there must be a regional integration of energy markets. Canadian and American markets are becoming heavily interconnected at a time when broad regional markets are fast evolving. In order to deal with these challenges, it is becoming essential to work together to create a market platform that allows for efficient pricing policies and to find ways to attract capital and to encourage the utilisation of new resources.

These challenges force regulatory entities to work on new rate design approaches to improve efficiency in order to reinvest capital in the system and promote environmental protection, which is a part of the public interest.

To realise this, the regulatory entities must harmonise their decisions. Efforts to harmonize standards across regulatory regimes within Canada have paid large benefits in reducing regulatory costs to project proponents, improving consistency in public protection and removing distortions from investment decisions. The benefits of harmonization on an international level will be similar, although potentially much larger.

Market restructuring quickly yields significant benefits for major consumers of energy and lesser benefits for small consumers who are in a position to make informed choices. On the other hand, service quality suffers and the plight of poor customers, whom utilities take little interest in serving, worsens.

In some places, restructuring has highlighted situations of market dominance which hamper competition.

Despite energy policies and good intentions, restructuring will remain stymied as long as regulators continue to exercise control in a traditional manner and distributors continue to deliver their products and services in the conventional way.

To ensure a smooth transition to a market economy in the energy sector, fair and transparent rules must be developed, appropriate information must be provided, and regulation that protects the survival of local producers and promotes technological innovation must be implemented. However, where a monopoly situation persists, cost-based regulation needs to be maintained.