ASi" kUCTURE FlOR DEVELOPMENT

mation, that constraint is being partly relieved by Some pointers on consumer involvement in regthe
increasing possibilities of international compari- ulation are available from industrial countries. The
son. Specialized industry organizations and interna- United Kingdom has ten consumer commissions,
tional development banks can serve a useful func- one for each of the ten water service jurisdictions.
tion by disseminating data on production costs. Each is headed by a commissioner who reports to
Periodic audits can also provide information feed- the Office of Water Services on the needs and the
ing into the regulatory process.
concerns of consumers, including the results of for-
Ne-a inistrtuments. The limitations of existing regu- mal surveys and public meetings. In France, where
latory instruments (such as rate-of-return, price-cap, water services are controlled through local municiand
yardstick regulation) have spurred the search pal councils with consumer representatives, private
for new instruments. New instruments have been providers consider good consumer relations essendesigned
to minimize the information required by tial for maintaining their standing with the municithe
regulator and to increase the responsiveness to pal authorities.
the customer, manling them, at least in principle, especially
suited to the needs of developing coun- Conclusion
tries-although many of them have not been fully
tested in practice. In the United States, an intermedi- The past decade marks a watershed. Boldly innovaate
form of regulation balances the risk of windfall tive measures have been taken to pry open monoprofits
(or losses) from the selection.of an inappro- lithic infrastructure sectors. Competition and
priate X in the price-cap formula. If the rate of return unbundling of diverse activities are spreading. Techexceeds
a prespecified limit, the firn. ias to refund nological change (as in teleconmunications and
the difference to customers. If return, fall below the
lower limit, price increases greater than those im- - -
plied by the cap are permitted in some cases.
Another regulatory approach offers a provider a Box 3-fl Participation as regulation:
choice of regulatory options (a stiff price cap but no an initial step in Bangalore
mtonitoring of profits, or larger price increases with s h f t i cosue
A seaous hanchcap facing the individual consumer
ldoser monitoring of profits). The expectation is that dealing with a public utility is the lack of knowlthe
regulated entity will, through its choice, reveal edge of the "rules of the game" and the right to serits
ability to undertake significant cost (and, hence, vice. Expectations are often low and incentives for
price) reductions, as well as its attitude toward risk. collectiveaction are often lmited.
A form of regulation that is even less restrictive
A random sample of 800 households in the inbut
that can .provide meaningful discipline is | dustrial city of Bangalore, India, highlightedissatknownhat
"prot ia reatin.gulatosp ,a
mor n isfaction with the quality of service supplied by the
-r theas performaneof suppliersand standready mom -- telephone, electricity, and water utilities. Only 9
tLor the perforrnance.of suppliers and stand rwedy to . preto pecn fthose hs sampled ape were'sat.isfied eestsidwt with their hi
intervene should problems arise. As long as cus-. telephone service. Even fewer people were satisfied
tomers are reasonably satisfied with the suppliers'
with electricity and water services. Problems cited
performance, the regulator places no formal restric- included supply shortages, excess billing, inability
tions on the suppliers' activities.
to get errors corected, and a geneal lack of communication
with the service agenrcy.
The conclusions of a broader study of quality of
- CREATINC A coNsumER cosnTuENcy. Consum-..
senCUice weolu dearn more competition and better iners,
both individuals and businesses, are not typi- formation are needed. The two groups of agencies
cally involved much in the regulatory process, even that performed relatively well in consumer assessthough
their input can be critical to efficient service ment-banks and hospitals-operate in a relawhere
the regulator has only limited means or ac- tively competitive environent. m
quiring information. Fmal consumers are often the
Another conclusion was that eosumer voice,'
best monitors of service quality. Consumer feedback mob rough groups such as residents' AssoCiations,
can be an important force in sectoral ieform
can be employed direcly to motivate suppliers to and reorgnization. These assocations can provide
provide high-quality
-provide~ ~ ~ service.
service.lo ~ For
examVation
example, returns
andiqalt
critical monitoring and feedback to
canetumse
minimize
for suppliers can be linked to consumer ratings of abuses and hold public officials accountable. Wellperformance.
Initial steps have been taken in Banga- publicized interity comparisons of service quality
lore. India, toward.creating an information base rel- would create an inforrnation base on which conevant
for consumer awareness and decisionmaldng sminer associatons could act..
(Box 3.11).
71.