Regulatory Models and the Productivity Challenge

Building on the previous chapter which explained the nature of common regulatory problems, this chapter turns into sector specific matters, it is concerned with regulatory models being used across the industriesIndustry in South AfricaAfrica. As in other jurisdictions, the different network industries have adopted their own models of regulatory accounting to enable the assessment of costs and the determination of tariffs. Common regulatory models including the Rate of Return in electricity, Long Run Incremental Cost in telecommunications and CPI-X in the airport industry. If anything, these models stand out as aspects of regulatory practices in the Global SouthGlobal South that are distinctly traceable to the Global NorthGlobal North. RegulationRegulation is not merely about asserting control over network industriesNetwork industries; it is about selecting regulatory accounting practices that create the right incentivesIncentives and produce measurable outcomesOutcomes. In the South African context, choosing the appropriate regulatory model is both a technical and political act. Models do not operate in a vacuum but are mediated by the capabilities of regulatorsRegulators, the behaviourBehaviour of regulated entities, and the broader economic and institutional context. Understanding how different models perform under these conditions is central to building a regulatory system that delivers.