Strategy

ESCOSA RAP

The Essential Services Commission of South Australia is an independent statutory authority that undertakes economic regulation in the water and sewerage, electricity, gas, maritime and rail industries. The Commission also provides advice to local councils under the Local Government Act 1999, provides advice to the South Australian Government on economic and regulatory matters and conducts formal public inquiries. 

This Strategy is intended to explain the Commission’s objective and purpose and how it proposes to achieve those over the long term. It is a guide for not only the Commission and its staff but also for its stakeholders and the community at large. 

The long-term Strategy is supported by a series of shorter-term plans:

  • The annual performance plan explains the projects and programs which it undertakes from time to time, with this Strategy informing the performance, delivery and evaluation of that performance plan. 
  • The people plan articulates how the Commission will continue to be an employer of choice and support its staff to deliver the results required. 
  • The annual budget explains and justifies the resources it requires to deliver the performance plan. 

The Commission’s business model directs it in the practical delivery of the work program.

The Commission’s culture is ‘how’ it operates, performs it’s functions and interacts with stakeholders and the South Australian community.

Strategy - indicators of success

  • We have clearly identified our objective, purpose and strategies, which together form our ‘Strategy’ and align with our functions and powers
  • We have a business model that focusses on effective and efficient regulatory design, actions and advice, which is evaluated over time, that provides a long-term framework for delivering value and adapting to change
  • We demonstrate a culture and behaviours that align to, and help achieve, our Strategy, including internal and external collaboration 
  • We meet our statutory requirements 
  • We publicly report on the success, or otherwise, of our Strategy and workplans

Our objective

The Commission’s objective under the Essential Services Commission Act 2002 (ESC Act) is the protection of the long-term interests of South Australian consumers with respect to the price, quality and reliability of essential services.

The ESC Act sets out seven further factors which the Commission must have regard to in performing its functions: 

  • promoting competitive and fair market conduct
  • preventing misuse of monopoly or market power
  • facilitating entry into relevant markets
  • promoting economic efficiency
  • ensuring consumers benefit from competition and efficiency
  • facilitating maintenance of the financial viability of regulated industries and the incentive for long-term investment, and
  • promoting consistency in regulation with other jurisdictions.

Our purpose

The Commission adds long-term value to the South Australian community by meeting its objective through its independent, ethical and expert regulatory decisions, advice and inquiry reports. Its functions play a critical role in ensuring that South Australians are able to access reliable essential services at the lowest sustainable price. The Commission focusses on the need for regulated entities to be accountable to consumers and to act in their long-term interests

Our operating context

Our regulatory frameworks must be responsive to our operating context and environment. We have identified four factors which may influence those frameworks and the advice that we provide:

  • Changing market and industry structures, including the impacts of new and emerging technologies, changes in energy markets and Government expectations in relation to environmental, social and governance obligations
  • Changing community expectations on standards of service, access to essential services and cost of living pressures
  • An increasing focus, locally, nationally and internationally, on collaborative regulatory practice and how that translates to our economic regulation and advisory work, and
  • South Australian, Australian and global economic climates and trends.

Having considered those factors in the context of our overall statutory and operating environments, we have developed six areas of strategic action, explained below, with the intent that these will assist us to meet our statutory objective and purpose.

Our areas of strategic action

The Commission continues to focus on six strategic pillars which will consolidate and strengthen our regulatory decisions, advice and inquiry reports, thereby contributing to the achievement of our objective.

  • Prioritising a positive workplace culture: we will support our people, and work to attract and retain high quality staff who display and uphold the Commission’s values. 
  • Building stakeholder engagement and providing for consumer inputs and challenge: genuinely engaging with our stakeholders to facilitate understanding of consumer and regulatory issues, obtain high quality evidence from a broad range of sources to guide our work and provide opportunities for consumers to input to and challenge the work of both service providers and the Commission.
  • Design of regulation: delivering fit-for-purpose regulatory design and implementation, using evidence-based processes and pursuing efficiency and effectiveness in regulatory design, implementation, and outcomes.
  • Analytical capability: enhancing our analytical capacity and capability and the use of market intelligence to underpin our regulatory design and advice, monitoring of performance outcomes and the regulatory actions that we take.
  • Regulatory performance: using market monitoring outcomes to provide performance information to consumers, guidance and performance feedback to regulated entities, and reshaping our compliance and enforcement approach to ensure that it is efficient and effective in driving positive consumer outcomes.
  • Evaluation capability: embedding evaluation of our performance – both regulatory and operational – across all of our work.
     

In doing so, we have regard to global, national and local regulatory practices and developments and continue to focus on independent, robust, evidence and risk-based decisions, advice and inquiry reports, using enhanced market intelligence and analytical practices.

Prioritising a positive workplace culture

Workplace culture is constantly evolving, and it is a priority for the Commission to look at ways to attract and retain high quality staff and to use insights from contemporary evidence to trial methods to improve engagement and productivity. We actively support our staff to flourish and enable them to achieve our primary objective.

We seek regular feedback from staff on ways to improve our workplace culture and offer multi-layered and holistic support to staff. The Commission’s People Plan 2023 – 2026 articulates how the Commission will continue to be an employer of choice and continue to support our staff to deliver results. 

Indicators of success

  • We have implemented the People Plan 2023 - 2026
  • We have robust recruitment processes resulting in skilled people who can contribute to the overall work program of the Commission and who add to the cultural strength of the Commission
  • We test innovative work practices to determine overall value – for staff and the Commission
  • We seek feedback from staff regularly and clearly determine and report on actions.

Building stakeholder engagement and providing for consumer inputs and challenge

Information, evidence, knowledge, insights and advice gained from a diverse range of sources through genuine and effective engagement enhances our work. We are committed to genuine engagement with all of our stakeholders and acting on the best available data and information. Our stakeholders include consumers (large and small), consumer representative bodies, regulated entities, industry participants, government bodies, other regulators, the media and Members of Parliament.

We seek stakeholder comment and advice on regulatory issues, their views on existing or emerging issues that may affect our work and their feedback on how we undertake our engagement and our work.   We endeavour to provide clear and consistent processes and information to our stakeholders, affording them the opportunity to be involved in our work, explaining what we may be seeking from them and the way in which their views may have an impact on regulatory and advisory outcomes.

We particularly acknowledge the importance of providing consumers with the opportunity to directly understand, test and challenge regulated entities’ price/service/quality proposals. Consumers should not only be able to engage in the Commission’s work but should also have the ability to express their views on those matters directly to regulated entities, as those entities develop long-term business strategies and plans. They should also be able to verify that their views have been appropriately considered by service providers once those long-term business plans have been finalised.

Indicators of success

  • We have provided opportunities for stakeholder engagement, comment and feedback on our work in line with our Charter of Consultation and Regulatory Practice, including through setting expectations (where necessary) on regulated entities in relation to stakeholder engagement.
  • We have asked stakeholders for feedback on our engagement and education practices.
  • We have engaged with other regulators, nationally and within South Australia, where their roles may intersect with ours, to understand the nature of the costs their requirements may impose on regulated businesses and to avoid duplication in regulatory roles.
  • Our work is recognised, nationally and internationally, by other regulators and agencies as adding value in economic regulation.

Design of regulation

We focus on designing efficient and effective long-term regulatory frameworks and processes that deliver the lowest sustainable prices for consumers, reflective of the service levels for which they are willing to pay. This involves examining the need for regulation (regulating only when it delivers benefits to consumers that exceed the costs of regulation), considering the costs (to those who are regulated and to consumers) of the potential different forms that regulation may take and designing our regulatory frameworks using the best available evidence. This may result in different forms of regulation being applied over time (to a sector or an entity), having regard to those matters in the light of the Commission’s primary objective. 

To obtain that evidence, we engage with all of our stakeholders to understand their views and draw on the market intelligence that we routinely gather, as the information and advice we gain in that way enhances the quality of our regulatory design.

We regularly review our regulatory frameworks, in terms of both outcomes and process, to ensure that they continue to be effective, targeted to the needs of consumers and cost-effective in practice, thereby protecting consumers’ long-term interests.

Indicators of success

  • We have reviewed codes, guidelines and other regulatory instruments, to determine if the desired outcomes were achieved, at regular review periods.
  • We have taken into account the overall policy and legislative framework established by the Parliament when reviewing our regulatory framework, and did not act in isolation from that.
  • We have established and maintained consumer protection frameworks to promote the delivery of both service levels valued by consumers and efficient prices, including consideration of vulnerabilities, including consumers affected by family and domestic violence.
  • Consumers were protected and paid the lowest sustainable prices for the required level of service, rather than the lowest short-term prices possible, and regulated businesses had sufficient funds to invest and operate to ensure continuity in the supply of essential services.

Analytical capability

Our analytical capacity and capability are critical inputs to our regulatory design and advisory work, as well as our ability to understand and act on regulatory performance outcomes.

Our capacity is our internal skill and ability - in both our people and our systems - to learn and develop our talents, and to obtain, understand, store and analyse data and evidence.

Our capability is the way in which we use data and evidence to generate information which supports our regulatory actions and advisory work, as well as our evaluation of the effectiveness of that work over time.

We continue to enhance and, where needed, reshape our existing capacities and capabilities in data analytics and market intelligence gathering. We invest in our people and our technologies to ensure that we are optimising long-term value from the data and information that we seek and use (acknowledging the costs of data provision by entities). We seek working partnerships with entities, other regulators and agencies and consumer groups, in order to improve our information sources, knowledge and abilities.

Indicators of success

  • We collect and analyse only useful and relevant data and information that is accurate, accessible and provides the necessary evidence for regulatory, inquiry and advisory purposes.
  • We create and analyse information and intelligence to inform a tailored regulatory approach and engagement with entities focussed on long-term outcomes. 
  • We have defined the regulatory and advisory issues early, obtained a wide range of evidence and considered all plausible options in our work.
  • We provided expert, balanced and impartial advice to Government on any matter referred to the Commission.

Regulatory performance

We use data and information to design and implement regulatory frameworks which allow consumers to access affordable and reliable essential services. This allows us to develop meaningful indicators of success, to monitor market outcomes, to question and provide feedback to regulated entities on their performance, to acknowledge positive outcomes and to regularly assess our own performance levels and trends in order to discover whether there is potential to improve consumer outcomes.

We also use data and information to provide consumers with insights and to explain trends in market outcomes. At the same time, we work with regulated entities to assist them in transparently explaining their performance and encourage and require them to publish performance information and advice to demonstrate their commitment and accountability to consumers.

Where evidence shows that regulated entities have failed to meet regulatory requirements (or are at risk of doing so) and are not being accountable to consumers, we use our verification, compliance and enforcement powers.

We continue to enhance and refine our approach and practices in these areas, understanding that the community expects a strong, targeted and risk-based compliance focus on regulated entities’ performance.

Indicators of success

  • We have monitored the performance of regulated entities to ensure our regulatory framework is delivering positive outcomes which includes compliance with decisions, reliability of services for consumers and industry profitability and investments.
  • We have kept regulated entities accountable by monitoring and reporting on service standards, licence requirements and other regulatory obligations, and taking compliance and enforcement action as required.

Evaluation capability

We continue to build our capability to evaluate, report and act on the outcomes of our regulatory decision making, as well as our own operational performance. In doing so, we look to understand best practice in evaluation techniques (locally, nationally and internationally) and engage and consult with our stakeholders on those matters.

We also seek information from and collaborate with stakeholders on individual evaluation projects, to assess the effectiveness of both existing and new processes for regulatory determinations and advice as well as in assessing and understanding their outcomes. In many cases these have a longer-term horizon and require analysis of performance and consumer outcomes over time.

This evaluation capability is also applied to our internal operational practices, maintaining vigilance in order that we operate in an efficient and effective manner. We remain committed to publicly reporting our evaluation outcomes and to refining our evaluation techniques over time.

Indicators of success

  • We have sought external feedback on the outcomes of our regulatory decision-making, advice provided and evaluation practices/techniques.
  • During the planning phase of our work, we have clearly stated the intended outcomes of our actions and set metrics to allow us to understand whether they are achieved.

We have monitored those indicators of success and evaluated the evidence to inform further and future regulatory and operational decisions and actions.

Strategic plans - archived

The Strategy sets out the Commission’s key areas of action in achieving its objective of protecting the long-term interests of South Australian consumers, while committing to continued engagement with stakeholders. We will achieve this by designing and implementing effective and efficient regulatory regimes, monitoring and analysing market outcomes under those regimes, taking regulatory action as needed and evaluating and learning from outcomes in order to improve regulatory performance and effectiveness over time.   

The Strategy is supported by an annual Performance Plan. The Performance Plan outlines the Commission’s key regulatory and advisory work program and is supported by the corporate work program. 

Performance plans

The Strategy is supported by an annual Performance Plan. The Performance Plan 2023-24 outlines the Commission’s major regulatory projects, advisory projects, inquiry functions and other ongoing statutory functions, and is supported by the corporate work program. 

Archived performance plans