The Constitutional Court has just published the full text of the ruling C-048 of 2024which protects the independence of the Energy and Gas Regulation Commission (Creg), the entity in charge of regulating the rates of these services.
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The lawsuit questioned the fixed term of the Commissioned Experts, arguing that these positions should be freely removable because they are agents of the President. The ruling reaffirmed the constitutionality of the Experts’ period, clarifying that they are not presidential agents, since they also perform functions delegated by the Congress of the Republic, such as rate regulation.
What the Court points out has great value because it restricts the scope that a possible reform of the current public services regime could have (Laws 142 and 143 of 1994). For example, this project could not define that Rate regulation is a presidential function or power.
However, The value of this sentence does not end there. The ruling also includes two central conclusions from the intervention that the Court requested of me during the process of this decision: i) there is a direct and positive relationship between the configuration of the regulator and the quality of regulation, and ii) there is a direct relationship between the good quality of regulation and the guarantee of fundamental rights.
In other words, the Court recognizes that reducing the independence of entities such as the Creg in the face of current political criteria negatively impacts the quality of regulation.
It is not a minor issue, especially if one takes into account that last year the National Government issued a decree through which it intended that the President be the one to regulate energy rates. Fortunately, The Council of State provisionally suspended this decision.
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Public services
Nor is it minor if we consider the draft reform of home public services published by the newspaper Portafolio a few months ago, in which it was intended include rate regulation within presidential functions.
With this ruling, the Court responds to those who, due to their disagreement with the work of the Creg or other interests, maintain that it does not matter whether the rates are regulated by whoever exercises the Presidency of the Republic or by a commission of experts with some independence. Our highest court explained, clearly, that for regulation to fulfill the purposes assigned to it by the Constitution, it is not only relevant to consider ‘what’ and ‘how’ it is regulated, but also ‘who’ carries it out.
In other words, to preserve the guarantee of fundamental rights related to these services, it is essential to protect the quality of regulation. And, to protect the quality of regulation, it is necessary to preserve a certain independence of the regulator in the face of current political or electoral concerns.
These valuable conclusions are not based on ideological analysis, but on the evidence of the Colombian case, perhaps one of the most successful in the developing world.
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It would be foolish to ignore that in Colombia, high-quality regulation has been fundamental for the guarantee of fundamental rights related to the provision of energy and gas services. Not only has private investment been added to public investment intended for this sector, but has also improved management in public and mixed service providers.
A look at the contrast between the Colombian energy sector of the 80s and the one that emerged from laws 142 and 143 of 1994 reveals significant improvements. The sector in the 1980s, unable to expand coverage and quality, contributed to almost a third of the country’s external debt. Instead, the new regulatory framework allowed historic increases in coverage and quality, and even made it possible to export energy and invest in other countries. Millions of Colombians, especially those with lower incomes, benefited from these advances.
The logic behind this change is relatively simple. In general, increasing physical and economic accessibility to energy service requires large investments and entails sunk costs, which can only be recovered in the long term. If we want to encourage this type of investment, whether public or private, we need the regulation, especially that of rates, to have credibility.
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Regulatory commissions are essential to this credibility. The credibility of the country’s regulatory commitment depends on regulation being in the hands of technical and independent entities, but adequately coordinated with the rest of the government, instead of depending directly on those in political office, such as a President or a Minister.
However, the current regime is not perfect. Some adjustments are required in economic, technical and governance terms to move more quickly towards meeting the SDG goals in 2030. And the tremendous difficulties of our compatriots in the Caribbean Region due to the quality and rates of these services fully justify their outrage and their demands for government action. However, the cure would be much worse than the disease if the independence of the Creg is eliminated.
Without a fixed period, the work of the Commissioned Experts would be exposed to political pressure and electoral, reducing the credibility of rate regulation and, consequently, investment in this sector. And without investment it is impossible to solve the problems in the Caribbean Region or any other. The Court has recognized this, and its arguments should be taken into account in any reform project.
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JULIÁN LÓPEZ MURCIA
Briefcase
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