Who will regulate the regulators?

Asked to explain and reverse the steep increase in electricity rates, Malacañang was quick to say this is an issue beyond the control of the President. Indeed it is. This falls under the jurisdiction of one of the regulatory boards specifically mandated by law to administer public utilities.

Such boards are autonomous within their jurisdictions, and, strictly speaking, no one can tell them how to do their work. Their job is to monitor and enforce compliance with the rules in accordance with the law that created them. Since it is the President who appoints the members of these government agencies, it is crucial that highly competent individuals with unquestionable integrity are selected for these bodies. Much of what we call governance nowadays is of this nature.

Regulation is a phenomenon that is tailor-made for the era of privatization and outsourcing. Governments have ceased to provide basic services like water and electricity. What they do instead is regulate the private provision of these services—in the name of consumer welfare, public safety, the protection of the environment, etc., or simply to ensure fair competition and avert market failure.

What this means basically is that public goods and services whose accessibility used to lie at the core of party programs and promises are effectively removed from the sphere of politics, and consigned to the sphere of the market. The market is presumed to be a self-correcting system that performs its societal function best when it is left alone. Regulation is seen as necessary only when, for any number of reasons, market mechanisms may not work properly. This is the neoliberal concept of regulation. But, of course, there is nothing about regulation that precludes it from being used as a tool to serve the positive ends of development and social equity.

To ensure their regulatory independence, agencies are typically staffed by experts, lawyers, and accountants who have neither run for political office nor previously worked for any player in the industry they are regulating. The antidote to the virus of regulatory capture is credibility—a reputation for integrity, independence, and a record of professional competence. Clearly, such considerations are of no importance to us. Take the case of the current chair of the Energy Regulatory Commission. Her background suggests that she is ill-suited for the demanding responsibilities of a modern regulator.

Before she was plucked out of anonymity in 1995 to run as representative of Pampanga’s second district, ERC Chair Zenaida Cruz-Ducut had worked as a lawyer for Bong Pineda, Central Luzon’s alleged “jueteng” lord and kingmaker. Her undistinguished career in Congress spanned nine years, ending in 2004. She ran under Danding Cojuangco’s Nationalist People’s Coalition in 1998, but transferred to Gloria Macapagal-Arroyo’s party after the latter seized the presidency in 2001. Zeny Ducut promptly became GMA’s loyal minion, avidly campaigning for her in the presidential election of 2004 and supporting her son Mikey Arroyo’s bid for the congressional seat she had occupied for nine years.

Some say Ducut worked for a while as a deputy legal counsel in Malacañang during GMA’s second term. But now we learn from Benhur Luy, the key whistle-blower in the Napoles pork barrel scam, that during that time—from 2004 to 2008—she allegedly operated as a go-between who earned commissions by introducing some of her former colleagues in Congress to Janet Lim-Napoles. Toward the end of her troubled presidency, GMA started giving out stable sinecures to people who had been loyal to her. Ducut was one of these. She was appointed chair of the Energy Regulatory Commission, an agency whose functions she knew nothing about. Apart from being a lawyer, she had little in her educational and professional background that qualified her for this crucial position.

But, in our kind of system, merit is the least of the worries of political appointees. They typically keep a low profile so as not to attract media attention. They take care not to antagonize the powers that be, even as they assiduously cultivate friendly relations with those who wield influence in the new dispensation. This is how Ducut, until recently, conducted herself at the ERC—basically by remaining anonymous.

It was interesting that the media mistook her for a P-Noy loyalist when Benhur Luy first mentioned her as one of the middlemen in the pork barrel racket that Napoles used to access members of Congress. People had obviously forgotten that she was one of the last appointees of GMA to a tenured position in the government. Her term at the ERC does not end till 2015. When her name was mentioned in connection with the pork barrel scam, no one paid heed that she was the head of a major government regulatory agency—a position of trust.

When Ducut was invited to appear at the Senate inquiry into the huge increase in electricity rates that the ERC had approved, her first reaction was to beg off. But, realizing that her continued silence was not doing her any good, she came to the hearing and read a prepared statement in which she unabashedly aligned herself with those protesting the power rate increase. That is how politicians behave under pressure. They will do anything to cling to their posts. Who will check regulators like her?

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