Analysing success of regulatory policy transfers: Evidence from Turkish energy markets Seyit Ali Dastan n Energy Market Regulatory Authority of Turkey, Muhsin Yazicioglu Caddesi, No:51/C EPDK, 06530 Yuzuncuyil, Ankara, Turkey article info Article history: Received 8 July 2010 Accepted 4 October 2011 Available online 26 October 2011 Keywords: Regulation Energy markets Utilities abstract Economic regulation of public utilities has become a worldwide phenomenon with the preceding privatisation stream. It is questionable to transfer regulatory models hastily without customising the policy options or introducing necessary institutional reforms enabling the achievement of expected results of regulatory reform. Institutional configuration of a country affects credibility of regulatory commitments, quality of regulatory design, and way of policy transfer. Turkey’s energy market regulation experience confirms the decisive role of institutions in shaping the regulatory framework. & 2011 Elsevier Ltd. All rights reserved. 1. Introduction The economic regulation of public utilities has become a worldwide phenomenon over the last two decades. As more than a decade has passed since this process began, and given the dizzying pace and extent of the changes, it is now a good time to ask whether regulation policies have benefitted the countries that carried them out. There are now a number of studies geared towards a comparison of the ‘‘before and after’’ of the reforms. One of the earliest works in this field is that of Levy and Spiller (1996) with their analysis of comparative studies of telecommu- nications regulation from an institutional perspective. This paper follows their approach and aims to contribute to the growing number of studies of the consequences of the reforms and to analyse the extent to which the role of institutions, formal or informal, play a role in the success of the policy reforms. This analysis will mainly focus on Turkey’s energy markets’ reforms in the face of British experience in such a way to allow derivations for other countries’ reforms. In more clear terms, the purpose of the paper is to discuss the role institutions in the success of reforms by referring to Turkish case and without having any stance in favour of or against the reform itself. The paper is divided into two main parts. The first part unveils the factual and theoretical background to the reforms. The second part is devoted to a case which we hope may shed some light on the issue, that of the Turkish energy markets. The question I am attempting to answer is as follows: Has Turkey’s energy markets’ regulatory reform process yielded the expected benefits, and what institutional factors affected the success or failure in the achievement of its goals? The essay probes into the regulatory governance in Turkey and analyse what institutional factors led to deviations, if any, from the expected outcome. An analysis of the institutional configuration in the UK is also included in this section in order to provide a comparative analysis. The findings of the study justify the conclusion that public utility regulation reform may deviate from the expectations, but it would be unfair to argue that they are completely fruitless. In overall terms, the paper will contribute to the institutional analysis of utility regulation and provide policy-makers with clues regarding better means of carrying out regulation and the necessary tools to think about what is lacking in the reforms. 2. The puzzle 2.1. Factual background The last quarter of the 20th century witnessed public sector reforms all over the world. The inadequacy of institutions of the Keynesian welfare state to respond to the complex needs of the modern era (Majone, 1996, p. 56) and rising disappointment in public service delivery (Lodge, 2008) led to varying public sector reforms. One of the main themes of these initiatives is the privatisation of state-owned enterprises and creation of light- touch regulators for the utility markets. Britain in many ways led these reforms and played the role of pace-setter. This trend included the privatisation of utilities in telecommunications (1984), gas (1986), electricity (1989), water (1989), and railways (1993). The regulatory regime designed with the privatisation envisaged the non-involvement of politicians in the market. Contents lists available at SciVerse ScienceDirect journal homepage: www.elsevier.com/locate/enpol Energy Policy 0301-4215/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.enpol.2011.10.006 n Tel.: þ90 3122014206; fax: þ90 3122014255. E-mail address: sdastan@epdk.org.tr Energy Policy 39 (2011) 8116–8124