Delegation Dynamics and European Regulatory Agencies: Principal-Agent and Experimentalist Analyses in the Case of Energy

In the last two decades, there has been a progressive extension of delegation to European regulatory agencies. The dominant analytical framework for analysing such delegation has been the principal-agent model based on attention to formal arrangements, hierarchical relationships between principals and agents and the control mechanisms of principals over agents to pursue the principals’ goals. However, in recent years, an apparent rival model has appeared, namely experimentalism, which emphasizes informal arrangements facilitating the elaboration of revisable standards, understands decision making as increasingly based on networks and suggests that solutions to problems and the definition of important problems can only be identified as they are being pursued.

The paper looks at the politics of discretion by European regulatory agencies for markets, which have been set up in network industries and finance. It compares the formal pattern of delegation with the informal development of liberalization and re-regulation of markets. It focuses especially on the example of the internal energy market and its regulation by the Agency for the Cooperation of Energy Regulators (ACER) entered into operation in 2011. This is a politically sensitive domain in which there is a long history of delegation as well as informal modes of decision making, allowing analysis of different phases of delegation and discretion. The paper analyses parallel formal delegated and experimentalist architectures to argue that the two sets of processes have interacted. It then draws out implications for our understanding of the value of principal-agent and experimentalist frameworks and the insights each offers.