Baldwin et.al (2012) emphasizes on the five criteria for good regulation in which the primary observation of regulatory framework is seen in the context of public domain rather than wealth maximization. Baldwin et.al (2012) presents the following questions which should be the basis of forming policies:
Is the action or regime supported by legislative authority? – This particular question focuses on the legitimacy of the action taken by the authority, because energy companies could have their own criteria and follow them for personalising their profits rather than acting in a public domain.
Is there an appropriate scheme of accountability? – This is an important indicator of the adherence to the policies and regulations. It is important because if companies and their actions are not accountable to anyone or the government, then they could possibly act in ways which would care less for the benefit of the citizens and only pursue their personal interests.
Are procedures fair, accessible, and open?—This question advises to assess the procedures of the government policies and the energy companies and see if their actions and the results of their actions is transparent and made known to every citizen. It also requires the procedures of the policy to be fair giving equal rights to everyone and allocating resources without any discrimination. And lastly, it is also required to be discussed, implemented in an open manner and citizens must have free and open access to all the requisite actions and procedures.
Is the regulator acting with sufficient expertise?—The actions of the regulator must be assessed by sufficient expert advice because there is a possibility of the actions and regulations being mediocre rather than fulfilling and meeting the prime requirements. Hence it is advised that the regulator before forming a policy takes expert advice from industry veterans along with citizen participation and accordingly form policies.
Is the action or regime efficient? — This question relates to the effective implementation of policies and a necessity of a measurement tool to identify its usefulness and ability to reach the desired outcome. If the desired outcome is not reached, it is advisable to twist the policy to adjust to actions which may produce better results.