A regulatory period typically refers to the time between a major review of the underlying components of a determined rate regime (such as the allowed rate of return, the efficiency factor, performance standards, etc.) and the subsequent review. Separate regulatory periods can also be devised to account for timing to establish new institutions and to ease the transition to a new type of regulatory structure.
Ultimately, there is no unambiguously optimal time period. Determining the appropriate length of the regulatory period requires balancing competing pressures; factors that influence the selection include the stability (or predictability) of the underlying economic and financial factors, as well as the administrative costs associated with regulatory oversight. Generally, most regulatory periods throughout the world range between three and five years – regulatory periods that are relatively longer or shorter than this are associated with their own risks.
If regulatory period is
shorter than 3 years
If regulatory period is
between 3-5 years
If regulatory period is
longer than 5 years
