The Water Supply Authority expects to face the following issues and challenges over the next 2-3 years:

• There needs to be a firm commitment by the government on the regulatory role of WASA and what other roles WASA is expected to perform. There also needs to be an understanding of WASA’s role by the water consumers. Consumers need to appreciate the benefits of having a water supply regulator that will ensure good quality service and maintain a fair price. The drive for the regulator needs to come from both directions and in this regard a comprehensive communications strategy is of paramount importance. 
• Lack of formal recognition of its role as a regulator is restricting WASA’s potential to raise a levy from the operators to finance its regulatory activities. This means that WASA must continue to seek funds through involvement in projects and in undertaking other allocated tasks. Establishment of self-funding mechanism and obtaining levies from operators is needed. 
• The Water Regulatory Board has not yet been established. 
• There have not yet been formal performance agreements between the water suppliers and WASA. 
• Staff resources will need to be substantially enhanced for WASA to be able to undertake its activities. 
• Tariff levels in some provinces are too low and insufficient to cover the full cost of water supply. This is constraining the financial autonomy of the water companies and as a consequence their managerial and operational autonomy. There are insufficient funds for proper operations and maintenance and staff training. There is a need for significant additional support to WASA in the development of suitable tariff policy, structures and levels and a firm action plan progressing towards full cost recovery. 
• Existing office and facilities are sufficient for current needs. However, once additional staff is engaged, there will eventually be a need for increased office space, preferably at an independent location, increased office equipment and networking facility to enhance communications with the water suppliers and the community at large. 
• There is a need to develop appropriate planning, design criteria, design standards, standard drawings, specifications and financial toolkit for development of water supply schemes in different conditions including small town water schemes and appropriate institutional models as well as methods for up-scaling / improving water supply systems over time. 

There is a need to establish a regulatory based reference library in WASA, performance reports, guidelines, standards and PSP information.

The pace of development of regulation in the water supply sector accelerated in 2002. Without any legal powers of enforcement for most of the time it has been operating, Water Supply Authority (WASA), Lao PDR has had to rely on other mechanisms principally comparative competition. This involves the publication of the WASA Annual Report containing the performance, both technical and financial, of the operators. Although the OFWAT comparative competition concept is applied with great effect to a privatised industry there is no reason why it cannot be applied to a state-owned one. The only difference is that the maximisation of profit incentive inherent in a privatised structure is not as strong. Furthermore, any failure to meet efficiency expectations determined through comparative competition will not result in reduced profits for shareholders but will actually deprive the company of much needed cash for further investment, which may, in turn, lead to lower level of service. Notwithstanding the above shortcomings it is still possible to generate improved performance though comparative competition, the driver being psychological more than financial i.e. a manager of a water operator will have a desire to be amongst the best performing, or at least not to be amongst the worst. This is especially strong in Asia where ‘loss of face’ is a powerful force.

One of the most notable achievements of the Energy Regulatory Commission (ERC), Philippines is the establishment of internationally accepted rate-setting methodologies that promote efficiency among utilities which is the Performance-Based Rate-Setting Methodologies.

PBR employs a performance incentive scheme that encourages cost-cutting and economy of operations through the optimal use of assets as well as efficiency in service delivery that can lower electricity rates in the long term. It provides incentives for distributors to achieve efficiencies in the provision of services by allowing them to retain any savings in the cost of service provision for a period. Its objectives are to attain increased efficiency, improve dependable quality of service, reduce costs, and maintain reasonable rates.

For the transmission business, the ERC sets a revenue cap, for a 5-year regulatory period while for Private Utilities (PUs), the ERC sets a price cap for a 4-year regulatory period. Manila Electric Company (MERALCO), Dagupan Electric Corporation (DECORP), and Cagayan Electric Power and Light Company, Inc. (CEPALCO) are the first private distribution utility entrants to the PBR. By 2011, all private distribution utilities would be under PBR.