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Regulated electricity retailing in Chile

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  • Galetovic, Alexander
  • Muñoz, Cristián M.

Abstract

While some countries have unbundled distribution and retailing, skeptics argue that the physical attributes of electricity make retailers redundant. Instead, it is claimed that passive pass through of wholesale prices plus regulated charges for transmission and distribution suffice for customers to benefit from competitive generation markets. We review the Chilean experience with regulated retailing and pass through of wholesale prices. We argue that when energy wholesale prices are volatile and prices are stabilized, distortions emerge. Regulated retailers gain little by mitigating or correcting them. On the contrary, sometimes price distortions increase their profits. We estimate the cost of three distortions that neither regulated retailers nor the regulator have shown any interest in correcting.

Suggested Citation

  • Galetovic, Alexander & Muñoz, Cristián M., 2011. "Regulated electricity retailing in Chile," Energy Policy, Elsevier, vol. 39(10), pages 6453-6465, October.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:10:p:6453-6465
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    5. Ljerka Cerovic & Dario Maradin & Sa a Cegar, 2014. "From the Restructuring of the Power Sector to Diversification of Renewable Energy Sources: Preconditions for Efficient and Sustainable Electricity Market," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 599-609.
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