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Regulation of transmission expansion in Argentina Part I: State ownership, reform and the Fourth Line

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  • Littlechild, S.C.
  • Skerk, C.J.

Abstract

From 1992 to 2002, major expansions of the Argentine electricity transmission sector depended on users proposing, voting and paying for such expansions, which were then put out to competitive tender. Commentators hold this novel policy to have been unsuccessful, mainly on the ground that it substantially delayed investment in a much needed “Fourth Line” to Buenos Aire. This paper challenges this interpretation. The policy was chosen because the conventional regulatory framework could not be trusted to deliver more efficient transmission investment decisions. The delay to the Fourth Line was short. Most importantly, the Fourth Line was not economic. Hence the delay was beneficial both in deferring and in reducing costs. It indicated a need to reappraise transmission investment policy because the availability of gas had made it more economic to generate electricity near Buenos Aires than to transmit it a long distance.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0464.

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Length: 75
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:cam:camdae:0464

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Web page: http://www.econ.cam.ac.uk/index.htm

Related research

Keywords: Argentina; electricity; transmission; regulation;

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References

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  1. Leautier, Thomas-Olivier, 2001. "Transmission Constraints and Imperfect Markets for Power," Journal of Regulatory Economics, Springer, vol. 19(1), pages 27-54, January.
  2. Pollitt, M.G., 2004. "‘Electricity Reform in Argentina: Lessons for Developing Countries’," Cambridge Working Papers in Economics 0449, Faculty of Economics, University of Cambridge.
  3. Paul Joskow & Jean Tirole, 2003. "Merchant Transmission Investment," Working Papers 0304, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  4. Manuel A. Abdala & Pablo T. Spiller, 2005. "Decentralized Investment and Quality Decisions In Common-Pool Networks," Public Economics 0508004, EconWPA.
  5. Chisari, Omar O. & Dal-Bó, Pedro & Romero, Carlos A., 2000. "High-Tension Electricity Network Expansions in Argentina: Decision Mechanisms and Willigness-to-Pay Revelation," UADE Working Papers 9_2000, Instituto de Economía, Universidad Argentina de la Empresa.
  6. Vogelsang, Ingo, 2001. "Price Regulation for Independent Transmission Companies," Journal of Regulatory Economics, Springer, vol. 20(2), pages 141-65, September.
  7. Abdala, Manuel A., 2008. "Governance of competitive transmission investment in weak institutional systems," Energy Economics, Elsevier, vol. 30(4), pages 1306-1320, July.
  8. Bushnell, James B & Stoft, Steven E, 1996. "Electric Grid Investment under a Contract Network Regime," Journal of Regulatory Economics, Springer, vol. 10(1), pages 61-79, July.
  9. Bushnell, James & Stoft, Steven, 1997. "Improving Private Incentives for Electric Grid Investment," Staff General Research Papers 31549, Iowa State University, Department of Economics.
  10. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-42, September.
  11. Thomas-Olivier Leautier, 2000. "Regulation of an Electric Power Transmission Company," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 61-92.
  12. Antonio Estache & Martin Rodriguez-Pardina, 1996. "Regulatory Lessons from Argentina's Power Concessions," World Bank Other Operational Studies 11609, The World Bank.
  13. Littlechild, S.C. & Skerk, C.J., 2004. "Regulation of transmission expansion in Argentina Part II: Developments since the Fourth Line," Cambridge Working Papers in Economics 0465, Faculty of Economics, University of Cambridge.
  14. Chao, Hung-Po & Peck, Stephen, 1996. "A Market Mechanism for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 10(1), pages 25-59, July.
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Citations

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Cited by:
  1. Littlechild, Stephen C. & Ponzano, Eduardo A., 2008. "Transmission expansion in Argentina 5: The regional electricity forum of Buenos Aires province," Energy Economics, Elsevier, vol. 30(4), pages 1491-1526, July.
  2. Erdogdu, E., 2012. "A cross country analysis of electricity market reforms: potential contribution of New Institutional Economics," Cambridge Working Papers in Economics 1232, Faculty of Economics, University of Cambridge.
  3. Pollitt, M.G., 2004. "‘Electricity Reform in Argentina: Lessons for Developing Countries’," Cambridge Working Papers in Economics 0449, Faculty of Economics, University of Cambridge.
  4. Thomas-Olivier Léautier & Véronique Thelen, 2009. "Optimal expansion of the power transmission grid: why not?," Journal of Regulatory Economics, Springer, vol. 36(2), pages 127-153, October.
  5. Michael Pollitt, 2004. "Electricity Reform in Chile Lessons for Developing Countries," Working Papers 0416, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  6. Abdala, Manuel A., 2008. "Governance of competitive transmission investment in weak institutional systems," Energy Economics, Elsevier, vol. 30(4), pages 1306-1320, July.
  7. Erdogdu, Erkan, 2011. "Determinants of successful electricity market reform," MPRA Paper 38410, University Library of Munich, Germany.
  8. Littlechild, S.C. & Skerk, C.J., 2004. "Regulation of transmission expansion in Argentina Part II: Developments since the Fourth Line," Cambridge Working Papers in Economics 0465, Faculty of Economics, University of Cambridge.

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