High-tension electricity network expansions in Argentina: decision mechanisms and willingness-to-pay revelation
This paper describes the procedures established by the present regulation for high-tension network expansions, studies its optimality and points its main problems. According to the present regulatory scheme, the decision to expand the high-tension network system is on the hands of the private sector. A simple model of the Argentine electricity system and its regulation allowed the simulation of cases in which the present “Public Contest” method could result in the rejection of socially desirable projects and the acceptance of undesirable ones. Some of the reasons for the existence of wrong incentives to investment are found and changes to the mechanism are suggested.
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