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Regulatory governance and chile's 1998–1999 electricity shortage

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  • Ronald Fischer
  • Alexander Galetovic

Abstract

We study regulatory incentives and governance during the 1998–1999 electricity shortage in Chile. We argue that it was feasible to manage the shortage with no outages. The outages can be blamed on the rigid price system and deficiencies in regulatory governance, which led to a weak regulator unable to make the price system work. The shortage shows the limitations of a rigid price system requiring regulatory intervention. It suggests that countries where governance structures are weak should rely as much as possible on market rules that clearly allocate property rights and leave contract terms to be freely negotiated by private parties.

Suggested Citation

  • Ronald Fischer & Alexander Galetovic, 2003. "Regulatory governance and chile's 1998–1999 electricity shortage," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(2), pages 105-125.
    • Handle: RePEc:taf:jpolrf:v:6:y:2003:i:2:p:105-125
    DOI: 10.1080/1384128032000145323
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    References listed on IDEAS

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    1. Gilbert,Richard J. & Kahn,Edward P. (ed.), 1996. "International Comparisons of Electricity Regulation," Cambridge Books, Cambridge University Press, number 9780521495905.
    2. Nesbakken, Runa, 1999. "Price sensitivity of residential energy consumption in Norway," Energy Economics, Elsevier, vol. 21(6), pages 493-515, December.
    3. Serra, Pablo & Fierro, Gabriel, 1997. "Outage costs in Chilean industry," Energy Economics, Elsevier, vol. 19(4), pages 417-434, October.
    4. Bernstein, Sebastian & Agurto, Renato, 1992. "Use of outage cost for electricity pricing in Chile," Utilities Policy, Elsevier, vol. 2(4), pages 299-302, October.
    5. Bernstein, Sebastian, 1988. "Competition, marginal cost tariffs and spot pricing in the Chilean electric power sector," Energy Policy, Elsevier, vol. 16(4), pages 369-377, August.
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    Cited by:

    1. Murillo, Maria Victoria & Foulon, Carmen Le, 2006. "Crisis and policymaking in Latin America: The case of Chile's 1998-99 electricity crisis," World Development, Elsevier, vol. 34(9), pages 1580-1596, September.
    2. Galetovic, Alexander & Muñoz, Cristián M., 2011. "Regulated electricity retailing in Chile," Energy Policy, Elsevier, vol. 39(10), pages 6453-6465, October.

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