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

  • Littlechild, S.C.
  • Skerk, C.J.

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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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
Note: CMI, IO
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  1. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-42, September.
  2. Manuel A. Abdala & Pablo T. Spiller, 2005. "Decentralized Investment and Quality Decisions In Common-Pool Networks," Public Economics 0508004, EconWPA.
  3. Joskow, Paul & Tirole, Jean, 2004. "Merchant Transmission Investment," IDEI Working Papers 263, Institut d'Économie Industrielle (IDEI), Toulouse.
  4. Antonio Estache & Martin Rodriguez-Pardina, 1996. "Regulatory Lessons from Argentina's Power Concessions," World Bank Other Operational Studies 11609, The World Bank.
  5. 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.
  6. Bushnell, James & Stoft, Steven, 1997. "Improving Private Incentives for Electric Grid Investment," Staff General Research Papers 31549, Iowa State University, Department of Economics.
  7. Leautier, Thomas-Olivier, 2001. "Transmission Constraints and Imperfect Markets for Power," Journal of Regulatory Economics, Springer, vol. 19(1), pages 27-54, January.
  8. Pollitt, M.G., 2004. "‘Electricity Reform in Argentina: Lessons for Developing Countries’," Cambridge Working Papers in Economics 0449, Faculty of Economics, University of Cambridge.
  9. Chisari, Omar O. & Dal-Bo, Pedro & Romero, Carlos A., 2001. "High-tension electricity network expansions in Argentina: decision mechanisms and willingness-to-pay revelation," Energy Economics, Elsevier, vol. 23(6), pages 697-715, November.
  10. 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.
  11. Abdala, Manuel A., 2008. "Governance of competitive transmission investment in weak institutional systems," Energy Economics, Elsevier, vol. 30(4), pages 1306-1320, July.
  12. Vogelsang, Ingo, 2001. "Price Regulation for Independent Transmission Companies," Journal of Regulatory Economics, Springer, vol. 20(2), pages 141-65, September.
  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. 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.
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