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Power Utility Re-regulation in East European and CIS Transformation Countries (1990-1999): An Institutional Interpretation

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  • Christian von Hirschhausen
  • Petra Opitz

Abstract

This paper analyzes the process of power utility re-regulation in Eastern Europe and the CIS during the decade of systemic transformation (1990-1999); in particular, it explores reasons why early attempts to introduce competition-oriented reform models have not succeeded. We discuss advantages and disadvantages of various reform models from an institutional economic perspective. The approaches to and results of power sector reform in Eastern Europe are assessed; quantitative indicators are wholesale and retail prices, cost coverage ratios, investment levels, and the degree of unbundling and privatization. The paper concludes that a gradual approach to reforms may have been appropriate for the first years of systemic transformation, but that today, ten years later, there is no reason to delay market-oriented reforms any longer.

Suggested Citation

  • Christian von Hirschhausen & Petra Opitz, 2001. "Power Utility Re-regulation in East European and CIS Transformation Countries (1990-1999): An Institutional Interpretation," Discussion Papers of DIW Berlin 246, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp246
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    References listed on IDEAS

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    1. Paul L. Joskow, 1997. "Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 119-138, Summer.
    2. David M. Newbery, 1994. "Restructuring and privatizing electric utilities in Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(3), pages 291-316, September.
    3. Jon Stern, 1994. "Economic regulation in Central and Eastern Europe 1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(3), pages 391-398, September.
    4. Spiller, Pablo T, 1996. "Institutions and Commitment," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 421-452.
    5. von Hirschhausen, Christian & Engerer, Hella, 1998. "Post-Soviet gas sector restructuring in the CIS: a political economy approach," Energy Policy, Elsevier, vol. 26(15), pages 1113-1123, December.
    6. Joskow, Paul L, 1996. "Introducing Competition into Regulated Network Industries: From Hierarchies to Markets in Electricity," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 341-382.
    7. Bickenbach, Frank & Kumkar, Lars & Soltwedel, RĂ¼diger, 1999. "The new institutional economics of antitrust and regulation," Kiel Working Papers 961, Kiel Institute for the World Economy (IfW).
    8. Mark Armstrong & John Vickers, 1996. "Regulatory reform in telecommunications in Central and Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 295-318, October.
    9. I. Lewington, 1997. "Framework Options for Electricity Utilities in Transition Economies: Attempting a Systematic Approach," CERT Discussion Papers 9708, Centre for Economic Reform and Transformation, Heriot Watt University.
    10. Glachant, Jean-Michel, 1998. "England's wholesale electricity market: could this hybrid institutional arrangement be transposed to the European Union?1," Utilities Policy, Elsevier, vol. 7(2), pages 63-74, June.
    11. Helene Ryding, 1998. "Electricity Restructuring in Ukraine: Illusions of Power in the Power Industry?," CERT Discussion Papers 9803, Centre for Economic Reform and Transformation, Heriot Watt University.
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    Cited by:

    1. Russell Pittman, 2003. "Vertical Restructuring (or Not) of the Infrastructure Sectors of Transition Economies," Journal of Industry, Competition and Trade, Springer, vol. 3(1), pages 5-26, March.
    2. Zhang, Yinfang & Parker, David & Kirkpatrick, Colin, 2005. "Competition, regulation and privatisation of electricity generation in developing countries: does the sequencing of the reforms matter?," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 358-379, May.

    More about this item

    Keywords

    Power sector; institutions; transition; Eastern Europe;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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