IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Light and lightning at the end of the public tunnel : reform of the electricity sector in the Southern Cone

Listed author(s):
  • Estache, Antonio
  • Rodriguez-Pardina, Martin

The authors provide an overview of recent privatization experiences in Argentina, Brazil, and Chile. They focus on both achievements and outstanding problems in the electricity sector. They pay special attention to the issue of whether regulators can enforce compliance and sustain the spirit of reform - bringing the forces of competition to the sector - despite the unavoidable adjustments and fine-tuning that effective regulation requires. Among the lessons: Competition, rather than privatization, is the key to transforming the sector. For competition to work, several conditions must be met: 1) The primary energy source must be competitive for competition in the wholesale market to work. (In Chile, the fact that most of the water rights have been allocated to the major generator company seriously limits efficiency in the sector.) 2) Monopolistic stages must be formally separate from other stages, with clear rules for third-party access. (Here, the structure adopted by Argentina seems superior to that adopted by Chile.) 3) New entry into the system is the ultimate test of competition. The main gain from competition in electricity generation comes from the decentralization of decisions about when, how much, and what type of generation has to be brought to the market, rather than from short-term gains from minimizing costs. Overall, vertical and horizontal separation in the sector increases rather than reduces the burden and complexity of regulation. In a disintegrated system, the issues that arose in a traditional monopoly situation (fair rate of return, asset base, tariff to final consumers, and so on) are significantly increased. New issues include third-party access, the promotion of competition, interconnection pricing, and consistency of regulations across stages of competitive development. Restructuring and privatization are still in their early stages so lessons drawn from experience must be considered tentative.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2074.

in new window

Date of creation: 31 Mar 1999
Handle: RePEc:wbk:wbrwps:2074
Contact details of provider: Postal:
1818 H Street, N.W., Washington, DC 20433

Phone: (202) 477-1234
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2074. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.