Electricity Restructuring: To Real Competition or Potemkin-type Liberalisation?

Abstract

Electricity restructuring is intended to introduce competition into electricity production and supply, leaving dispatch, transmission and distribution as regulated natural monopolies with non-discriminatory third-party access to the networks. The aim of the reform is to ensure that supply continues to meet growing demand by creating conditions that will encourage investment and promote greater efficiency in both production and consumption. If the reform is to achieve its major goals, the marketised segments of the sector must be characterised by real competition based on economically meaningful prices. There are two dangers here. The first is that private interests will acquire substantial market power. The second is that the state itself will use the assets it retains, combined with the considerable regulatory powers at its disposal, to "manage" the market.