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Regulation of State-Owned and Privatized Utilities: Ukraine Electricity Distribution Company Performance

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  • Sanford Berg
  • Chen Lin
  • Valeriy Tsaplin

Abstract

Both ownership and regulation affect the behavior of utility managers. Private ownership rewards managerial decisions that enhance shareholder value. Regulatory incentives reward behavior that affects profits and costs. An empirical analysis of 24 Ukraine electricity distribution companies from 1998 to 2002 indicates that privately owned firms do respond to incentives that add to net cash flows (associated with reducing commercial and non-commercial network losses). However, they also respond more aggressively than do state-owned distribution utilities to mark-up (cost-plus) regulatory incentives that increase shareholder value but decrease cost efficiency. Copyright Springer Science+Business Media, Inc. 2005

Suggested Citation

  • Sanford Berg & Chen Lin & Valeriy Tsaplin, 2005. "Regulation of State-Owned and Privatized Utilities: Ukraine Electricity Distribution Company Performance," Journal of Regulatory Economics, Springer, vol. 28(3), pages 259-287, November.
    • Handle: RePEc:kap:regeco:v:28:y:2005:i:3:p:259-287
    DOI: 10.1007/s11149-005-3957-z
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    References listed on IDEAS

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    1. Simar, L. & Wilson, P.W., 1998. "Productivity Growth in Industrialized Countries," Papers 9810, Catholique de Louvain - Institut de statistique.
    2. 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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