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Issues and options for restructuring electricity supply industries

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  • David Newbery

Abstract

The electricity supply industry is highly capital-intensive, whose success depends critically upon the management of its investment. In most developing countries investment is poorly managed, poorly maintained, and often inadequate. Inadequate regulation or political control lead to low prices that undermine the finance of investment and give poor incentives for management and operation. The paper argues that regulation must be carefully designed to provide efficient incentives and adequate guarantees to sustain investment and operations and only then will privatisation improve performance and benefit consumers. The paper discusses the evidence for these claims, the circumstances required for full unbundling and liberalisation to be successful, and those where the Single Buyer Model or continued, ideally reformed, state ownership, may be preferable, at least until conditions improve.
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Suggested Citation

  • David Newbery, 2002. "Issues and options for restructuring electricity supply industries," Working Papers EP01, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:ep01
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    References listed on IDEAS

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    1. Gilbert,Richard J. & Kahn,Edward P. (ed.), 1996. "International Comparisons of Electricity Regulation," Cambridge Books, Cambridge University Press, number 9780521495905, October.
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    8. Pollitt, M. G., 1997. "The Restructuring and Privatisation of the Electricity Supply Industry in Northern Ireland: Will it be Worth it?," Cambridge Working Papers in Economics 9701, Faculty of Economics, University of Cambridge.
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    More about this item

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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