Regulation: What the prime minister needs to know

Journal Article · Fri Mar 01 04:00:00 EST 1996 · Electricity Journal

DOI:https://doi.org/10.1016/S1040-6190(96)80182-5· OSTI ID:457102

Tenenbaum, B

With over 20 countries reforming their power sectors, state-owned enterprises are being privatized; but governments may not realize that they cannot regulate private companies in the same way that they regulated state enterprises. Power sector reform can succeed only when governments reform both the sector and its regulation. Regulation is government intervention. When a government regulates, it imposes direct and indirect controls on the actions of state-owned or private enterprises in a particular sector. Government controls on prices are the most common form of economic regulation in the power sector. But regulation often goes beyond simple price or tariff controls. State-owned power enterprises are commonly required to get government approval for many minor operating and investment decisions. A government may regulate openly and directly through published rules, decrees, and licenses, or it may regulate through informal contacts between ministries and the managers of the regulated enterprise. State-owned enterprises are especially vulnerable to this {open_quotes}hidden{close_quotes} regulation. As a top official in an Asian government-owned utility explains, {open_quotes}What matters most is not what the ministry writes in its decrees, but what the minister says in his telephone calls.{close_quotes} Regulation is therefore not a new phenomenon for most countries, but there is often much confusion about what it means. A typical reaction from politicians and officials hoping to privatize some or all of their power sector, and at the receiving end of advice on regulatory policy, is, {open_quotes}But this is nothing new! Our government has always controlled the activities of state-owned enterprises through different ministries. And these controls have created many problems. We don`t need to reinvent the past and put a new label on it.{close_quotes}

• OSTI ID: 457102
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 2 Vol. 9; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
COMMERCIAL SECTOR
COMPETITION
ELECTRIC POWER INDUSTRY
GLOBAL ASPECTS
REGULATIONS