Reshaping power markets: Lessons from South America

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

DOI:https://doi.org/10.1016/S1040-6190(96)80186-2· OSTI ID:457107

Lalor, R P; Garcia, H

Does restructuring enhance efficiency and give consumers a portion of these gains? Evidence from Chile and Argentina - whose restructuring is well ahead of that in the U.S. - demonstrates that more efficient power markets can be created, and that the need remains for appropriate treatment of the competitive and monopolistic portions of the market. Centrally planned electric systems have a long history in industrial states around the world: Marxist and capitalist, totalitarian and democratic. A growing enthusiasm world-wide for economic democracy has recently brought the concept of central planning under greater scrutiny, and alternative solutions have been sought. This paper describes experiences with the deregulation of the utility industry in Chile and Argentina and assesses the relevance of those experiences to the ongoing evolution of market-based systems in the United States. The lessons of the Southern Cone are very relevant to the ongoing dialogue on deregulation in the U.S. Experience there suggests a number of conditions that are important for the creation of competitive and efficient energy markets: (1) Mandatory separation of regulated functions, and clear delineation of the limits of involvement by regulated entities in competitive markets; (2) Unbundling of transmission charges and provision of {open_quotes}comparable{close_quotes} fair transmission access; (3) Clearly defined, published nodal or zonal transmission prices reflecting incremental operating and upgrade costs; (4) Establishment of a centrally dispatched commodity market, spot markets for both capacity and energy priced at system marginal cost, and a parallel bilateral market based on long term contracts; and (5) Access by generators and marketers to at least a portion of the retail market.

• OSTI ID: 457107
• 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
ARGENTINA
CHILE
COMPETITION
DEREGULATION
ELECTRIC POWER INDUSTRY