Failures of electricity reform

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In their paper Electricity reform in developing and transition countries: A reappraisal, J.H. Williams and R. Ghanadan find that the standard menu for reform of electricity markets in developing countries has been ill-suited to local conditions.

Despite fundamental differences in motivations and conditions, non-OECD reform policies were largely based on the theoretical analysis and policy recommendations of economists concerned principally with deregulation in the US and Europe.

They also point out that "reformed" developing countries remain susceptible to shocks from the OECD.

The impact of the California energy crisis on government and public confidence in electricity reform was felt everywhere and can hardly be overestimated. As one Chinese power official remarked, "California's crisis warned us that we should be very cautious when undertaking the reforms and consider all the circumstances".

A main failing of the standard reform menu has been its under-emphasis on service. The authors also fault reformers for not including provisions for access, social pricing and environmental protection in final reform packages.

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