Stimulating efficient distribution. http://dx.doi.org/10.1109/MPAE.2007.376581

Abstract

The article focuses on the price regulation schemes in most of the Latin American countries. Each country’s situation is described very clearly through proper comparisons. The authors emphasize that a growing challenge in the restructuring of the electrical sector, where competition is introduced in the generation area, is to achieve equivalent efficiencies in the electrical distribution service, an activity that develops in a monopolistic environment. Latin America has had an experience of over 20 years of applying incentive price regulation to its distribution companies. The Latin America experience of incentive regulation for distribution companies has resulted in a sustained evidence of efficiency, through clear incentives for cost reductions, and attraction to investors, given adequate returns to investment capital.