Chapter 17 – Understanding the Argentinean and Colombian Electricity Markets

Publisher Summary This chapter makes comparisons between Argentina and Colombia to develop a better understanding of how the different models of deregulation shaped the evolution of their electricity systems. Both countries deregulated over 10 years ago and as such provide a period where analysis and comparison can begin to yield insights into the consequences of both the initial and later decisions on the evolution of the electricity system. After the initial transformation, the two countries almost “froze” the reforms and no substantial adjustments were made to cope with the challenges that emerged subsequently. Argentina faced the problem, because the regulator avoided creating uncertainty for investors about revenues in the future by allowing a relatively high tariff. A similar situation occurred in Colombia. This might make the situation better for the investors, but might create another set of problems as consumers do not see sufficient benefits from the reforms. The new round of reforms should take into account different aspects of the problem—they should consider an economic recovery of the region, they may rely more on market institutions, and the future design should take into account the possibility of creating regional integration.