Power System Restructuring: A review of the progress in various parts of the world

Abstract

Globally, the electrical power supply industry has been and is still undergoing change in the mode of operation from Vertically Integrated Utilities (VIUs) to liberalized power markets, with unbundling of the generation, transmission and distribution functions. These reforms have been driven by various internal and external factors. The internal drivers for electrical industry liberalization vary depending on the level of
development of a country. In mature economies, restructuring has been propelled by the need to provide electricity at lower prices and to offer customers a greater choice in the retail market. In developing countries, the power industry needs to meet the fast growing electrical
energy demand induced by blooming economies. The overall expected outcomes are improved efficiency, improved service reliability and introduction of reflective pricing, hence, a reduction in the price-cost gap of electrical energy. These benefits are expected to stimulate economic development. This paper reviews the drivers of the reforms; the proposed standard model of implementing the reforms; merits and
demerits of the various options which chart the evolution of the Electricity Supply Industry (ESI) from a regulated monopoly to full competition. In addition it discusses the various fully restructured power markets in the world; the reforms, so far, in Sub-Saharan Africa, South Asia and Latin America; their impacts and lessons learned.