THE BRITISH EXPERIENCE OF PRIVATIZATION AND REGULATION OF THE ELECTRICITY INDUSTRY, AND SOME LESSONS FOR THE PHILIPPINES

Peter Stubbs and Rafael E. A. MacAtangay

Journal of the Asia Pacific Economy, 2002, vol. 7, issue 1, 113-136

Abstract: The electricity industry was the UK's biggest privatization. It was complex, since part of the industry was a natural monopoly, but some of it could be broken up into competing enterprises. Service imperatives and political considerations inhibited the optimum break-up of generation. Efficiency has improved and real prices have fallen since divestiture, but it is arguable how much scope for radical competitive improvement remains. Imminent reforms under NETA are controversial and, some economists claim, misconceived, risking a new system, like the old, implemented without enough forethought. The Philippines electricity system urgently needs reform, though privatization is problematic, given existing long-term highcost supply contracts. However, reform proceeds, having absorbed some lessons from UK experience: generation has more players, and spatial pricing and separate buyer bidding should avoid some pitfalls of the UK pool. Problems of capital scarcity, imperfections in market information and ineffectual competition policy are likely to empower existing players.

Date: 2002
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DOI: 10.1080/13547860120110498

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