Results of Electricity Sector Restructuring in Peru Case Study From

Content Provider	Semantic Scholar
Abstract	1 Peru restructured its electricity sector in the early 1990s. While being slow and leaving much of the Peru's electricity sector in the hands of the government, sector reforms and privatization brought significant changes, and Peruvian electricity sector started to benefit from increased reliability, efficiency and declining transmission losses. ¾ How did sector reforms proceed? ¾ What were some of the characteristics of the Peruvian model that yielded the positive results? Sector Reforms As a part of globalization and deregulation of economy, in 1992 the Peruvian government issued the Electric Power Concession Law (the Law), which established a new regulatory framework that promoted competition and efficiency in generation, transmission and distribution of electric power by requiring the unbundling of these activities. The Law also called for the privatization of all state-owned commercial operating assets. It also permitted to set electricity tariffs according to marginal costs and free market. Large customers received the freedom to negotiate directly with generation and distribution companies. From 1997, single investors could own a maximum of 15% of generation, transmission and distribution, or a maximum of 5% across the industry as a whole. The law also gave the government the right to deny mergers in the electricity sector if the merger is not in the "national interest." With the adoption of the Law, consumers using small amounts of electricity received protection from large tariff increases, with pricing overseen by an autonomous entity, the Electricity Tariffs Commission (CTE), which was later renamed the Energy Tariffs Commission. The Law also created the Committee for the Economic Operation of the Interconnected System (COES) to be in charge of dispatch of the system. COES comprises of the owners of the generation plants and transmission systems of each interconnected system, and coordinates the operation of the system at the lowest possible cost. It works to guarantee the safety of the electricity supply, and to ensure the best possible use of the electricity resources of each interconnected system. Another body created by this Law is OSINERG whose principle functions are to oversee compliance with provisions that make up the legal, technical, and commercial regulatory framework governing electricity production. Generation and distribution have both undergone privatization, which had disposed of more than 60% of the state's holdings in the sector by the end of 1998. Electrolima and 1 This case study was prepared using publicly available information.
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://www.beg.utexas.edu/energyecon/new-era/case_studies/Results_of_Electricity_Sector_Restructuring_in_Peru.pdf
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article