Electricity Reform in Chile: Lessons for Developing Countries

Abstract

Chile was the first country in the world to implement a comprehensive reform of itselectricity sector in the recent period. Among developing countries only Argentina hashad a comparably comprehensive and successful reform. This paper traces the history ofthe Chilean reform, which began in 1982, and assesses its progress and its lessons. Weconclude that the reform has been very successful. We suggest lessons for the generation,transmission and distribution sectors, as well as the economic regulation of electricity andthe general institutional environment favourable to reform. We note that while the initialmarket structure and regulatory arrangements did give rise to certain problems, theoverall experience argues strongly for the private ownership and operation of theelectricity industry.