Power Utility Re-regulation in East European and CIS Transformation Countries (1990-1999): An Institutional Interpretation

Abstract

This paper analyzes the process of power utility re-regulation in Eastern Europe and the CIS during the decade of systemic transformation (1990-1999); in particular, it explores reasons why early attempts to introduce competition-oriented reform models have not succeeded. We discuss advantages and disadvantages of various reform models from an institutional economic perspective. The approaches to and results of power sector reform in Eastern Europe are assessed; quantitative indicators are wholesale and retail prices, cost coverage ratios, investment levels, and the degree of unbundling and privatization. The paper concludes that a gradual approach to reforms may have been appropriate for the first years of systemic transformation, but that today, ten years later, there is no reason to delay market-oriented reforms any longer.