Do power sector reforms affect electricity prices in selected Asian countries?

• Published in: Energy policy 2019-06, Vol.129, p.1253-1260
• Main Authors: Ahmed, Tauqir, Bhatti, Arshad Ali
• Format: Article
• Language: English
• Subjects: Consumers; Deregulation; Electricity; Electricity consumption; Electricity prices; Electricity pricing; Electricity reforms; Energy policy; Intergenerational transmission; Outliers (statistics); Panel data; Panel data analysis; Power; Prices; Privatization; Project finance; Random effects; Reforms; Regulation; Regulatory agencies; Regulatory reform
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2019.03.012

This paper examines the impact of power sector reforms on electricity prices using panel data for selected Asian countries over the period 1970–2017. We estimate two separate models for domestic and industrial prices. Our results from pooled OLS and the random effect model show that the impact of independent power producers, privatisation, restructuring, and deregulation on electricity prices is negative and significant, making both domestic and industrial consumers better off. However, the welfare effects of unbundling generation from transmission and distribution appear to be beneficial for residential end-users only. Our results also indicate that other reform indicators including third-party access and the existence of independent regulatory agencies may not be the right choice for a reduction in electricity prices, given the absence of a requisite conducive environment for regulations in our sample countries. Thus, the inconsistent behaviour of different regulatory reforms towards different countries and regions of the world needs to be considered in the policy formulation of the power sector. We also note that the results can be magnified in terms of significance with the exclusion of some outlier observations in the data. •Analysis of welfare impacts of power sector reforms in selected Asian countries.•The reducing effect of competition, privatisation and deregulation on electricity prices.•Apparent beneficial welfare effects of unbundling for residential end-users only.•A trivial effect of third-party access and independent regulatory agencies on electricity prices.