engleski

The Impact of Requlatory Quality on Electricity Sector Reforms: The Case of Transition Countries

Electricity sector as a classis case of natural monopoly has gone through remarkable changes in almost all countries during the past two decades. Transition countries have implemented electricity reforms as a part of much wider structural adjustment programmes and regulatory reforms represent a crucial reform step. The results of regulatory reforms in these economies show that the creation of effective regulatory structures in electricity sector strongly depends on the regulatory and overall institutional quality, while unbundling has made the regulatory task even more complex. The standard institutional solution in electricity sector is to establish an independent regulatory agency, instead of direct regulation by a government ministry/department, operating within a clearly defined legal framework. An independent regulator should set tariffs, entry and exit terms for network activities such are electricity transmission and distribution. However, economic and political institutions necessary for well functioning of regulatory authorities are weak and most transition countries face a shortage of qualified human resources in order to optimally staff new regulatory agencies. Therefore their full independence is dubious and governments still have a formal or informal influence in those activities of electricity regulators that are concerning electricity prices. Our empirical findings show that the regulatory quality completely mediates the effects of government effectiveness on the success in implementing electricity reforms. These results confirm that the regulatory quality is a crucial condition for the success of electricity reforms in transition countries, where the market opening and the level of competitiveness is not sufficient. Therefore the role of government should be much wider than just setting the independent regulator per se and it should include the creation of an effective and transparent regulatory quality that would make the market more competitive and the spillover effects and technology diffusion more effective.

regulatory quality, electricity sector, reforms, transition countries, mediation and moderator analysis

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