The Electricity Reforms in Chile Essay Example | Topics and Well Written Essays - 3500 words

The Electricity Reforms in Chile - Essay ExampleDuring the late 1970s and untimely 1980s most of the earlier nationalized firms were being given ass to their earlier owners and massive government companies, for instance electricity firms were enticed to trade on a commercial basis. Government firms were breaking even and by the late 70s and early 80s there were indications that electricity firms specially showed improving rates of return on capital.The macro economy and most of the major economic indicators started to indicate substantial improvement. puffiness dropped and GDP started to grow at a considerable pace especially after 1985. This healthy economic trend grew further during the late 1980s and accelerate further to 6.2 p.a. during the early 1990s. The electricity reforms in Chile follow most of the features found in the electricity systems of developed nations. Since Chile has a small commonwealth (15.5m in 2002), thus the capability to take advantage of economies of sca le, if at all is moderate2. Even though Chiles electricity consumption per person is low when compared to developed countries, it is increase fast at (6% per annum). The electricity making system has a big installed hydro capacity base, however as demand rises fossil fuels have become more(prenominal) snappy. Most probably there is a difference between Chile and other developing countries as the strength due to the fact that it was administered by war machine rule for a long time. 2. Analysisi. Reform in electricity - History The Electricity Act enacted in 1982 is up to now the most vital legislation in the celestial sphere. In January 2004 there were some significant changes to the regulations governing the sector after the passage of Lay Corta. The electricity sector inChilebasically depends on caloric and hydro big businessman extension. Shortage of natural gas led the government to increase the supply by building a first liquefied gas endpoint with more capacity of gener ation. The new project started in the year 2007. Re-gasification plant terminal near the capital city ofSantiagois intended to increase and stabilize power supply for its existing and projected gas-fired thermal plants. There was a consideration to further expand the constructions in various new hydropower and coal-fired thermal plants. Chiles electricity sector reform was very efficiently implemented by the authorities and because of the success of the reforms many other governments followed the same to improve power generation in their several(prenominal) countries3. Figure 4 Chiles Natural Gas Total Consumption (2003) - Total Annual Demand 8.73 BCMSource www.lyd.com/english/noticias/restructuring.ppt -Chile4 Adaptation of many initiatives like straight and horizontal unbundling ofpower generation, regular transmissionanddistributionand large scale privatization brought billions of institutional investment to the electricity sector due to electricity shortage of the country5. Th e 1982 Electricity Act was amended terzetto times in 1999, 2004 and 2005 respectively in Chiles parliament. Even though during the 1980s there werent many markets from which Chileans could draw inspiration, the officials visited UK, France and Belgium. From the knowledge gained from these countries they came up with the idea of separate generation and distribution firms where payment was done in accordance with a formula based on cost. This apart they also came up with a dispatch