Regulatory Governance and Sector Performance : Methodology and Evaluation for Electricity Distribution in Latin America

This paper contributes to the literature that explores the link between regulatory governance and sector performance. The paper develops an index of regulatory governance and estimates its impact on sector performance, showing that indeed regulation and its governance matter. The authors use two unique databases: (i) the World Bank Performance Database, which contains detailed annual data for 250 private and public electricity companies in Latin America and the Caribbean; and (ii) the Electricity Regulatory Governance Database, which contains data on several aspects of the governance of electricity agencies in the region. The authors run different models to explain the impacts of change in ownership and different characteristics of the regulatory agency on the performance of the utilities. The results suggest that the mere existence of a regulatory agency, regardless of the utilities' ownership, has a significant impact on performance. Furthermore, after controlling for the existence of a regulatory agency, the ownership dummies are still significant and with the expected signs. The authors propose an experience measure in order to identify the gradual impact of the regulatory agency on utility performance. The results confirm this hypothesis. In addition, the paper explores two different measures of governance, an aggregate measure of regulatory governance, and an index based on principal components, including autonomy, transparency, and accountability. The findings show that the governance of regulatory agencies matters and has significant effects on performance.

Bibliographic Details

Main Authors:	Lopez Azumendi, Sebastián, Andres, Luis, Guasch, José Luis
Language:	English
Published:	World Bank, Washington, DC 2008-01
Subjects:	ACCOUNTABILITY, ACCOUNTING, AUDITING, AUDITS, AUTHORITY, AUTONOMOUS MANAGEMENT, AVERAGE LEVEL, BENCHMARKING, CENTRAL BANKS, CITIZENS, CONSUMER COMPLAINTS, CONSUMER WELFARE, CORPORATE PERFORMANCE, COST STRUCTURE, CROSS COUNTRY DATA, DATA COLLECTION, DECISION MAKERS, DECISION-MAKING, DECISION-MAKING PROCESS, DEVELOPING COUNTRIES, DISCLOSURE, ELECTRIC POWER, ELECTRIC POWER INDUSTRY, ELECTRIC POWER SECTOR, ELECTRIC UTILITIES, ELECTRICITY COMPANIES, ELECTRICITY CONSUMERS, ELECTRICITY DISTRIBUTION, ELECTRICITY DISTRIBUTION SECTOR, ELECTRICITY GENERATION, ELECTRICITY MARKET, ELECTRICITY MARKETS, ELECTRICITY REGULATION, ELECTRICITY REGULATORS, ELECTRICITY SECTOR, EMPIRICAL ANALYSIS, EMPIRICAL EVIDENCE, ENERGY LOSSES, ENERGY REGULATORS, EXPENDITURE, FINANCIAL STRENGTH, FIRM PERFORMANCE, FORMAL REGULATION, GENERATION CAPACITY, GOOD GOVERNANCE, GOOD REGULATORY GOVERNANCE, GOVERNANCE DATA, GOVERNANCE INDEX, GOVERNANCE INDEXES, GOVERNANCE INDICATORS, GOVERNANCE VARIABLES, GOVERNMENT AUTHORITIES, GOVERNMENT BUDGET, IMPACT OF REGULATION, INDEPENDENT REGULATOR, INDEPENDENT REGULATORS, INDEPENDENT REGULATORY, INDEPENDENT REGULATORY AGENCIES, INFRASTRUCTURE INDUSTRIES, INFRASTRUCTURE PROJECTS, INFRASTRUCTURE SECTORS, INSTITUTIONAL ARRANGEMENT, INSTITUTIONAL ARRANGEMENTS, INSTITUTIONAL DEVELOPMENT, INSTITUTIONAL INFORMATION, INSTITUTIONAL QUALITY, INSTITUTIONAL STAKEHOLDERS, JUDICIARY, LABOR COSTS, LABOR PRODUCTIVITY, LATIN AMERICAN, LAWS, LEGAL FRAMEWORK, LEGAL STATUS, LEGISLATIVE PROCESS, LIBERALIZATION, MANAGERIAL AUTONOMY, MEASURING GOVERNANCE, MONOPOLIES, NATIONAL REGULATORS, NATURAL GAS, ORGANIZATIONAL AUTONOMY, OUTPUT, OUTPUTS, OUTSOURCING, PARLIAMENT, PARLIAMENTARY OVERSIGHT, PARTICULAR COUNTRY, PERFORMANCE DATA, PERFORMANCE INDICATORS, POLICY CREDIBILITY, POLITICAL INTERFERENCE, POWER SECTOR REFORM, PRIVATE INFRASTRUCTURE, PRIVATE INVESTMENT, PRIVATE OWNERSHIP, PRIVATE SECTOR, PRIVATE SECTOR PARTICIPATION, PRIVATIZATION, PRIVATIZATIONS, PUBLIC ADMINISTRATION, PUBLIC ENTERPRISES, PUBLIC POLICY, PUBLIC SECTOR, PUBLIC SECTOR GOVERNANCE, PUBLIC SERVICE, PUBLIC SERVICES, QUALITY REGULATION, QUALITY STANDARDS, RATE OF RETURN, REGULATED INDUSTRIES, REGULATORS, REGULATORY AGENCIES, REGULATORY AGENCY, REGULATORY AUTHORITIES, REGULATORY AUTONOMY, REGULATORY COMPETENCIES, REGULATORY DECISIONS, REGULATORY ECONOMICS, REGULATORY EFFECTIVENESS, REGULATORY ENVIRONMENTS, REGULATORY FRAMEWORK, REGULATORY GOVERNANCE, REGULATORY GOVERNANCE ARRANGEMENTS, REGULATORY IMPLICATIONS, REGULATORY INDEPENDENCE, REGULATORY INSTITUTIONS, REGULATORY INSTRUMENTS, REGULATORY POLICIES, REGULATORY POLICY, REGULATORY POWERS, REGULATORY PROCESS, REGULATORY PROCESSES, REGULATORY QUALITY, REGULATORY REFORMS, REGULATORY RESPONSIBILITIES, REGULATORY SYSTEM, REGULATORY SYSTEMS, REGULATORY TOOLS, RESIDENTIAL TARIFFS, SERVICE QUALITY, STATE REGULATORY, STATE-OWNED ENTERPRISES, SUSTAINABLE DEVELOPMENT, TARIFF REGULATION, TAX, TELECOMMUNICATIONS POLICY, TRANSITION COUNTRIES, TRANSITION ECONOMIES, TRANSPARENCY, TRANSPORT, TRANSPORT SECTOR, TRANSPORTATION, TRINIDAD AND TOBAGO, UTILITIES,
Online Access:	http://documents.worldbank.org/curated/en/2008/01/8969725/regulatory-governance-sector-performance-methodology-evaluation-electricity-distribution-latin-america https://hdl.handle.net/10986/6390
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