Santiago Arango

Chapter 17 – Understanding the Argentinean and Colombian Electricity Markets

Publisher Summary This chapter makes comparisons between Argentina and Colombia to develop a better understanding of how the different models of deregulation shaped the evolution of their electricity systems. Both countries deregulated over 10 years ago and as such provide a period where analysis and comparison can begin to yield insights into the consequences of both the initial and later decisions on the evolution of the electricity system. After the initial transformation, the two countries almost “froze” the reforms and no substantial adjustments were made to cope with the challenges that emerged subsequently. Argentina faced the problem, because the regulator avoided creating uncertainty for investors about revenues in the future by allowing a relatively high tariff. A similar situation occurred in Colombia. This might make the situation better for the investors, but might create another set of problems as consumers do not see sufficient benefits from the reforms. The new round of reforms should take into account different aspects of the problem—they should consider an economic recovery of the region, they may rely more on market institutions, and the future design should take into account the possibility of creating regional integration.

Thinking About the Future

When an electricity sector in a country becomes deregulated, companies in the sector face an uncertain future. The transition from being a monopoly to a “commercial” company is often difficult and dangerous for the organization. In this situation, a company requires internal changes that are as big as those seen in any industry. The risk in the external environment is perceived as major, as competitors might enter the industry, customers might leave the company, and financial markets might make demands before money can be raised, etc., issues that were not part of the industry before deregulation. Furthermore, the regulation itself will most likely change significantly and become more confrontational. In this chapter, we discuss these three areas of risk that a deregulated company faces: regulatory, market, and organizational risks. We also discuss one of the methods that might help companies, System Dynamics, which with its focus on lags and feedback is well suited to help managers make sense of their new industry.

Self-organizing behavior in collective choice models: laboratory experiments

Purpose – The purpose of this paper is to consider queuing systems where captive repeat customers select a service facility each period. Are people in such a distributed system, with limited information diffusion, able to approach optimal system performance? How are queues formed? How do people decide which queue to join based on past experience? The authors explore these questions, investigating the effect of information availability, as well as the effect of heterogeneous facility sizes, at the macro (system) and micro (individual performance) levels. Design/methodology/approach – Experimental economics, using a queuing experiment. Findings – The authors find little behavioural difference at the aggregate level, but observe significant variations at the individual level. This leads the authors to the conclusion that it is not sufficient to evaluate system performance by observing average customer allocation and sojourn times at the different facilities; one also needs to consider the individuals’ perfor...