Analysis of the welfare implications of power-sector restructuring in West Bengal, India

Abstract

This paper analyses the welfare implications of power-sector reform in a situation where public-sector and private-sector utilities co-exist, based on restructuring of the power-sector in India's West Bengal state. The fifteen-year review period covers parts of both pre-restructuring and post-restructuring. The panel data analysis spanning four consumer categories indicates a negative impact of system de-integration on welfare due to the rise in transmission costs and increased tariff rates that result in a fall in both consumer and producer surplus. The paper also studies the effect of the reform on the capacity of supply to meet demand.