The old and the new reform of Chile's power industry

Abstract

Chile's regulatory framework introduced in 1982 remained unchanged for more than 20 years. The reform had a positive effect, but several warning signals appeared by the end of the 1990s indicating the need to introduce changes. The most important problems were the lack of competition in the generation segment and the reluctance to expand capacity. These problems were appropriately faced by two amendments to the law (2004?2005). Knowing the experience of Chile is relevant, because the lessons learnt can be applied to other countries that have adopted the same model. In addition, it illustrates that the power industry can work reasonably well under a 'regulated' competition framework, different from the deregulation model currently being discussed in other countries.