Utility Privatization and Regulation

Utility Privatization and Regulation

A Fair Deal for Consumers?

Edited by Cecilia Ugaz

The authors address the question of infrastructure reforms in a novel way by focusing on the impact which they can have on consumers through the prices paid by different groups and on their access to the networks. They analyse original material from four Latin American countries – Argentina, Bolivia, Chile, Peru – and two European countries – Spain and the UK. Access is especially relevant when considering immature systems which have not yet extended to cover the majority of the population, as is the case in many Latin American countries. The authors also address the widespread impact of privatization on the economy (via macroeconomic influences) and the more general issues of subsidies and regulation which are endemic to these industries. The book focuses on the reform of four sectors: telecommunications, electricity, gas, and water and sanitation.

Chapter 5: UK utility reforms: distributional implications and government response

Catherine Waddams Price and Alison Young

Subjects: development studies, development economics, economics and finance, development economics, public sector economics


Catherine Waddams Price and Alison Young 1. INTRODUCTION Privatization and deregulation are now under way in many countries, including those in Latin America, which have often been in the forefront of developments, as other studies in this project report. In many places a new phase of reform has been reached, when the initial effects are assessed, often by governments that did not themselves instigate the reorganization, and the general legitimization of the arrangements is reviewed. The UK, also a pioneer in this field under the Conservative governments of 1979 to 1997 has now reached this second phase. By the end of their period in power virtually all the formerly nationalized industries were privately owned – telecoms, water, electricity, gas, railways, as well as coal, iron and steel among others. This study concentrates on the effect of reform on the first four of these industries, their impact on different household groups and the response of the incoming Labour government since 1997, particularly the Utilities Act passed in 2000. While the UK is very different from most Latin American countries in terms of income levels and income distribution, and in terms of provision of social security services and the penetration levels of utilities, its use as an exemplar by many enthusiasts for reform makes its pioneering privatization policy, its effects and subsequent political reaction an interesting case study. Section two describes the difficulties faced by some British citizens in gaining access to utility services. Section three gives...

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