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 6: The reform of the utilities sector in Spain

Pablo Arocena

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


Pablo Arocena 1. INTRODUCTION As in many other countries, the utilities sector in Spain is involved in an ongoing process of fundamental reform, largely driven by the European Union’s initiatives towards market liberalization. In a relatively short period of time, the historical monopoly of telecommunications has been dismantled and control of the industry has passed to private hands. In the energy sector, some important state-owned companies have been privatized and the market progressively liberalized at an even faster pace than that proposed by the European directives. Parallel to regulatory reforms, the 1990s witnessed a large number of mergers and acquisitions that led to massive horizontal and vertical concentration. On the other hand, the interrelation between telecommunications, oil, gas and electricity companies resulted in the creation of big industrial and financial groups, whose individual boundaries and interests are often difficult to recognize. Also at the beginning of the 1990s, the Spanish utilities initiated an international expansion through an aggressive policy of investments and acquisitions in the privatization programmes carried out in most Latin American countries. This corporate growth shaped the Spanish utilities as a group of prominent players both in the European and the Latin American arenas, while utility prices in Spain were among the highest in Europe. The objective of this study is twofold. First, we describe the reforms that have taken place in the utilities sectors in Spain and assess the role of politics in shaping the process of such reforms. Second, we assess the distributional impact of...

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