Regulation of the Electricity Industry in Bolivia: Its Impact on Access to the Poor, Prices and Quality



of complaints filed by consumers, regulated companies and State entities; and resolving of
interposed first-instance appeals (revocatory recourse)5.

Main attributions of the General Superintendency are to pronounce upon second-instance appeals
(hierarchic recourses)6 interposed against resolutions of the sectorial superintendencies, and to
supervise and issue opinions on the effectiveness and efficiency of the sectorial
superintendencies‘ management.

As to regulation of the electricity sector proper, the new Electricity Law7 approved after the
completion of the capitalization process, disaggregated the highly vertically integrated public
industry into three different, separated areas: generation, transmission and distribution. It placed
restrictions on joint ownership of enterprises in different stages of electricity production and
consumption, and established different regulatory mechanisms for each of the three areas.

The generation part was considered competitive, and hence Law 1604 creates incentives for the
existence of several electricity generating companies throughout the country. The pricing
mechanism follows the concept of most efficient, or marginal cost pricing, and reflects the
induced competition allowed in this part of the process8.

The transport of electricity - the transmission area - is, on the other hand, thought of as a natural
monopoly and hence only one company with an “open access“ clause is allowed to exist. In this
stage of the process, pricing caps - or more specifically, income caps - are utilized to regulate
prices paid by the generators to the enterprise carrying electricity to the distributors.9

5 Revocatory recourse is the first administrative instance established for any person or enterprise, public or private,
that considers its legitimate interests or rights injured by a resolution of a sectorial superintendency.

6 Hierarchic recourse is the second administrative instance established for the appellant who considers that the
resolution of the Revocatory Recourse is still injuring his interests or rights. If still unhappy with the decision taken
by the General Superintendency on the interposed hierarchic recourse, the appellant has a last recourse with the
Judicial instance, which is a demand before the Supreme Court of Justice. Its decision is final.

7 Law 1604, approved in December of 1994. With the passage of this law commences the era of regulating industries
in Bolivia, in accordance with the framework established in Law 1600 (SIRESE Law).

8 Node prices will take into account projected demand for the next 48 months; the optimum operation program which
minimizes operating costs; anticipated values of marginal cost for the energy system for block schedules established
by the Superintendency of Energy; the basic energy price for block schedules as the weighted average of the
marginal costs calculated before the projected demand values, discounted by the a discount rate established by the
Superintendency; the basic peak power price; and a power loss factor and and energy loss factor. Maximum node
prices will be readjusted every month, applying the applicable indexation formulas established by the
Superintendency.

9 Maximum transmission prices paid by the generators connected to the Main Interconnected System shall cover the
total cost of transmission, which includes the annualized cost of investment, operation, maintenance and
management costs of an economically adjusted transmission system.



More intriguing information

1. Achieving the MDGs – A Note
2. The name is absent
3. Feeling Good about Giving: The Benefits (and Costs) of Self-Interested Charitable Behavior
4. Does Market Concentration Promote or Reduce New Product Introductions? Evidence from US Food Industry
5. The Impact of Cognitive versus Affective Aspects on Consumer Usage of Financial Service Delivery Channels
6. Whatever happened to competition in space agency procurement? The case of NASA
7. A Critical Examination of the Beliefs about Learning a Foreign Language at Primary School
8. The name is absent
9. Estimating the Technology of Cognitive and Noncognitive Skill Formation
10. Publication of Foreign Exchange Statistics by the Central Bank of Chile
11. Party Groups and Policy Positions in the European Parliament
12. On Dictatorship, Economic Development and Stability
13. Placenta ingestion by rats enhances y- and n-opioid antinociception, but suppresses A-opioid antinociception
14. The urban sprawl dynamics: does a neural network understand the spatial logic better than a cellular automata?
15. The name is absent
16. The ultimate determinants of central bank independence
17. The name is absent
18. DISCRIMINATORY APPROACH TO AUDITORY STIMULI IN GUINEA FOWL (NUMIDA MELEAGRIS) AFTER HYPERSTRIATAL∕HIPPOCAMP- AL BRAIN DAMAGE
19. The name is absent
20. Managing Human Resources in Higher Education: The Implications of a Diversifying Workforce