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The Electricity Reforms in Chile - Essay Example
Among all countries in the world, Chile has the most complete and longest running electricity restructuring program in the world. Reforms were initially introduced in 1978 when the National Energy Commission was set up. The 1982 Electricity Act is up to now the most vital law regulating the present organization of the sector…
During the late 1970s and early 1980s most of the earlier nationalized firms were being given back to their earlier owners and massive government companies, for instance electricity firms were enticed to trade on a commercial basis. Government firms were breaking even and by the late 70s and early 80s there were indications that electricity firms specially showed improving rates of return on capital.
The macro economy and most of the major economic indicators started to indicate substantial improvement. Inflation dropped and GDP started to grow at a considerable pace especially after 1985. This healthy economic trend grew further during the late 1980s and accelerated further to 6.2 p.a. during the early 1990s. The electricity reforms in Chile follow most of the features found in the electricity systems of developed nations. Since Chile has a small population (15.5m in 2002), thus the capability to take advantage of economies of scale, if at all is moderate2. Even though Chile's electricity consumption per person is low when compared to developed countries, it is increasing fast at (6% per annum). The electricity making system has a big installed hydro capacity base, however as demand rises fossil fuels have become more vital. ...