The Second Generation of Power Exchanges: Lessons for Latin America

Almost two decades after the beginning of the Chilean and English experiments in power sector reform and privatization, many other countries have adopted or are in the process of adopting a model that promotes competition in the wholesale power market that is based partly on the pioneering efforts of those two countries. As often happens, successful pioneers become the most fervent apologists for their innovations, touting their validity for all kinds of situations, regardless of the specific conditions in each case. The Chilean and English models are the evolutionary basis of two models, which while having many features in common, reflect special conditions of time and place. Some of the countries that adopted these models often introduced significant improvements, as in the case of Argentina. In particular, Norway stands out as an example of a careful adaptation of the English model with satisfactory results. In addition, "secondgeneration" reformers like Spain, the United States, Australia and New Zealand have come up with sophisticated innovations that were often arrived at with support from a group of academics and experts who lent an almost religious air to the discussions.