The Economic Regulation of the Electricity Energy Distribution

Posted by Social Science Research Network

The Economic Regulation of the Electricity Energy Distribution

By Jose Vicente Cadavid, Gustavo A. Lopez Sr. & Enrique Carlos Arias (Universidad EAFIT)

Abstract:      The establishment of competition in the electricity markets in Colombia through the Laws 1424 and 1435 of 1994 meant the separation of the necessary activities to provide the service (generation, transmission, distribution and marketing). These activities are regulated and controlled by the Regulatory Commission for Energy and Gas — CREG and the Superintendence of Public Services SSPD, respectively, which set the conditions, prescript and controls sector. The Electrical distribution, in particular, is one of the activities under the regulatory process in Colombia. Its action is justified by the effects on social welfare generated by the natural monopoly condition, supported by the existence of economies of scale, economies of scope, subadditivity of costs and barriers to entry.

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