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Transmission expansion in Argentina 4: A review of performance

Authors
Disciplines
  • Economics

Abstract

In 1992 Argentina's electricity reform provided an innovative approach to transmission expansion. In particular, major expansions were determined by the Public Contest method - that is, by votes of transmission users rather than by the transmission company or the regulatory body - and then put out to competitive tender. This paper reviews the overall performance of that policy. There was substantial new transmission investment, especially in control systems and transformers rather than extra-high-voltage lines: an achievement of the policy lies in making better use of the existing transmission system. The number and value of Public Contest transmission expansion projects were steadily growing over time until Argentina's economic crisis, particularly at sub-transmission level. Transactions costs were not a problem in the Public Contest method: the median number of voters was 5, and the process was generally characterised by harmony between participants rather than by discord. Distribution companies supported rather than obstructed the process, though there was scope to improve the provincial regulatory framework. There was effective competition to build and operate the expansions, with a median of 3 bids for each and the incumbent winning less than one fifth. Such competition roughly halved the cost of new lines. This contrasts with lines built under the present Federal Transmission Plan at two and a half times the previous cost.

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