Economic and Political Constraints on the Demand-Side of Electricity Industry Re-structuring Processes

This paper identifies the major political and economic constraints that impact the demand-side of electricity industry re-structuring processes. These constraints have been a major barrier to implementing effective restructuring processes in many countries, particularly those in the developing world. The paper describes how these constraints have been addressed and how this has harmed market efficiency and system reliability using examples from re-structuring processes around the world. The paper proposes demand-side regulatory interventions to manage these constraints in a manner that limits the harm to wholesale market efficiency. Finally, specific regulatory inventions for developing countries are proposed.