Privatization of electricity distribution in Brazil: Long-term effects on service quality and financial indicators

The politics of energy privatization in Latin America: Contours and directions

“…One study that illuminates the positive effects of energy privatization is Renan Muller and Erik Eduardo Rego's analysis of the Brazilian electricity sector. In their study, they verify the long-term impacts of privatization policies that are applied to the distribution of electricity by comparing regulatory indicators from 34 companies that represent 97% of the distribution market (Muller & Rego, 2021). They compare privately owned companies to state-owned companies by analyzing regulatory performance indicators such as the System Average Interruption Frequency Index and the System Average Interruption Duration Index that indicate the number of interruptions and the duration of these electricity interruptions respectively.…”

“…They compare privately owned companies to state-owned companies by analyzing regulatory performance indicators such as the System Average Interruption Frequency Index and the System Average Interruption Duration Index that indicate the number of interruptions and the duration of these electricity interruptions respectively. Through U test statistical analyses of these indices, along with indicators such as service quality, operational costs, profitability, and commercial losses, Muller and Rego find that the private companies performed better than state owned ones in quality of service, continuity of energy supply, and meeting the goals set by regulators (Muller & Rego, 2021). These companies also performed in terms of operating costs, commercial losses, and profitability thus indicating that these companies are economically efficient and help improve the quality of service for consumers.…”

“…The studies in this essay examined (1) the interplay between external forces such as the IMF and internal forces such as political competition and ideological preferences in shaping privatization; (2) the infrastructure of resistance to these policies and the effects of protests on participants; (3) the broader effects of energy privatization in the region. Overall, privatization of energy created mixed results, with increased electric efficiency in Brazil but disastrous effects in Argentina (Kingstone, 2018; Muller & Rego, 2021; Recalde, 2011). Moreover, these policies remain unpopular, facing mass resistance across the region (Almeida & Perez, 2023).…”

Assessing the Effects of Market Power on Electricity Reliability in China: Toward a Green and Reliable Market

“…Xie et al (2021) indicate that the unbundling reform implemented in China has not improved the service quality of the power grid firms. Muller and Rego (2021) prove that private ownership positively influences both quality and financial indicators considering regulatory goals in Brazil.…”

“…Unfortunately, China's unique economic system and regulation framework lead to the grid market power, which raises a question of whether grid market power has negative impacts on service quality (Yu and Fu, 2012;Li and Gao, 2014). The possible reason for this is that stated-owned companies may be less efficient due to problems of the political use, as governments do not aim at profit maximization and operational efficiency (Muller and Rego, 2021). Furthermore, if quality is not contractible and included in regulation standards, a monopolist may deliver a lower service quality (Ter-Martirosyan and Kwoka, 2010).…”