In the interests of greater economic efficiency many countries or states have reformed their utility industries or are at various points in the overall reform process.

APW, working with the specialist energy legal consultants ResourcesLaw International, is able to provide high quality, tailored and cost-effective services for the planning, structuring and implementation of the reform process itself, as well as for existing utilities, new entrants and other organisations needing to work within a new industry regulatory framework.

Importantly APW and ResourcesLaw International bring to their assignments an understanding of both the broader issues of utility industry reform and a practical understanding of electricity, gas and water as asset intensive businesses and of how the physical infrastructure underpins business performance.


Structural and Regulatory Reforms

To create a competitive electricity market, where none existed before, a government needs to implement a wide range of structural and regulatory reforms.

Because political, economic and industry conditions vary markedly between various states and countries, simply adopting a template approach derived from another country’s reforms is probably not appropriate. Reform should be tailored to the particular circumstances of each country, or state, and the specific outcomes desired by the government.


Steps in the Reform Process

The reform process will usually involve many steps. For each of these steps APW with ResourcesLaw International is able to provide advice based on actual experience and on international best practice:
  • Unbundling - Vertically integrated utilities are dismantled or "unbundled" into production, transmission, distribution and retail utilities.
  • Independent Regulation – Governments separate regulatory and utility management functions and delegate regulatory responsibility to an independent agency, operating in a professional manner and utilising transparent procedures.
  • Commercialisation - The unbundled utilities are then restructured and run along commercial lines. They accept responsibility for their own services and their own financial viability.
  • Corporatisation - The unbundled utilities are established as Government owned corporations with independent directors and commercial incentives.
  • Market Implementation - Wholesale and retail markets cannot evolve by themselves; they are usually created by splitting up ownership of the power stations and other production facilities, appointing an independent system operator, removing exclusive franchises and introducing rules to enable competitive trading.
  • Network access - A non-discriminatory, open access regime is established for the transmission and distribution networks to guarantee all producers and retailers the right to participate in the market.
  • Legislative framework - To provide security and stability, all reforms and relevant industry standards and operating procedures are set out in law and associated regulatory instruments.
  • Private Sector Investment - IPPs are introduced in such a way as to not constrain freedom of action in pursuing wider industry reforms.
  • Privatisation - If privatisation is desired it is implemented in a way that maximises return from the sale process, in accordance with any broader government objectives, whilst also protecting market competition.
  • Public support - Public support for all reforms enhances the prospects of success. Reforms affect all people and their interests must be taken into account.
  • Renewable energy and greenhouse gas emissions - Some governments have legislated special provisions relating to renewable energy resources and greenhouse gas emissions. These are increasing in importance.
  • Convergence and Consolidation – In time the situation might arise where utilities reconsolidate along non-traditional lines through strategic alliances, mergers and acquisitions to achieve greater productive and economic efficiency.

ESI reforms in any country or state, regardless of its stage of economic development, should be designed to serve the country's or state’s unique needs and circumstances. This depends not just on the size and characteristics of the power systems but also on the applicable economic and political factors. A similar philosophy is also appropriate for reforms to gas or water markets

APW and ResourcesLaw International do not agree with a one-template-fits-all approach. We are able to call upon our extensive knowledge of the reform process world wide. Models of reform that have been tested and successfully applied in other countries carry less risk than theoretical models.

Governments and other organisations considering how best to implement utility sector reform can benefit by seeking advice from us on what has been tried, and what has succeeded, elsewhere.



ADVICE ON COMPETITIVE MARKET ISSUES

APW and ResourcesLaw International are also able to provide advice to governments and regulators, existing electricity participants or to new entrants on issues pertaining to competitive markets. Our services include advice relating to:

  • Market Codes
  • Market design options
  • Market conduct
  • Market management
  • Trading systems and mechanisms
  • Network Pricing Regulation
  • Factors in price determinations
  • Pricing choices
  • Reset directions
  • Approaches to planning
  • Frameworks for attracting capital investment

Other specialist services provided by APW and ResourcesLaw International include:

  • umbrella project management
  • assistance with enabling legislation
  • tariff structures
  • disaggregation and corporatisation
  • assistance with privatisation processes
  • due diligence studies and condition assessment reports
  • human resource management issues
  • renewable energy issues

 

 
 
 
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