The experience of electricity sector restructuring to date highlights that there is no one-size-fits-all approach to unbundling. However, there are elements of restructuring that are likely to work across jurisdictions (such as the inclusion of multiple generators to assure competition, or limiting political intervention to build market confidence among future market participants). A few key takeaways:
- unbundling is a means to an end, not an end unto itself – before initiating discussions around the various forms of unbundling, policymakers need to ascertain whether unbundling is required at all. In jurisdictions where reliable electric service is maintained at cost effective but relatively inexpensive rates, it may not make sense to restructure;
- a strong policy commitment from decisionmakers is necessary to ensure that market reforms are fully implemented;
- it is important to clarify the objectives for restructuring upfront;
- establishing cost-reflective tariffs is essential for competitive markets, whether in bilateral contracting or in a wholesale market;
- while reviewing best practices is important, each jurisdiction will need to alter the approach depending on its objectives;
- policymakers should create a clear due process to revise the unbundling strategy and adjust the course of implementation, should the need arise; and
- ultimately, electricity sector reforms are complex endeavors that can be lengthy, require careful planning of the specific sequence of actions, and training across all institutions and market participants.
