Author: Lado Kurdgelashvili
Publisher: ProQuest
Published: 2009
Total Pages:
ISBN-13: 9780549925101
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Around the world, network utilities (i.e., electricity, natural gas, railway, telecommunications, and water supply industries) are undergoing major structural transformation. A new wave of market liberalization, together with rapid technological changes, has challenged the previously dominant monopoly organization of these industries. A global trend toward deregulation and restructuring is evident in countries at different levels of social and economic development. The challenges of transition from a monopolistic to an open market competitive structure are numerous. Understanding these problems and finding solutions are essential to successful restructuring. In developing countries and economies in transition (i.e., the Eastern Europe and the former Soviet Union), government-owned utilities are often considered to be highly inefficient. The dominant power sector restructuring strategies seek to promote economic efficiency through a gradual introduction of competition into the power sector. Five components of power sector reform are commonly proposed by the World Bank and others for these countries: commercialization, privatization, establishment of an independent regulatory agency, unbundling and gradual introduction of competition in generation and retail markets. The Republic of Georgia, like many economies in transition (e.g., Hungary, Ukraine, and Kazakhstan) has followed this reform model. However, outcomes of the reform have not been as promised. The acute economic problems facing Georgia after it regained independence have compounded problems in the power sector. A review of Georgia's utility reforms reveals that the country has undertaken electricity industry restructuring without giving substantial consideration to the problems that these reforms might have created within the industry or society. The main task of this dissertation is to find the restructuring model, which can best serve economic, social and environmental goals under circumstances similar to those in economies of transition. The dissertation provides a guide for policy makers in the energy sector for implementing power sector reform. At first the dissertation offers a general overview of different models of power sector organization, regulatory frameworks and market arrangements, and the potential impact of reform on social welfare. This knowledge is then applied for analysis of power sector reform in the Republic of Georgia. Social welfare analysis (SWA) is a major analytical tool used in the research for assessing the potential impacts of different power sector organization models on various stakeholders. Through the research it was identified that power industry arrangements in different countries have their particularities; however, after some level of simplification, power sector organization models can fit into one of three broad categories: (1) Government control and regulation of generation and retail segments of the power industry. (2) Full scale competition in the generation segment and retail choice. (3) Partial government control of the generation segment and limited retail choice. For SWA of different power market arrangement scenarios, electricity supply and demand curves had to be derived; for this purpose electricity demand forecasting and power supply evaluation methodologies were developed. This dissertation combines SWA, accepted demand forecasting methods and established power supply evaluation techniques to assess power sector performance under specified policy scenarios relevant to the circumstances of economies in transition such as the Republic of Georgia. Detailed analyses are performed for understanding possible outcomes with the introduction of different reform models. In addition, specific options for incorporating sustainable energy alternatives in the energy planning process are identified and assessed in economic, environmental and social terms. Special attention is given to market-based instruments for promoting sustainable energy options (e.g., renewable portfolio standards, energy conservation and energy efficiency programs) and social policies (e.g., lifeline rates, local employment). Results obtained from the detailed analysis of policy options for Georgia guide recommendations for a reform of the power sector.
