In this study, we empirically estimate the impact of quality regulation based on economic incentives on the frequency and duration of power outages. First, based on a sample of 143 electricity distributors across Latin America and the Caribbean, we show that between 2003 and 2019, the System Average Interruption Duration Index (SAIDI) and the System Average Interruption Frequency Index (SAIFI) decreased after the implementation of quality regulation by an average of 40% and 45%, respectively. Second, our estimations show that the implementation of the quality regulation had a positive and significant impact on reducing both the duration and frequency of outages. Finally, our results show that on average, private firms had a better quality performance, but the worst performing firms in the region were also private. Our results advocate for more quality regulation.
Keywords: Regulation, Electricity, Quality, SAIDI, SAIFI, Latin America, Caribbean
Read the working paper here – free access
