Program on Energy and Sustainable Development Working Paper #53
The Brazilian energy sector reform followed a textbook model from early 1990s Latin America - specifically Chile and Argentina - premised on introducing competition to the wholesale power market while maintaining monopolies in transmission and distribution. The textbook electricity reform model also established an independent system operator and independent regulator to oversee system management. Brazil began its power sector reform by privatizing distribution, followed by generation and transmission. And because the drought and successive power rationing of 2001-02, the Brazilian power market is being reformed again. The wholesale market will be ruled by long term contracts and new institutions are being developed to coordinate the sector. In this contract environment, IPPs stand out less than in countries with a single buyer model (e.g. South East Asia, Mexico).