Responses to electricity liberalization: the regional strategy of a Chilean generator

Abstract

Chilean reformers joined the new trend toward liberalization of the electricity markets around 1980, 12 years before any other Latin American country. This paper summarizes the main characteristics of the electricity reforms in Chile and other Latin American countries. It then analyzes the strategic response by the electricity generating company Endesa de Chile to these reforms. Endesa completely reformulated its competitive strategy. Its most significant commitments were its investments across Latin America in privatized power plants in Argentina, Peru, Colombia and Brazil. Endesa based its internationalization on its Chilean experience in transforming an inefficient state-owned firm and operating it in the new electrical regulatory framework favorable to market competition. The company's competitive advantage originated to a great extent in that Chile was the first country in Latin America to reform its electrical sector. (C) 2002 Elsevier Science Ltd. All rights reserved.