At the same time, these governments will have much more public capital for other uses, which would have otherwise been absorbed in the power sector. While these benefits may be the strength of power sector reform, these reforms have unexpected impacts or consequences. There are several models of power sector reform that have been exercised. Commercialization reduces the government subsidies for the sector. This will usually bring the power price in line with the market price.
Privatization allows private firms to produce and sell electricity.
Restructuring means that the sector is unbundled into independent firms that are individually involved in generation, transmission, distribution and retailing activities. Competition allows wholesale power to be sold and purchased by more than one firms at competitive prices. The following are a number of problems identified by civil society groups monitoring power sector reforms in various countries. Tariffs Increase in the Short-term. When a government reduces or eliminates subsidies for electricity, as a result of commercialization, tariff adjustments are made.