**_Electricity Sector Reform in Developing Countries, Jamasb, Mota, Newbery, Pollitt_**

Reform in the rest of the UK also offers an insight into the possible effects of structure and market design on the performance of reform. Pollitt (1997, 1999) applies a similar social cost-benefit analysis methodology, similar to that in Newbery and Pollitt (1997), to the Scottish and the Northern Ireland systems. The Scottish system consisted of two vertically integrated companies that were privatised without restructuring, and a stateowned nuclear power company that was sold as part of the state-owned British energy in 1996. Pollitt (1999) estimates that the efficiency gains from privatisation in the Scottish system, under the more probable counterfactual scenario, were relatively small at about 10% of turnover (compared to 50% in England and Wales). Moreover, the costs of restructuring were almost equal to the efficiency gains.

An alternative “pro-public” scenario based on the assumption that the same firms were under public ownership but had initiated similar measures (such as closure of inefficient nuclear plants and expansion of the interconnection capacity to the south), found the total efficiency gains were almost zero and the discounted loss amounted to 74% of turnover. The distribution effect of the reform was more uneven than that in England and Wales. The estimated loss to consumers amounted to approximately £1.5 billion or 80% of turnover (compared to 8% in England and Wales). Proceeds from the sale of the assets were £3.6 billion, while the estimated loss of revenue stream amounted to £5.2 billion (excluding the subsequent windfall tax). The estimated profit stream to the new owners was £6.7, compared to the £3.6 billion price that was paid for the assets.

Reform in Northern Ireland followed a different path. The power generation units were sold through trade sale as three separate companies, each having long-term power purchase agreements with the transmission and distribution utility. The generating companies achieved significant efficiency improvements, although the power purchase agreements meant that the savings could not be passed to consumers. Pollitt (1999) estimates the gains in the generation companies at approximately £1 billion or 195% of turnover (compared with 55% in England and Wales), but restructuring costs were high and amounted to £0.1 billion.

The distributional impacts of reform were again uneven, but consumers benefited to the tune of £1 billion after intervention through a price review resulted in significant price reductions. Government proceeds from the sale of assets were £0.9 billion compared to future foregone revenue streams of £0.1 billion. At the same time, the new owners of the companies incurred a loss of £0.4 billion as a result of the price review.

Domah and Pollitt (2001) focus on the impact of reform on the distribution networks. The study presents a social cost benefit study of privatisation and regulatory reform of the regional electricity distribution companies in England and Wales at the end of 1990. It uses the actual data for the 1985/86-1997/98 period and cost predictions into 2005. The paper also points out that, in the first few years following the reform, both costs, prices, and profits rose. In subsequent years, costs began to fall. However, the distribution of efficiency gains was initially uneven; benefits remained with the companies, generating large profits, which eventually led to the imposition of special windfall taxes. It was not until around 2000 that consumers began to benefit from efficiency gains. The paper estimates that the benefits to customers were equivalent to 37