# **#7: The record of reforms to price formation, especially tariff-setting through regulatory agencies, is decidedly mixed**

53. The following three observations explore the determinants of cost-recovery levels observed in the case studies: reforms relating to price formation (Observation #7); reforms relating to utility governance and decision-making (Observation #8), and boundary conditions (Observation #9).

54. The first determinant of cost-recovery levels investigated in this analysis is reform progress relating to price formation. Almost all of the 17 case studies undertook reforms in in the power sector in line with the Standard Model’s hypothesis on (see Table 5). A total of 16 out of 17 countries or states established regulatory entities—albeit with various degrees of independence and different mandates— to improve electricity retail price formation. Two countries—Colombia and the Philippines—also established competitive wholesale markets, but none of the cases saw a transition to liberalized retail. The analysis below therefore focuses on the impact of the establishment of regulatory entities.

**Table 5: Main Reforms of Price Formation in the Power Sector in 17 Case Studies**

|**Country/State**|**Main Reforms to Price Formation in the Power Sector**|
|---|---|
|Colombia|1994: Creation of sector regulator; 1995: Creation of wholesale market.|
|Dominican Republic|1998: Creation of sector regulator, but the regulator has no actual authority over tariff level,<br>tariffs are not set according to regulatory framework and are not adjusted as mandated in the<br>Law.|
|Egypt, Arab Rep.|1997: Regulatory agency established; 2015: Electricity law reestablished regulator but partially<br>restricted regulator’s independence.|
|India - Andhra Pradesh|1999: Independent, autonomous regulator formed|
|India – Odisha|1996: Establishment of regulatory commission (but with little political independence)|
|India – Rajasthan|2000: Establishment of Rajasthan Electricity Regulatory Commission (but with little political<br>independence)|
|Kenya|1997: Electricity Regulatory Board (ERB) established; 2007: Energy Regulatory Commission (ERC)<br>created, replacing ERB|
|Morocco|2016: New law established a regulator, ANRE, but without price setting function. Price<br>regulation remains a direct government responsibility.|
|Pakistan|1997: Creation of a regulatory authority to calculate tariffs for generation and T&D; actual tariffs<br>set by Ministry of Water and Power|
|Peru|1993: Electricity regulatory agency created|
|Philippines|1987: Regulatory body with pricing authority created; 2001: Transformed into independent<br>regulatory agency; 2006: Wholesale electricity market created|
|Senegal|1998: Creation of regulatory agency, but without pricing authority|
|Tajikistan|No independent regulator|
|Tanzania|2001: Independent regulator established, operationalized in 2006, but recently its independence<br>is vanishing|
|Uganda|2000: Electricity Regulatory Authority established|
|Ukraine|1994: Regulatory entity (NERC) created; 1996: Wholesale electricity market created [tbc]|
|Vietnam|2005: Regulator established, although limited independence|

_Source:_ World Bank Staff.

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