Regulatory reforms, normative changes, and performance: Evidence from the electricity sector in Latin America

Abstract

Over the past three decades the Latin American region has experienced various regulatory reforms, and distinctive normative changes have been introduced in the framework, instruments, or procedures adopted by independent regulatory agencies (IRAs). While there is evidence that the establishment of an IRA positively affects regulated sector performance, little is known about the effects of these additional legal dispositions when incorporated in primary or secondary legislation. However, normative changes may shape IRAs' actual regulatory activities and the signals they send to their stakeholders, potentially influencing sectoral performance. This research traces the evolution of several instruments and procedures legally adopted by IRAs located in Latin America and comprehensively assesses the influence of these normative changes on the performance dimensions of the electricity sector. We built indexes that describe the adoption of specific legal dispositions in the region. These indexes reveal that the evolution of the normative dispositions varies in terms of extent, context, and timing of adoption. In addition, the changes are not equally or even positively associated with specific performance dimensions. While economic regulatory instruments shape many performance dimensions, “soft” procedural dispositions also play an important role in perceptions of quality in the electricity sector.