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Institutional Arrangements for the Promotion of Regional Integration of Electricity Markets : International ExperienceThis paper focuses on the institutional
 arrangements needed for facilitating regional electricity
 cooperation. The paper begins by discussing the theory of
 international trade cooperation in electricity, with a view
 to discussing what preconditions might be important in
 facilitating wide area trading across national borders. It
 then discusses two sets of case studies. The first set
 focuses on three regional developing country power pools --
 the Southern African Power Pool, the West African Power
 Pool, and the Central American Power Market. The second set
 focuses on three regional power pools in more developed
 countries -- one in the United States, the Single
 Electricity Market in Ireland, and the South East Europe
 market. These cases highlight the potential and difficulty
 of having cross-jurisdictional power pools. In the light of
 the theory and evidence presented, key lessons are drawn in
 the areas of preconditions for trading, necessary
 institutional arrangements, practicalities of timetabling,
 reasons to be hopeful about future prospects, and
 suggestions for future research.
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Mitigating Vulnerability to High and Volatile Oil Prices : Power Sector Experience in Latin America and the CaribbeanCountries heavily dependent on imported oil to power a significant portion of their electricity generation are especially vulnerable to high and volatile oil prices. In net oil-importing countries worldwide, high and volatile oil prices ripple through the power sector to numerous segments of the economy. As prices move up and down, so does the cost of electricity production, which has far-reaching effects on the economy, fiscal and trade balances, businesses, and household living standards. High and volatile oil prices affect economies at both a macro and micro level. The major direct effects at the macro level are a deteriorating trade balance, through a higher import bill, reflecting a worsening in terms of trade; and a weakening fiscal balance due to greater government transfers and subsidies to insulate movements in international energy markets. At the micro level, investment uncertainty results from the higher risk of engaging in new projects and associated development and sunk costs, which, in turn, affects policy decisions and economic growth. This study responds to the needs of policy makers and energy planners in oil-importing countries to better manage exposure to oil price risk. The study's objective is threefold. First, it analyzes the economic effects of higher and volatile prices on oil-importing countries, with emphasis on the power sector, using examples from Latin America and the Caribbean (LAC). Second, it proposes a menu of complementary options that can be applied over multiple time frames. Several structural measures are designed to reduce oil generation and consumption, while a range of financial instruments are suggested for managing price risk in the short term. Finally, it attempts to quantify some of the macroeconomic and microeconomic benefits that could accrue from implementing such options.
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International Experience with Cross-border Power TradingThe five main lessons for Southern Africa from our review of the experiencewith cross-border power trading in other regions of the work are that: Security of supply concerns need to be explicitly addressed and understood by the parties to proposed cross-border transactions. Regional entities need to be empowered to make decisions based on legally enforceable national government commitments, particularly in relation to planning, pricing, and settlement rules. Bilateral trading provides a basis for expanding trading volumes, both through constructing the physical infrastructure that future deals will use and by establishing workable legal and regulatory frameworks. Power pools will help to generate sustained increases in cross-border trading along with other regional trading arrangements, particularly in power systems with several interconnection. The substance and process of regulatory reviews in importing and exporting countries must be clear to create sufficient investment certainty.