America’s Utility Reform Subsidies and Service Obligations

Any infrastructure reformers concerned with social issues in a developing country need to address two problems. The first is increasing access by the poor, and the second is ensuring consumption affordability, i.e. the ability of the poor to pay for both consumption and the amortization of the access charges. The two are related. The main concern of both policy makers and academics has been to identify options to cut costs so that coverage can be accelerated, focusing on cheaper technologies or on various financing/lending schemes. Latin America has been a pioneer in many aspects of such reform. Nevertheless, the Latin American experience shows that the poor are often the last to benefit from increased access due to reform. While in most countries, the rural poor tend to be omitted from reforms altogether, treatment of urban users varies considerably. Residential users have often been more exposed to increasing connection costs resulting from reform than commercial users