Evaluating the regulator : winners and losers in the regulation of Spanish electricity distribution (1988-2002)

The main aim of this article is to evaluate the actions of the Spanish regulator as far as the activity of electricity distribution is concerned. In contrast to other European Union countries, in Spain this activity has historically been in the hands of the private sector. To this end, we shall firstly analyze whether the legislative changes introduced by the regulator have led to the distribution companies improving their efficiency levels; secondly, whether the benefits they have obtained have been linked to these levels; and lastly, whether the consumer has shared in these improvements. The analysis was carried out by comparing the income obtained by the companies as reward for their electricity distribution activity during the 1988-2002 period with those they would have received had the regulation model proposed by Bogetoft (1997) been applied to them. The results show that the Spanish electricity regulator has not linked the reward given to the companies with their efficiency, and in addition, they have benefited at the expense of the interests of the consumer