Table of Contents

Foreword 11
1 Introduction 13
1.1 Background 14
1.1.1 The Electricity Supply Industry in Perspective 14
1.1.2 The Interplay between Energy Sector
Reform and Governance 15
1.1.3 Determinants of Public Policy and Sector Performance 18
1.2 Problem Statement, Research Objective
and Research Questions 20
1.2.1 Problem Statement: 20
1.2.2 Research Objective 22
1.2.3 Research Questions 23
1.3 Research Approach 25
1.3.1 The SCP Paradigm 25
1.3.2 The New Institutional Economics 25
1.3.3 An Adaptation of the SCP Paradigm
through the Lens of the NIE 27
1.3.4 Multidisciplinary Nature 29
1.3.5 Research Methods 29
1.4 Outline of the Thesis 29
2 Key Economic Principles and Concepts
of SIDS and SIMS 31
2.1.1 Background 32
2.1.2 Chapter Outline 32
2.2 The Electricity Supply Industry 32
2.2.1 Characteristics of the Electricity Supply Industry 32
2.2.2 Functional Decomposition of the Electricity
Supply Industry 33
2.2.3 Electricity Supply Markets 35
2.2.4 Natural Monopoly 39
2.3 Features of Small Island Developing States 41
2.3.1 General Features of SIDS 41
2.3.2 Economic Features of SIDS 43
2.3.3 Economic Vulnerability and Resilience Concepts
and Measurements 46
2.4 Small Isolated Monopoly Systems
for the Electricity Supply 49
2.4.1 A Defi nition for SIMS 49
2.4.2 Policy Challenges Facing SIMS 51
Contents.
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2.4.3 Stocktaking of the Caribbean Power Sector Reform:
A Case Study 53
2.5 Conclusions 56
2.5.1 Synthesis 56
2.5.2 The way forward 57
3 Effective and Effi cient Industry Performance 59
3.1 Introduction 60
3.1.1 Background 60
3.1.2 Chapter Outline 60
3.2 Defi ning Effective and Effi cient Industry Performance 61
3.2.1 An Operational Delineation of Performance 61
3.2.2 Effectiveness further explored 63
3.2.3 Effi ciency further explored 65
3.2.4 Effective and Effi cient Industry Performance:
a Defi nition 67
3.2.5 Measuring Industry Performance:
Performance Measurement Frameworks. 68
3.2.6 The Malcolm Baldrige Quality Award 68
3.2.7 The Balanced Scorecard 70
3.2.8 EFQM 72
3.2.9 The Performance Prism 73
3.2.10 Concluding remarks on Performance
Measurement Frameworks 77
3.3 Measuring Industry Performance:
Overview of Benchmarking Techniques 77
3.3.1 Classifi cation of Benchmarking Techniques 77
3.3.2 Frontier Based Benchmarking Methods 78
3.3.3 Mean and Average Benchmarking Methods 79
3.3.4 Process Approaches 80
3.3.5 Concluding Remarks on Benchmarking Methods 81
3.4 Case Study: The Caribbean Benchmark Study 81
3.4.1 The Uni–dimensional Caribbean Benchmark Study 81
3.4.2 Case Study: The multi – dimensional Caribbean
benchmark study 87
3.4.3 Refl ection on the Use of Benchmarking
within a Caribbean Context 88
3.5 Conclusion 90
3.5.1 Synthesis 90
3.5.2 The way forward 91
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4 The Interplay of Institutions with Industry Performance 93
4.1.1 Background 94
4.1.2 Chapter Outline 94
4.2 Understanding Institutions 94
4.2.1 Institutions, What They Are and Which Role They Play 94
4.2.2 Institutions and Governance 96
4.2.3 Core Institutions for Good Governance Structure 98
4.3 Institutions and Regulation 100
4.3.1 The Various Meanings of Regulation 100
4.3.2 Theory of Economic Regulation 102
4.3.3 Basic Engineering of Regulation:
Institutional Approaches 108
4.4 Detailed Engineering of Regulation:
Price-setting Policies 114
4.4.1 Cost of Service Regulation 114
4.4.2 Price Cap Regulation 116
4.4.3 Yardstick Regulation 118
4.4.4 Franchise Regulation 119
4.4.5 Hybrid Schemes 120
4.4.6 Refl ections on Price Setting Policies 120
4.5 Conclusions 121
4.5.1 Synthesis 121
4.5.2 The Way Forward 123
5 The Interplay of Governance
with Industry Performance 125
5.1.1 Background 126
5.1.2 Chapter Outline 126
5.2 Understanding Governance 126
5.2.1 Conceptual and Defi nitional Issues 126
5.2.2 Modes of Governance 127
5.2.3 What Constitutes ‘Good Governance’? 129
5.3 Regulatory Governance 130
5.3.1 Regulatory Governance: Conceptual
and Defi nitional Issues 130
5.3.2 The Interplay of Regulatory Governance
with Industry Performance 134
5.4 Corporate Governance 135
5.4.1 Conceptual and Defi nitional Issues 135
5.4.2 A Review of Corporate Governance 136
5.4.3 The interplay of Corporate Governance
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with Industry Performance 139
5.5 Measuring State, Regulatory
and Corporate Governance 141
5.5.1 Measuring State Governance / Institutional Quality 141
5.5.2 Measuring Regulatory Governance 143
5.5.3 Measuring Corporate Governance 145
5.6 Conclusions 150
5.6.1 Synthesis 150
5.6.2 The Way Forward 152
6 A Framework to Promote Effective and Effi cient
Performance of the Electricity Industry in SIMS 153
6.1 Introduction 154
6.1.1 Background 154
6.1.2 Chapter Outline 154
6.2 A Framework to Promote Effective and Effi cient
Performance of the Electricity Industry in SIMS 155
6.3 The Institutional and Governance Perspective 156
6.3.1 Country Governance / Institutional Quality 156
6.3.2 Application of the Country Governance
Perspective of the Framework 157
6.3.3 Corporate Governance 159
6.3.4 Application of the Corporate Governance
Perspective of the Framework 159
6.4 The Regulatory Menu of Options “Options in the Game” 161
6.4.1 Options for the Regulatory System 161
6.4.2 A Recap of Regulatory Substance
and Regulatory Governance 161
6.4.3 The Menu of Regulatory Options further Explored 162
6.4.4 Application of the Framework 167
6.4.5 Refl ections on the Regulatory Menu of Options 168
6.5 Conclusion 170
7 Research Synthesis 173
7.1 Introduction 174
7.2 Research Synthesis 174
7.2.1 Problem Statement and Research Objective 174
7.2.2 Research Question 1: Key Concepts
and Economic Principles of SIDS and SIMS 175
7.2.3 Research Question 2: Effective and Effi cient
Industry Performance 178
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7.2.4 Research Question 3: The Interplay
of Institutions with Industry Performance 183
7.2.5 Research Question 4: The Interplay
of Governance with Industry Performance 185
7.2.6 Research Question 5: A Framework
to Promote Effective and Effi cient Performance
of the Electricity Industry in SIMS 188
8 Reflections, Policy Implications
and Recommendations 191
8.1 Refl ections 192
8.1.1 Reflections on the importance of Policy Intervention 192
8.1.2 Refl ections on the Purpose of a Framework 193
8.1.3 Refl ections on Deployment of the Framework to
Promote Effective and Effi cient Industry Performance 195
8.2 Policy Implications and Recommendations 196
8.2.1 Policy Implications 196
8.2.2 Policy Recommendations 198
8.2.3 Recommendations for Future Work 200
References 203
Annex I. Case Study: Stocktaking Caribbean
Power Sector Reform 221
Annex II. Case Study: Caribbean Benchmarking Study 239
Annex III. Case Study: Measuring Governance 263
Annex IV. Price Regulation Further Explored 281
Annex V: Reflections on Strategic Planning
and Management of the Energy Sector 291
Summary 309
Samenvatting 315
Curriculum Vitae 321
NGInfra PhD Thesis Series on Infrastructures 327

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