Most Sub-Saharan African countries try to promote rural electrification through both centralized and decentralized approaches. This guide focuses on the decentralized approach, providing practical guidance on how small power producers and mini-grid operators can deliver both electrification and renewable energy in rural areas. It describes four basic types of on- and off-grid small power producers, as well as several hybrid combinations that are emerging in Africa and elsewhere. The guide highlights the ground-level regulatory and policy questions that must be answered by electricity regulators, rural energy agencies, and ministries to promote commercially sustainable investments by private operators and community organizations. Among the practical questions addressed is how to design and implement retail tariffs, quality of service standards, feed-in tariffs, and backup tariffs. The guide also analyzes the regulatory implementation issues triggered by donor grants and so-called top-up payments. It provides a primer for nonengineers on interconnection and operating standards for small power producers connected to main grids and isolated mini-grids. It analyzes whether the option of small power distributors, used widely in Asia, could be employed in Sub-Saharan Africa, and addresses two often ignored questions: what to do when the big grid connects to the little grid and how to practice light-handed regulation. Finally, the guide considers the threshold question of when to regulate and when to deregulate tariffs. All these implementation issues are presented with specific ground-level options and recommendations rather than just general pronouncements. In addition, to make the discussion more useful to practitioners, the guide provides numerous real-world examples of successful and unsuccessful regulatory and policy actions taken in Kenya, South Africa, and Tanzania, as well as Nepal, Sri Lanka, and Thailand. Many of the decisions are inherently controversial because they directly affect the economic interests of investors and consumers. The guide highlights rather than hides these real-world controversies by drawing upon candid comments of key stakeholders national utility managers, mini-grid operators, government officials, and and consumers."

Around the world, governments perform three main functions: they tax, they spend, and they regulate. And of those three functions, regulation is the least understood. The best way to avoid getting stuck with poorly performing regulatory systems is to subject them to ongoing and periodic reviews to make sure they are fully functional and reflective of social and economic realities, and help to achieve the government's objectives for the sector. This handbook provides a road map for evaluating the strengths and weaknesses of an existing system--a map that could lead to a shared understanding of existing problems and to realistic and effective recommendations for 'second-generation' regulatory reforms. It does this by providing detailed guidance on how to perform systematic, objective, and publicly available evaluations of existing regulatory systems. It also presents practical advice on how to develop recommendations for improving these systems. The handbook will be of considerable value to government officials, regulators, managers of regulated enterprises, and consumer representatives in many developing and developed countries.

In many developing countries, both governments and investors have expressed disappointment with the performance of recently privatized electricity distribution companies. Some investors claim that the design of the new regulatory system is fundamentally flawed and recommend that independent regulatory commissions be replaced or supplemented by more explicit "regulation by contract" that would reduce the discretion of new commissions. This paper examines whether regulation by contract or a combination of regulation by contract and regulatory independence would provide a better regulatory system for developing and transition economy countries that wish to privatize distribution systems.