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Sequel to case HKS183.

The power shortages and blackouts of late 2000 and early 2001 drew international attention to the electricity deregulation regime adopted four years earlier by the state of California. This case provides a definitive account of the nature of that deregulation, as well as the process through which it was developed and the options considered as it was crafted. It focuses on the choices California made as it put in place a system that would divide the electricity generation, transmission and retail distribution systems that had, historically, been integrated. The case describes how California regulators and elected officials sought to maintain the operating and coordination efficiencies associated with the existing vertically- and horizontally-integrated system while allowing a competitive market to flourish. Because it stops short of describing what exactly seemed to go wrong when the power crisis hit California, the case demands discussion and analysis of the unintended consequences of the deregulation regime chosen-including the decision to fix retail prices during a transition period. It provides detailed descriptions of the role of a key new institution, the "independent system operator" and the role California chose for it to play in facilitating power transactions. HKS Case Number 1632.0

The power shortages and blackouts of late 2000 and early 2001 drew international attention to the electricity deregulation regime adopted four years earlier by the state of California. This case provides a definitive account of the nature of that deregulation, as well as the process through which it was developed and the options considered as it was crafted. It focuses on the choices California made as it put in place a system that would divide the electricity generation, transmission and retail distribution systems that had, historically, been integrated. The case describes how California regulators and elected officials sought to maintain the operating and coordination efficiencies associated with the existing vertically- and horizontally-integrated system while allowing a competitive market to flourish. Because it stops short of describing what exactly seemed to go wrong when the power crisis hit California, the case demands discussion and analysis of the unintended consequences of the deregulation regime chosen-including the decision to fix retail prices during a transition period. It provides detailed descriptions of the role of a key new institution, the "independent system operator" and the role California chose for it to play in facilitating power transactions. HKS Case Number 1633.0

In the wake of the fraud conspiracy convictions of its former executives Kenneth Lay and Jeffrey Skilling, the name Enron will likely long be synonymous with corporate corruption. But how did it rise, to the point of being the sixth highest-value US orporation, before its precipitous 2001 fall? This case provides a glimpse of a key element of Enron in action, as well as illuminating the complex process of foreign direct investment in a developing economy. The case focuses specifically on the Enron Development Corporation, that arm of the complex web of Enron subsidiaries which sought to build and operate power facilities around the world, including Argentina, Guatemala, the Philippines, Colombia and China. HKS Case Number 1618.1

This case focuses on the privatization of water and sanitation services in the city of Cancún, Mexico. Cancún's growth from a small fishing village in the 1970s to a major international tourist destination by the 1990s overwhelmed the city's public drinking water and sewerage systems. Insufficient coverage, deficient budgets, poor output quality, and environmental pollution were long-standing problems. With the aim of solving some of these problems, Cancún privatized water and sanitation provision in 1994, granting Mexico's first comprehensive private concession for water or wastewater system operation. Two years later, the concessionaire's inability to fulfill its service coverage and investment commitments led to a major legal confrontation with the state government of Quintana Roo and state administrative takeover of the concession company's operations. The case is designed to be used in discussions about (1) the problems generated by the absence of competitive bidding and transparency in concession processes; (2) the difficulty of raising tariffs without visible service improvements; (3) the role of regulatory monitoring and enforcement of concession performance targets; and (4) the impacts of contingencies like macroeconomic instability (Mexico's 1994 peso devaluation) on concession commitments. In 1996, the state government of Quintana Roo took over operation of Cancún's water and sanitation services, privatized only two years earlier. HKS Case Number 1593.0

The sequel describes the ensuing changes to the concession contract and regulatory oversight structure, and the return of operational control to the private concession company, Aguakán. It briefly discusses the financial and political difficulties that follow the concessionaire's reinstatement in Cancún, and the eventual sale of the concession in 1999 to a division of Enron Corporation. HKS Case Number 1593.1

In 1998, most officials in El Salvador recognize that the water infrastructure and the institutions responsible for managing that infrastructure are in disrepair. Without reforms, the country would be unable to provide water and sewerage services to a majority of its people. The Inter-American Bank had made it clear that financial aid to El Salvador was contingent upon the country's willingness to restructure its water system. Admittedly, there were major differences among the parties as to how the system should be reformed, but not whether it should be. HKS Case Number 1483.0

In 1992, Mayor Gabriel Garcia Romero confronted a situation all too familiar in developing countries-an inadequate and under capitalized water system. Only 28 percent of Cartagena's households had reliable drinking water. Thirty percent were not hooked-up to the system, and the remaining 42 percent had access, but their supply was frequently interrupted. Less than half the population had sewerage services, and there was no wastewater treatment-a problem with serious implications for public health. The water system had not been maintained adequately for more than a decade, and losses were estimated at 52 percent of the total supply. Only a percentage of the customers received bills, and many of these were never collected. Prices remained below cost, so even if the bills were collected, revenues would not have covered expenses. HKS Case Number 1482.0

In 1992, Mayor Gabriel Garcia Romero confronted a situation all too familiar in developing countries-an inadequate and under capitalized water system. Only 28 percent of Cartagena's households had reliable drinking water. Thirty percent were not hooked-up to the system, and the remaining 42 percent had access, but their supply was frequently interrupted. Less than half the population had sewerage services, and there was no wastewater treatment-a problem with serious implications for public health. The water system had not been maintained adequately for more than a decade, and losses were estimated at 52 percent of the total supply. Only a percentage of the customers received bills, and many of these were never collected. Prices remained below cost, so even if the bills were collected, revenues would not have covered expenses. HKS Case Number 1482.1

"There are occasions when matters go beyond satire and indeed beyond a joke. Things have become so ridiculous that the laughter is incredibly painful. The UK electricity privatization and regulation business has now reached this point." Thus began an article in the March 1995 edition of the Energy Economist. This quote captures the depths to which the credibility of the British program to regulate its electricity distribution companies had fallen. What had happened to a system of regulation touted as a model for the rest of the world-a model most experts felt was a major improvement over rate of return regulation, widely used in the USA? The core of the British system-performance based rates had either been adopted or were being considered in over 30 countries. It was the new wave of regulation. Yet in Britain, it had run smack into one of the largest political and financial furors in recent times. HKS Case Number 1619.0.

At a time, in the early 1980s, when Peru is wracked by leftist terrorism and hampered by weak central government, the Foundation for the Protection of the Environment (FPCN), founded by a group of Peru's leading biologists, becomes a vehicle through which international environmental organizations act to protect the diverse and unspoiled world of Peruvian Amazonia. FPCN convinces a government troubled by more immediate threats that this non-governmental organization should effectively take on the management of many of the country's more than 40 protected areas. But when a new Peruvian government, led by President Alberto Fujimori, makes clear that it wants to take back such traditional public roles, FPCN must find a new role for itself. Its task is complicated by a lack of overhead funds from its donors which has led to a substantial deficit. Its leadership examines its board structure and membership as part of the strategic planning which it undertakes. HKS Case Number 1376.0

At a time, in the early 1980s, when Peru is wracked by leftist terrorism and hampered by weak central government, the Foundation for the Protection of the Environment (FPCN), founded by a group of Peru's leading biologists, becomes a vehicle through which international environmental organizations act to protect the diverse and unspoiled world of Peruvian Amazonia. FPCN convinces a government troubled by more immediate threats that this non-governmental organization should effectively take on the management of many of the country's more than 40 protected areas. But when a new Peruvian government, led by President Alberto Fujimori, makes clear that it wants to take back such traditional public roles, FPCN must find a new role for itself. Its task is complicated by a lack of overhead funds from its donors which has led to a substantial deficit. Its leadership examines its board structure and membership as part of the strategic planning which it undertakes. HKS Case Number 1375.0