Investment decisions in electricity transmission in Argentina: The role of earmarked funds and gas pipeline expansions

This paper reexamines the problem of collective decisions of investment in electricity transmission in Argentina in the nineties. We summarize our previous results on the existence of a fundamental flaw in the evaluation of willingness-to-pay and on the need to consider the votes of groups of generators integrated through common ownership rather than individual generators. We discuss the workings of the SALEX account for financing expansions and confirm that the imperfect identification of voters could affect the evaluation of expansion projects. We also study an integrated model that considers two alternatives to electricity transmission: gas transmission and the location of generators; we show that location in the demand node voting against expansions in electricity transmission could be justified to maximize profits. (c) 2008 Elsevier B.V All rights reserved.