The Electricity Act 2003 makes it mandatory for all SEBs to unbundle into separate generation, transmission and distribution entities so as to make them more efficient than vertically integrated utilities. However, in most countries, vertically integrated utilities continue to remain better financial performers and are better able to meet customer needs. A review of the act calls for understanding trends in utility reforms; one of which is the concept of distributed generation that is gaining widespread acceptance. Instead of the outright selling of equity in distribution companies, management contracts for operations and maintenance, as seen in some developing countries, should be considered. The development of short-term energy markets is also an area that needs to be examined in detail.
