Does Liberalisation cause more Electricity Blackouts? Evidence from a Global Study of Newspaper Reports

There is a public perception that electricity liberalisation is the major cause of recent electricity blackouts. This is reflected in the newspaper reporting of blackouts. By contrast, it was not listed as a cause in any official investigation reports. In this paper, we examine the common causes of a number of large blackouts worldwide by applying the qualitative content analysis technique to different investigation reports. We generate a regional blackout dataset, spanning European, Latin American and Asian regions, by using news articles derived from the Factiva database. We use the random effects model and sample means techniques in a detailed examination of the effect of liberalisation and regional factors on the number of ‘small’ electricity blackouts between 1998 and 2007. The results indicate that, contrary to what we might expect, liberalisation does not have a significant statistical effect on the frequency of small blackouts. The perception that there is an increase in the number of blackouts after liberalisation seems to be shaped by the media’s reporting of individual ‘large’ incidents rather than the number of incidents reported.