Power shortages and blackouts are common in developing countries especially in emerging economies due to increasing electricity consumption, population and weak distrubution system. As a result, these economies are facing common problem that how to meet the grwoing demand to maintain economic growth and to develop a regulatory framework for electricity sector which is efficient and market based. This book explores the common problems faced by developing countries in the electricity sector and provides the practical examples of measuring efficiency of generation and distribution companies using state of the art methodologies. Based on efficiency results, price cap regulation for the purpose of electricity tariff setting has been proposed. This book serves as a guide to develop incentive based price cap regulation as a case study of developing countries. It also provides an integrated approach to efficiency measurement for electricity sector regulators.It covers the conceptual issues related to power sector policy analysis, privatization modules,efficiency and price cap regulation in an accessible yet rigorous maner.