Abstract The Colombian reform of its electricity industry was inspired in the British experience. The theoretical support and the actual application of the reform in the UK and Colombia are examined in this paper. Both theory and the British experience show the importance of designing an appropriate institutional framework for the sector that takes into account its specific features. The main challenges presented by the reform in Colombia are the control of the concentration of property, the introduction of antitrust and anticorruption mechanisms, as well as the development of new managerial skills that are required to confront the complex dynamics of the new environment.