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The article examines the price-cap regulation experience of the Chilean electricity distribution industry from 1988-1999. The industry is characterized by privately owned firms operating in a regulatory systems designed to put a pure price cap in place. According to the author, a significant feature of the country's price-cap regime is the attempt to limit the regulator's discretion at regulatory reviews. It was found that a measure of efficiency improve by 1.2% annually, on average from 1989-1999. Also found is the negative impact of the occurrence of regulatory review periods of cumulative abnormal returns. Further, the stock market responds differently to cost revelations during both review and nonreview periods.