CONSUMER PARTICIPATION IN REGULATORY REFORMS IN ELECTRICITY SECTOR: EXPERIENCE OF

CUTS INTERNATIONAL

UDAI S. MEHTA, CUTS INTERNATIONAL

Consumer Protection and Regulators

• Consumer protection is a primary mandate of all economic regulators universally

• To fulfil this mandate, regulators must ensure effective consumer participation in the regulatory process

• Depending on how effectively regulators fulfil their mandate vis-à-vis consumers, the regulatory process benefits from a higher degree of consumer involvement 2

Ladder of consumer participation in regulatory process

Three steps can be identified in consumer engagementInformation - Consultation – Partnership

•Information is the first step toward legitimate consumer involvement in the regulatory process.

•At this step, emphasis is placed on one-way flows of communication (from regulators to consumers) with no channel provided for feedback.

•Hence, when consumer participation is limited to information, consumers have little opportunity to influence the outcome of the decision-making process

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Contd……

CONSULTATION

•Regulators rely on consultation with consumers as a source of non-binding advice to inform the regulatory process

•Consultations can either be conducted on an ad hoc basis or throughout the regulatory process

•In absence of formal mechanism, consultation may not be sufficient to ensure effective consumer participation, as it offers no assurance that consumer input will be taken into account in the decision-making process

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Contd……

PARTNERSHIP

•“redistribution” of decision making power as consumers are granted the right to negotiate with the regulator.

•Effective partnership with consumers hinges on the appointment of consumer spokespersons representing the consumer constituency

– Appointment of Consumer Advocates– Including consumer representatives on the

Board of the regulatory institution5

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CUTS Interventions in South Asia

• CUTS–FES (Friedrich-Ebert-Stiftung) Project on

Involvement of Consumers in Power Sector

Reforms in Rajasthan, India (2001 -2007)

• A Pilot Project on Capacity Building on

Electricity Sector in Bangladesh, Nepal and

India (2008- 2010) (RESA Project)

Initiative Objectives

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CUTS FES PROJECThttp://www.cuts-international.org/cart/CUTS-FES.htm

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Objectives

• Sensitise service providers,

regulators and the consumers

• Mobilise community

participation in the reform

process

• Enhance capacities of CSOs

and consumers

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Strategy/Activities

• Awareness and Capacity Building• Network Formation• Consumers’ feedback and information gathering• Raising policy issues at appropriate forums

– At national level• Central government• Other consumers’ organizations

– At the state level• Rajasthan Electricity Regulatory Commission• State Government• Distribution Companies

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Outcomes

• Institutional Spaces– Provided under regulatory

framework• Advisory Committee• Grievance Redressal

Mechanism– Created under the

programme• Chaupal baithaks (village

meeting)• Jan Sunwaiis (public

meetings)• Network

– District level partners– Vidyut Sudhar Samitis

(electricity reform councils) 11

Regulatory Reforms in Electricity Sector in South Asia

(RESA Project)

http://www.cuts-ccier.org/RESA/

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RESA Project

• Activities: Project launch meeting & training programme, consumer base line survey, Reference group meetings, Territorial trainings, Grassroots interface meetings, advocacy seminar (India, Bangladesh and Nepal)

• Project Outputs: Territorial base paper, Territorial training manual, Vernacular handouts, E- newsletters, Poster, Policy briefs and Articles

• Highlights: GIM: 111 GIMs, Consumers reached - 5100 (Rajasthan & West Bengal) and produced a video documentary – ‘Powered to Grow’

• Effective participation of consumers, people’s representative, media and utility officials in project activities.

• RESA Initiative – ‘Bottom Up Approach’

Project Model

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Impact & Outcome

RESA Project

On Consumers

• Grassroots Interface Meetings (GIMs) were a phenomenal success.

• GIMs (111) reached out and sensitised close to 5100 consumers across project territories

• Recorded & registered their problems, their needs and challenges and subsequently came up with possible solutions.

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On Civil Society and Utility

Civil Society Organisations

• Strong network of capacitated grassroots civil society organisations • Extended and strengthened the network from Local to Regional

Level.• Created 80 grassroots trainers equipped to undertake advocacy on

Electricity • Helped to initiate constructive dialogue on partnering consumer

groups towards better consumer services, transparency and awareness building

Utilities

• GIMs provided an effective platform for two-way communication between the utilities and consumers-----– helped authorities understand the ground realities and problems

faced by consumers – helped consumers to understand various limitations/problems of

the utilities 17

On Regulators, Policy Makers and Media

• Helped regulators, policymakers & decision makers get in touch with grassroots realities & issues.

• Developed a network amongst policy community, regulators, civil society representatives and media to tackle the challenges jointly.

• Media involved in all key activities resulting in media enthusiasm about power sector reforms and its importance.

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WAY FORWARD TOSTRENGTHEN CONSUMER PARTICIPATION

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Milestones…..

Consumers of electricity should also have the option of choosing their service providers from many

– Need to promote: Competition; Open access; Private investment in this sector

Enhanced and Effective Consumer participation in Regulatory processes

– Regular Capacity building and Awareness programmes of CSOs and Consumers to be undertaken proactively by Electricity Regulatory Commissions.

– ERCs to develop effective and innovative communication channels for communication with Consumers and Community

– Improve on the existing formats of Public Consultations

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Extension of GRM upto Local Supply Offices to bring it within reach of Grassroots Consumers

– Necessary to : Do away with corruption in the system by removing the . scope for middlemen

– Can be achieved through: Change in policy and regulations; Improved and transparent service delivery mechanisms at all levels of utilities.

Undertake more Research Renewable Energy solutions; Improve Energy efficiency; Good Regulatory Practices from across the world; How to improve service delivery mechanism and How to harness Consumer power in improving the performance of this sector.

Milestones……

Recognition of CUTS

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USEFUL PUBLICATIONS

Consumer Empowerment in Electricity Reforms in South Asiahttp://www.cuts-ccier.org/RESA/pdf/Consumer_Empowerment_in_Electricity_Reforms.pdf

Powered to Grow: Video Documentary http://www.cuts-ccier.org/RESA/RESA_Documentary.htm

CUTS FES Reporthttp://www.cuts-international.org/cart/pdf/CUTSFES_Report_on_Power_Sector_Reforms.pdf

Water and Sanitation Programme: World Bank Reporthttp://www.cuts-international.org/cart/pdf/WSP-FES_Case_Study.pdf

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usm@cuts.org www.cuts-international.org; www.cuts-ccier.org

Asante sana