S2b - Overview of Indian Power Sector

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Overview of Indian Power sector Institutional, legal and policy

framework

Prayas - EGI Skill-share workshop for Tajikistan andKyrgyzstan Delegates

November 16-18, 2010, Pune, India

Prayas Energy Groupwww.prayaspune.org/peg, [email protected]
http://www.prayaspune.org/pegmailto:[email protected]:[email protected]://www.prayaspune.org/peg


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Prayas - EGI workshop Pune 2010 2

Implemented

Reg.Commn,

Unbundling (most

states)

NotImplemented

Full Cost

Recovery

Partially Implemented

Distbn-Privatisation

(Orissa (99),Delhi (02),

Urban Franchisee - Bhivandi(07), Nagpur (08),

MP, Agra-Kanpur (09), Gujarat, Rajasthan (in progress)

Slow increase in private gen & distrbn,

Technocratisation of decision making,

Commercial/Efficiency focus,

Evolving Electricity market - Trading, Power exchange

Reform Status


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P

U

B

L

I

C

Executive

MoP

Legislature

Policies

CERC

SERCs

Regulations

&

Orders

Tariff

Capacity Addition

Consumer Service

E.

Act

Schematic of institutional

and policy structure


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Institutional framework -1Central

Government

State Government Private sector

Indian andInternational

-Ministry of Power, Ministryof New & RenewableEnergy

- Planning Commission,Central Electricity Authority,Bureau of Energy Efficiency

-Corporations: Generation,Transmission, Trading,Financing, Manufacturing

-National and Regional Load

Dispatch

-Appellate Tribunal forElectricity and CentralElectricity RegulatoryCommission

-Ministry of Energy, StateRenewable Energy Agency

-Corporations: Generation,Transmission, Distribution

-State Load Dispatch Centre

-State RegulatoryCommission

Generation, Transmission,Distribution, Trading,Financing, Manufacturing,Services


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Institutional framework -2Ministry ofPower

Legal provisions (Electricity Act 2003), Policy directions such asNational Electricity and Tariff Policy, Guidelines for competitivebidding, etc

CentralElectricityAuthority

National Electricity plan, monitoring of projects, maintaining dataand statistics, demand forecast, feasibility analysis of Hydroprojects, etc

Generation

company

Subject to provisions of act, can generate power based on contracts

or independently. Needs to abide by Load Dispatch directions forscheduling its generation

TransmissionCompany

Builds and operates the transmission network and infrastructure

Distributioncompany

Distributes electricity to consumers, in charge of maintaining andbuilding distribution network, metering, billing and collection from

consumers

Load DispatchStatutory autonomous body entrusted with scheduling andaccounting of power at state level. Responsible for maintaining gridstability and discipline

Regulatory

Commission

Regulates all players in the sector, decides tariff, approves capitalexpenditure, monitors supply and service quality and ensure

implementation of various provisions of Electricity Act 2003


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Regulator

Power Flow

Money Flow

Regulation

Market

Institutional Framework -3Generation: Public,

Private

Transmission:

Public, Private

Distribution: Public,

Private, Bulk consumers


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Legal & Policy Framework:

Electricity Act 2003 A Central Act

Old national Acts repealed

Indian electricity Act 1910 Electricity (supply) Act 1948

Electricity Regulatory Commissions Act 1998

State reform Act provisions to be valid

provided they are not inconsistent with theElectricity Act 2003

Hence, the entire Indian electricity sectorwill be governed by the Electricity Act 2003



Electricity Act 2003

Emphasis on Breaking monopoly of State Electricity

Boards and promoting competition /trading

Creating economic imperative forfundamental changes

Attracting new investment Reduction of cross-subsidy Competition for increasing efficiency

(mostly in generation)

Defines institutional and policyframework for the whole country 8



Electricity Act 2003 - Key

provisions De-license Generation

Open Access in Transmission, Distribution

Promote trading and markets De-license rural distribution

Establishes norms for transparency and publicparticipation

Re-defined role and mandate of StateGovernments, Regulators and Licensees

Establishment of Consumer GrievanceRedressal Forums


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National Electricity Policy -1 Emphasises the electricity development link:Electricity is an essential requirement for all facets of our life. It has been

recognized as a basic human need. It is a critical infrastructure on which thesocio-economic development of the country depends

Issues addressed: Rural Electrification Generation , Transmission, Distribution Recovery of Cost of services & Targeted Subsidies. Technology Development and Research and Development (R&D) Competition aimed at Consumer Benefits Financing Power Sector Programmes Including Private Sector Participation.

Energy Conservation , Environmental Issues Training and Human Resource Development Cogeneration and Non-Conventional Energy Sources Protection of Consumer interests and Quality Standards



National Electricity Policy -2 Generation

Power-Demand to be fully met by 2012

A part of new generating capacity (say 15%) maybe sold outside long term Power PurchaseAgreements (PPAs)

Transmission & Distribution Development of National Grid

National and State level Open access to befacilitated

Demand side management



National Electricity Policy - 3 Consumers

Access to electricity for all households by 2010 Per capita availability of electricity to be increased

to over 1000 units by 2012 Minimum lifeline consumption of 1

unit/household/day as a merit good by year 2012 Cross subsidies to be reduced gradually Provision of support to lifeline consumers

(households below poverty line havingconsumption of 30 units per month) with tariffbeing at least 50% of average cost of supply.

Grievance Forum and Ombudsman to be set up Government and RCs to facilitate capacity building

of consumer groups.


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Tariff Policy -1 Objectives

Ensure availability of electricity to consumers at reasonableand competitive rates

Ensure financial viability of the sector and attractinvestments;

Promote transparency, consistency and predictability inregulatory approaches across jurisdictions and minimiseperceptions of regulatory risks;

Promote competition, efficiency in operations andimprovement in quality of supply

Covers General approach to tariff

Generation, Transmission, Distribution Tariff

Trade margin


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Tariff Policy -2

Power purchase by DISCOMS to be based oncompetitive bidding (exception for public sector)

Cross subsidy surcharge is to be paid by open accessconsumers. This is calculated as the difference

between the consumer tariff and the cost of supply Poor consumers (consuming say less than 30

units/month) will get support through cross subsidy.Their tariff will be at least 50% the average cost of

supply. SERCs will notify a roadmap to reduce crosssubsidy so that by 2011, tariffs would be within +/-20% the average cost of supply

Amendment (Mar 08) on Hydro tariff (transparent

bidding, long term PPA for 60%, R&R, development

fund etc


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National Rural Electrification

Policy-1 Goals

Provision of access to electricity to all householdsby year 2009

Quality and reliable power supply at reasonablerates

Minimum lifeline consumption of 1 unit perhousehold per day as a merit good by year 2012.

Covers Approach to rural electrification; RGGVY program;

Definition of electrified village; Involvement oflocal community; Financial assistance, Stand-alone systems, Bulk power purchase &

management of rural distribution


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National Rural Electrification

Policy -2 Grid and off grid solutions for Household

electrification and economic activities

Rural Electrification Corporation to be thenodal agency, Central support to States forRE

States to prepare RE Plan, set up District

Committees, notify rural areas . SERCs tomonitor

Franchisees for rural distribution


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National Programs Rural Electrification: Rajiv Gandhi Grameen Vidyutikaran Yojana

(RGGVY) 2005 Village (1,25,000) and rural household (78 million) electrification Central government to provide financial and implementation

support to States Guarantee by States for minimum 6-8 hours of power supply Decentralised Distributed Generation (DDG) to supplement grid

power US$ 12,500 m outlay

Urban Distribution: Re-structured Accelerated Power

Development and Reforms Programme (R-APDRP) 2008 Focus on base line data creation and distribution loss reduction

(urban) US$ 2500 m for base line data and IT applications US$ 10,000 m for distribution strengthening


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P

U

B

L

I

C

Executive

MoP

Legislature

Policies

CERC

SERCs

Regulations

&

Orders

Tariff

Capacity Addition

Consumer Service

E.

Act

TAP

TAP

Schematic of institutional

and policy structure


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Consumers/PublicUtility

Contract

Government

/ Policy makers

Political

Voice Authority/ policy

Regulatory

Commissions

Players and Interactions


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Discussion Multiple institutions, with different roles and

mandates

Evolving legal and policy framework Different drivers and different interests

influencing processes and decisions

Challenges of Civil Society Groups to find

their feet and push for public interest At different levels, different times, with different

actors

S2b - Overview of Indian Power Sector

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