Prayas Energy Group, India Regulatory process to enhance transparency and accountability: examples...

Prayas Energy Group, India

Regulatory process to enhance transparency and accountability: examples from India

Bishkek, September 2011

PresentationBy

Prayas Energy Group, Indiawww.prayaspune.org/peg


‘Prayas’ means ‘Focused Effort’

Research based, policy advocacy Voluntary

Org.

Based at Pune, India

Focus on protection of “Public Interest” in

electricity sector

About Prayas …

Activities:• Research & intervention (regulatory, policy)• Civil Society training, awareness, and support

www.amulya-reddy.org.in

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Interaction Plan

• Objective : Share examples from India about how regulatory process can enhance transparency and accountability

• Interaction Plan–Overview

• Regulatory framework • Key transparency and public participation spaces

–Case 1 – Reduction of ‘system losses’–Case 2 – Managing load shedding–Lessons

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Regulatory Framework in India

• Central Commission– One at central level– Regulates mainly inter-

state generation and transmission issues

– Tariff of central public sector companies (Generation and Transmission)

– Regulation of power exchanges

• State Commissions– One for each state– Regulates intra-state

generation, transmission and distribution

– Decides power purchase and tariff of all state distribution companies

– Determines consumer tariff and service quality parameters

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Key transparency and public participation spaces – Consumer Tariff Revision Process

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Key transparency and public participation spaces

• Consumers can file petitions / cases before regulatory commission– Non-compliance with commissions orders– Exposing utility inefficiency

• Public hearings on important matters– Issue of license

• Appointment of consumer representatives• Consumers can file / participate in appeals against regulatory

commission

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Case 1 – System loss reduction

System losses - Technical and non-technical energy losses (theft, slow meters etc.) in transmission and distribution of electricity


System Loss Reduction - Context

• Utilities estimate ‘System losses’‘System losses’ = Generation (energy input) – Metered Sales –

Estimated agricultural consumption

• Understatement of ‘system losses’ - No transparency about commercial losses, theft etc.

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0%

10%

20%

30%

40%

50%

60%

1975 1980 1985 1990 1995 2000

% o

f E

ner

gy

Ava

ilab

le

T&D loss Agri. Unmetered Share


System Loss Reduction – Exposing high losses

• Utility’s first tariff revision proposal before the commission – claimed ‘system losses’ of 18%

• Technical validation sessions and public hearings revealed– Utility was using ‘selective data’ to understate ‘system losses’

and overstate agricultural consumption

• Utility was ordered to use correct sampling methods and re-state ‘system loss’

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System Loss Reduction – Exposing high losses

0%

10%

20%

30%

40%

50%

60%

1975 1980 1985 1990 1995 2000

% o

f E

ne

rgy

Av

ail

ab

le

T&D loss Agri. Unmetered Share

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System Loss Reduction Implications of 40% system loss• Need for tariff increase due to huge system losses was

established• Huge media coverage and public debate about need to reduce

theft and improving metering• Forced regulator to set targets for reduction in ‘system losses’• Increased transparency and data made available to public• Enabled utility to initiate remedial measures (metering

improvements, penal actions against employees and consumers)

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System Loss Reduction : Increase in data and accountability

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Circle % Distribution loss

FY 2007-08 FY 2008-09Akola 40.26% 36.59%Amrawati 28.20% 27.14%Buldhana 22.55% 22.98%Washim 35.96% 31.52%Yeotmal 41.31% 28.75%Aurangabad (U) 28.73% 24.26%

Aurangabad [R] 39.81% 31.12%

Hingoli 56.45% 39.13%


System Loss Reduction : Slow but significant achievement

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Case 2 – Managing Load Shedding

Load shedding – Curtailing supply (planned black out) to manage supply deficit


Managing Load Shedding : Context

• Since 2004 shortages started increasing• Utility resorted to load shedding in ad-hoc manner and

to protect it’s revenue• Growing public unrest

– Street agitations– Litigation in High Court– Consumers raising this issue during commissions public hearing

• Regulatory commission mandated to evolve non-discriminatory, transparent protocol for load shedding

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Managing Load Shedding : Commission Order

• In 2005, Commission issued order specifying load shedding protocol

• Order issued after public hearings at six places• Order specified

– Hours of load shedding for each area– Load shedding proportional to level of ‘system losses’ and

revenue recovery in each area– Utility to widely publish schedule of load shedding and any

changes thereto.

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Managing Load Shedding: Increased Transparency and Accountability

• Several petitions and court cases when utility tried to change

load shedding protocol

• Significantly increased public interventions in the load

shedding hearings before commission and higher authorities

• Commission’s approach upheld by higher courts

• Continuously increasing transparency about supply

availability, plant performance as well as demand on the

system

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Managing Load Shedding: Transparency and Accountability

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Managing Load Shedding: Transparency and Accountability

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Managing Load Shedding: Outcome of increased Accountability and Transparency

• Utility forced to undertake load shedding in non-

discriminatory manner

• Increased pressure on utility to increase power purchase and

tie-up supplies

• Created incentive for loss reduction

• Prevented un-managable public unrest and helped addressing

the crisis in peaceful manner

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Lessons

• Regulatory process can significantly further transparency and accountability

• Increased transparency and accountability helps sector, companies and consumers

• Need long term strategic engagement by government, consumer groups and regulators

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Thank you.

Questions & Discussion

Shantanu [email protected]/peg

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