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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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
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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
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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
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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
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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