Electricity Sector Industry

and
Distribution Reforms
Sushanta K Chatterjee
Deputy Chief (Reg. Affairs), CERC
 Background

• First phase of reforms in electricity sector: 1991

• Major step towards liberalisation.
• Generation opened up for private participation

• Experience:
• Capacity addition through IPPs remained far short of expectation.
• It was realised,
• the approach of inviting investment on the basis of Government
guarantee, not the best way.
• Viability of the distribution sector, a pre-requisite for
attracting investments.
 Distribution Reforms

• Second Phase of Reforms – 1996 onwards

• Shift of focus to distribution reforms

• after the experience of the first phase of reforms.

• Consensus on Chief Ministers’/Power Ministers’

Conference.
 Distribution Reforms…

• Focus areas: Institutional Changes

• Independent Regulatory Commissions

o Distancing of Govt from tariff determination
o Tariff rationalisation,
o discipline in terms of payment of subsidies
• Reorganisation of SEBs
 Distribution Reforms…

• Focus areas: Operational Issues

• governance related: such as metering, energy audit,
control of theft and pilferage of electricity, privatization
of distribution wherever feasible.
• technological improvements: in terms transmission
and distribution system improvement, HVDS, use of
information technology etc., and
 Distribution Reforms…

Executive Initiatives:
 Accelerated Power Distribution & Reform Programme (APDRP).

 MOU/ MOA with States.

 Rating of SEBs / Utilities.

 Rural Electrification Programmes.

 Distribution Reforms…

The Electricity Act, 2003

• Competitive framework

• Open Access in distribution

• Multiple licensee in the same area of supply

 Distribution Reforms…

The Electricity Act, 2003…

• Special measures for consumer protection.

• Stringent measures against theft of electricity.

• Responsibility to the Government to ensure rural

electrification.
 Distribution Reforms…

National Electricity Policy

Aims and objectives

• Access to Electricity - Available for all households in next five years

• Availability of Power - Demand to be fully met by 2012. Energy and peaking
shortages to be overcome and adequate spinning reserve to be available.
• Supply of Reliable and Quality Power of specified standards in an efficient
manner and at reasonable rates.
• 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.
• Financial Turnaround and Commercial Viability of Electricity Sector.
• Protection of consumers’ interests.
 Distribution Reforms…

National Electricity Policy…

Distribution - Vision
• Need for efficient management of distribution sector
• MYT framework for minimising risk and promoting
efficiency
• Operationalisation of open access in distribution
• Assignment of PPAs to DISCOMs
 Distribution Reforms…

National Electricity Policy…

Distribution …
• Minimum area of supply for second licensee
• Metering plans for ensuring supply through correct
meter.
• Consumer indexing and mapping
• HVDS for reduction of losses, prevention of theft.
• Special Courts to be set up by all States.
 Distribution Reforms…

National Electricity Policy…

Distribution …
• Recovery of cost of service and targetted subsidies
• BPL Consumers (consuming below 30 units per month) to
pay at least 50% of the average COS.
• Competition for consumer benefits
• A part of new generating capacities, say 15% may be sold
outside long-term PPA.
• Planned reduction of T&D losses
 Distribution Reforms…

National Electricity Policy…

Distribution …
• Promotion of renewables
• Focus on energy conservation
• Consumer protection and quality of standards
• Reliability Index
• CGR Forum/Ombudsman
 Distribution Reforms…

Tariff Policy

Thrust on
• Competitive procurement of power by
DISCOMs
• Harnessing of surplus captive generation
• Promotion of renewable sources of energy
• Implementation of MYT
 Distribution Reforms…

Tariff Policy…

• Road map for reduction of cross-subsidy

• Tariffs to be within +/- 20% of the average COS by
2010-11
• Operationalisation of Open Access
• Surcharge methodology
• Standby arrangements
 Issues

• Reorganisation of SEBs
• Operationalising open access in distribution
• Procedure of grant of open access
• Determination of surcharge
• Whether cost of traded power can be
regulated?
• Harnessing of surplus captive generation
• Encouragement of Renewables
• Need for a power exchange?
Thank You