Overview of Indian Power sector – Institutional, legal and policy framework Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates November.

Overview of Indian Power sector – Institutional, legal and policy framework

Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates

November 16-18, 2010, Pune, India

Prayas Energy Groupwww.prayaspune.org/peg, [email protected]

Prayas - EGI workshop Pune 2010

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Implemented

Reg.Commn,Unbundling (most

states)

Not Implemented

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 -1 Central Government

State Government

Private sector – Indian and International

-Ministry of Power, Ministry of New & Renewable Energy- Planning Commission, Central Electricity Authority, Bureau of Energy Efficiency-Corporations: Generation, Transmission, Trading, Financing, Manufacturing-National and Regional Load Dispatch -Appellate Tribunal for Electricity and Central Electricity Regulatory Commission

-Ministry of Energy, State Renewable Energy Agency-Corporations: Generation, Transmission, Distribution -State Load Dispatch Centre-State Regulatory Commission

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


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Institutional framework -2Ministry of Power

Legal provisions (Electricity Act 2003), Policy directions such as National Electricity and Tariff Policy, Guidelines for competitive bidding, etc

Central Electricity Authority

National Electricity plan, monitoring of projects, maintaining data and statistics, demand forecast, feasibility analysis of Hydro projects, etc

Generation company

Subject to provisions of act, can generate power based on contracts or independently. Needs to abide by Load Dispatch directions for scheduling its generation

Transmission Company

Builds and operates the transmission network and infrastructure

Distribution company

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

Load DispatchStatutory autonomous body entrusted with scheduling and accounting of power at state level. Responsible for maintaining grid stability and discipline

Regulatory Commission

Regulates all players in the sector, decides tariff, approves capital expenditure, monitors supply and service quality and ensure implementation of various provisions of Electricity Act 2003

Market Operator

Electricity traders who buy & sell power; Electricity Exchanges


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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 the Electricity Act 2003

Hence, the entire Indian electricity sector will 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 for fundamental changes

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

(mostly in generation) Defines institutional and policy

framework for the whole country

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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

public participation Re-defined role and mandate of State

Governments, Regulators and Licensees Establishment of Consumer Grievance

Redressal Forums


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National Polices & Programs National Electricity Policy - February

2005 Tariff Policy- Jan 06 (Amendment – Mar

2008) National Rural Electrification Policy - Aug

2006 National Electricity Plan - Aug 2007 National Programs

Rural Electrification: RGGVY Apr 2005 Urban Distribution: R-APDRP July 2008


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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 the socio-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%)

may be sold outside long term Power Purchase Agreements (PPAs)

Transmission & Distribution Development of National Grid National and State level Open access to be

facilitated 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 having consumption of 30 units per month) with tariff being 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 reasonable and competitive rates

Ensure financial viability of the sector and attract investments;

Promote transparency, consistency and predictability in regulatory approaches across jurisdictions and minimise perceptions of regulatory risks;

Promote competition, efficiency in operations and improvement 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 on competitive

bidding (exception for public sector) Cross subsidy surcharge is to be paid by open access

consumers. 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 cross subsidy 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 households

by year 2009 Quality and reliable power supply at reasonable

rates Minimum lifeline consumption of 1 unit per

household per day as a merit good by year 2012. Covers

Approach to rural electrification; RGGVY program; Definition of electrified village; Involvement of local 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

the nodal agency, Central support to States for RE

States to prepare RE Plan, set up District Committees, notify rural areas . SERCs to monitor

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

Overview of Indian Power sector – Institutional, legal and policy framework Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates November.

Documents

indian electricity act

electricity supply act

prayas egi workshop

electricity development

provisions of act

policy structure slide

state reform act provisions

act schematic of institutional