Electricity has a two-tier independent regulatory structure, comprising the central commission at the national level and state commissions in the states.
Although absolute uniformity in regulatory action is neither feasible nor desirable in a country as diverse as India, harmonisation and predictability to the extent possible are required for stakeholder confidence. To achieve this, the Electricity Act stipulates that the principles and methodologies of the central commission in generation and transmission should act as guiding principles for SERCs. Moreover, the statutory forum of regulators has been established with chairpersons of the central and state commissions for operationalising necessary harmony and predictability.
Following the mandate of the act, the central commission has issued many important regulations, including the terms and conditions of tariff 2004-2009, open access in transmission, licensing of trading, and electricity grid code, etc.
The principles and methodologies of the central commission in framing these regulations have been, in turn, adopted by state commissions while issuing state-specific regulations. For instance, the central commission has moved away from the inefficient cost-plus tariff setting model to a more incentive-linked model based on normative parameters. SERCs have also moved in the same direction. All regulations are in the public domain and have led to considerable uniformity. As a result, every stakeholder today is aware of financial parameters like return on equity, depreciation, debt-equity ratio and also the technical indices of electricity regulation.
The forum of regulators is today functioning as an important platform for further harmonising regulatory decision-making. While the forum meets as frequently as required, sub-committees of the forum interact almost on weekly basis to sort out various intricate issues.
For example, the Act requires that every consumer with a load of more than one mw shall be enabled to select his source of supply and the process must be completed by January 2009. Through interaction in the forum, it has been possible for every SERC to lay down their regulations in this regard. The various open-access charges like parallel connection, grid support, minimum guarantee, etc have been greatly streamlined.
About 30 cases of distribution access have been approved and several consumers have taken such access. This competition has also led to reduction in retail tariff in states like West Bengal, thereby benefiting consumers. Distribution access continues to be a priority area for the forum.
Another initiative relates to harnessing captive generation. It is estimated that about 20,000 mw of captive generation is available for grid connectivity. Through the forum, the regulators have streamlined various charges leviable for such connectivity.
Renewable energy is another thrust area for harmonisation of regulatory response. Out of about 70,000 mw of potential, only 9,000 mw of renewables have been harnessed so far. About a dozen SERCs have issued guidelines, making it mandatory for distribution companies to procure a percentage of their requirement from renewable sources and such tariffs have been rationalised.
The regulators are moving ahead for the introduction of multi-year tariff regime in the states. For reliable baseline data through regulatory information management systems, the forum is finalising a set of key performance indicators which each utility would have to provide to SERCs. The forum has examined the concept of distribution margin and has recommended a multi-year framework for separate determination of network and content charges. Time of day tariff has been introduced in 16 states for high tension consumers. Over the next two-three years, LT consumers would be covered in phases.
The state commissions are giving high priority to the programme of 100% metering, upgradation of distribution lines and substations, etc. Intra-state availability-based tariff is being facilitated through the forum and is expected to be fully functional very soon.Today, there is far greater uniformity and predictability in electricity regulation than what existed earlier. This effort will continue.
(The author is former chairman, Central
Electricity Regulatory Commission.
He also served as Union power secretary)
Although absolute uniformity in regulatory action is neither feasible nor desirable in a country as diverse as India, harmonisation and predictability to the extent possible are required for stakeholder confidence. To achieve this, the Electricity Act stipulates that the principles and methodologies of the central commission in generation and transmission should act as guiding principles for SERCs. Moreover, the statutory forum of regulators has been established with chairpersons of the central and state commissions for operationalising necessary harmony and predictability.
Following the mandate of the act, the central commission has issued many important regulations, including the terms and conditions of tariff 2004-2009, open access in transmission, licensing of trading, and electricity grid code, etc.
The principles and methodologies of the central commission in framing these regulations have been, in turn, adopted by state commissions while issuing state-specific regulations. For instance, the central commission has moved away from the inefficient cost-plus tariff setting model to a more incentive-linked model based on normative parameters. SERCs have also moved in the same direction. All regulations are in the public domain and have led to considerable uniformity. As a result, every stakeholder today is aware of financial parameters like return on equity, depreciation, debt-equity ratio and also the technical indices of electricity regulation.
The forum of regulators is today functioning as an important platform for further harmonising regulatory decision-making. While the forum meets as frequently as required, sub-committees of the forum interact almost on weekly basis to sort out various intricate issues.
For example, the Act requires that every consumer with a load of more than one mw shall be enabled to select his source of supply and the process must be completed by January 2009. Through interaction in the forum, it has been possible for every SERC to lay down their regulations in this regard. The various open-access charges like parallel connection, grid support, minimum guarantee, etc have been greatly streamlined.
About 30 cases of distribution access have been approved and several consumers have taken such access. This competition has also led to reduction in retail tariff in states like West Bengal, thereby benefiting consumers. Distribution access continues to be a priority area for the forum.
Another initiative relates to harnessing captive generation. It is estimated that about 20,000 mw of captive generation is available for grid connectivity. Through the forum, the regulators have streamlined various charges leviable for such connectivity.
Renewable energy is another thrust area for harmonisation of regulatory response. Out of about 70,000 mw of potential, only 9,000 mw of renewables have been harnessed so far. About a dozen SERCs have issued guidelines, making it mandatory for distribution companies to procure a percentage of their requirement from renewable sources and such tariffs have been rationalised.
The regulators are moving ahead for the introduction of multi-year tariff regime in the states. For reliable baseline data through regulatory information management systems, the forum is finalising a set of key performance indicators which each utility would have to provide to SERCs. The forum has examined the concept of distribution margin and has recommended a multi-year framework for separate determination of network and content charges. Time of day tariff has been introduced in 16 states for high tension consumers. Over the next two-three years, LT consumers would be covered in phases.
The state commissions are giving high priority to the programme of 100% metering, upgradation of distribution lines and substations, etc. Intra-state availability-based tariff is being facilitated through the forum and is expected to be fully functional very soon.Today, there is far greater uniformity and predictability in electricity regulation than what existed earlier. This effort will continue.
(The author is former chairman, Central
Electricity Regulatory Commission.
He also served as Union power secretary)
