Its All About Power Sector

Electricity Act 2003 is considered as an indispensable measure to enhance the growth of power sector in India. All Generation, Transmission and Distribution sectors have had an impact in the past decade and most of which were positive. The act brought in various changes in the then existing policies and laid path to creation of new policies. The act owns very critical objectives regarding policy formulations, promotion of competition, protecting consumer interest, supply of electricity to all areas, rationalization of tariff, etc., Below is a review of what EA-2003 has in it's store to show us in a decades time. This should help us understand what has it achieved and what more needs to be done to take it to the next level.

• Incompliance with Section 3 of the Electricity Act 2003, National Electricity Policy which aims at meeting the demand fully by 2012, supply of reliable and quality power, increase of per capita availability of electricity, financial turn-around and commercial viability of electricity sector and protection of consumer interests was notified in June 2005.
• In compliance of section 3 of the Electricity Act 2003, the Government of India has also notified the Tariff Policy on January 06, 2006 to 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 promoting competition, efficiency in operations and improvement in quality of supply.
• The Tariff Policy has been subsequently amended from time to time to take care needs of hydro generation, transmission capacity and renewables.

Development of Electricity Industry

• Section 7 & 8 of Act provides for delicensing of generating station subject to compliance of technical standards relating to connectivity with the Grid and Concurrence of CEA needed for setting up of Hydro projects.
• Before 2003, total generated energy was 530 Billion Units (BU). Total generated energy has increased to 912.05 BU between 2003-13 which is an increase of 382.05 BU in a span of 10 years.
• Per Capita availability of power increased from 592 Units in 2003-04 to 917 Units in 2012-13.
• Share of Private sector increased to 32% in 2013 from 9.38% in 2004.
• As per Section 9 of Act, no license shall be required for supply of electricity generated from Captive generation plants to any licensee.
• Captive generation capacity has increased from 18740 MW in 2004 to 34444 MW in 2013.
• Section 38 & 39 of the Act provides for setting up of Central Transmission Utility (CTU) & State Transmission Utility (STU) for development of transmission network in a planned and coordinated manner.
• Transmission Capacity (66KV and above) has increased from 3,04,258 Ckt.Kms in 2002 to 4,58,529 Ckt.Kms In 2013.
• Section 131 of the Act provides for reorganization of SEBs to transfer rights and liabilities vested in the state government to be re-vested by the state government in a Government Company or Companies.
• 19 out of 21 State Electricity Boards (SEBs) have been restructured.

Promoting Competition

• Section 63 of the Act provides for determination of tariff through transparent process of bidding in accordance with the guidelines issued by the Central Government.
• Central Government notified guidelines for procurement of power by Distribution Licensees through competitive bidding in 2005 and Issued the Standard Bidding Documents (RFQ, RFP & model PPA) for long term procurement of power from Case-2 projects in 2006 and Case-1 projects, in 2009 and amended time to time.
• Issued Guidelines for short-term procurement of electricity i.e. for a period of less than or equal to one year, in 2012.
• In pursuant to the decision of the EGoM on UMPPs, reviewed Standard Bidding Documents (SBDs) and the Model Bidding Documents (MBDs) for construction and operation of power generation projects/ UMPPs on DBFOT basis have been issued on September 20, 2013 and the guidelines published on September 21, 2013.
• The tariff adopted by CERC for Four UMPPs (located in Mundra, Sasan, Krishnapatnam and Tilaiya) have been determined through the process of bidding and tariffs have been competitively determined.
• Two power exchanges have been set up and Short term market volume increased from 24 BUs in 2008-09 to 60 BUs in 2012-13.
• All this is expected to bring in larger private sector investments in power sector and also competitive tariffs. 
• Section 38, 39, 40 & 42 mandates for providing non-discriminatory open-access to the transmission system for use by any licensee or generating company on payment of transmission charges and by any consumer when such open access has been provided by Sate Commission on payment of transmission charges and a surcharge thereon.
• 27 SERCs have issued regulation on open access in intra-State transmission and distribution.
• 25 SERCs have allowed open access to consumers with loads of 1 MW and above.
• 22 SERCs have determined transmission and wheeling charges for open access.
• 20 SERCs have fixed cross subsidy charges for open access.
• Open access at Inter-state level is fully operational. The total number of transaction for open access availed on inter-state transmission system has increased from 15414 in 2008-2009 to 32088 in 2012-2013, transmitting a total of 73153 million Units in 2012-2013 as against 778 million units in 2004-2005

Protecting Consumer Interest

• Section 42(5) of the Act provides for establishment of a Consumer Grievances.
• Forum for redressal of grievances of consumers in accordance with the guidelines specified by State Commission.
• 9 Consumer Grievance Redressal Forum have been set up in 33 States/Union Territories by distribution licensees.
• Section 42(6) of the Act provides for appointment of Ombudsman who shall settle the grievance of the consumer with in such time and manner specified by State Commission.
• 28 Ombudsman have been appointed by SERCs.
• Section 153 of the ACT provides for constitution of Special Courts for the purposes of providing speedy trial of offences to in sections 135 to 140 and 150.
• 23 States have set up Special Courts for speedy trials.
• Consumers are represented in Tariff determination process by CERC through Public hearing.
• In compliance with Section 110 of the Act Appellate Tribunal (APTEL) has been established to hear appeals against the orders of the Adjudicating Officer or Appropriate Commission.

Supply of Electricity to all Areas

• National Electricity Policy formulated in pursuance of Section 3 of Act, mandates for access to electricity to all households by 2010 and demand to be fully met by 2012.
• Rural Electricity Policy formulated in pursuance of Section 4 of Act, mandates for provision of access to all households by year 2009.
• Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) Scheme launched in 2005 with a goal of electrifying all un-electrified villages/ hamlets and providing access to electricity to all house-holds. The scheme is still under progress.
• 1,07,615 unelectrified villages have been electrified till September 30, 2013 as against 1,12,980 unelectrified villages sanctioned for X & XI Plan.
• 3,01,533 partially electrified villages have been electrified till September 30, 2013 as against 3,83,470 partially electrified villages sanctioned for X & XI Plan.
• 212.63 Lakh BPL house-holds have been electrified till September 30, 2013 as against 276.76 Lakh unelectrified BPL households sanctioned for X & XI Plan.
• Total Outlay for X & XI Plan projects: Capital subsidy of INR 39000 Crore.
• In order to rationalize the tariff in all states, Ministry of Power made a reference to APTEL regarding filing of Annual Tariff revision petition in time by State Distribution utilities. APTEL in its order in 2011, has asked for periodic revision of tariffs by SERCs on suo moto basis. All SERCs have revised tariff in 2012-2013.

Promotion of  Efficient and Environmentally Benign Policies

• Improved availability and efficiency through successive regulations by CERC.
• Improved reliability and power supply through grid code regulations and Unscheduled Interchange mechanism.
• Introduction of point of connection tariff regulation in transmission for removal of regional cascading of transmission charges and for providing level playing field for all generators.
• Renewable Purchase Obligations fixed by all SERCs.
• CERC have notified Renewable Energy Certificate regulation and tariff regulations for renewable energy sources.
• Tariff Policy amended to provide for solar specific minimum purchase obligation of 3% by 2022 in accordance with National Solar Mission Strategy.
• Generation capacity has gone up from 3.5 GW in 2002 to 25 GW in 2012.

With so many issues addressed by the EA-2003, there still persist many issues and challenges in the power sector. These issues include Grid security, Financial viability of distribution licensees and high AT&C losses, Robust implementation of Open Access and Promotion of competition in distribution & retail sector, Accountability of Regulators and regular filling up of vacancies in Regulatory Commissions. Reviews help us understand the status of existing scenario and help us plan for necessary amendments in the act to address the issues and challenges.

Source: Cerebral Business Research Pvt. Ltd.