Showing posts with label Bills&Drafts. Show all posts

Electricity Act 2003: Has it Done What it has to?

No comments : Labels: , , , , , , ,
Electricity Act 2003: Has it Done What it has to?

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.
Policies
  • 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.
Read More

State-wise Status of Financial Restructuring Plan for Discoms

No comments : Labels: , , ,
State-wise Status of Financial Restructuring Plan for Discoms
It has now been more than a year after the release of order for financial restructuring of DISCOMS. The State-wise status of implementation of Financial Restructuring Plan for Discoms is given below and you may post your comments below regarding the same.
  1. Tamil Nadu:Discoms have already issued bond for 100% of the required amount to 24 Bankers and restructuring has also been completed. Bankers have also agreed to sanction 70% of operational losses of 2012-13 and balance 30% losses will be sanctioned by end of July 2013. State Government is taking over the liability by issuing special security in a period of 2 years instead of the maximum time allowed i.e. 5 years and the first year phasing is likely to be completed in July. Phasing for 2013-14 will be INR 3000 Crore and for 2014-15 INR 3300 Crore. Tariff increase for 2012-13 is 37% and for 2013-14, increase is 4%. Tamil Nadu Discom has informed that prepaid meters may not be required as they do not have any outstanding energy bills; State governments as well as large consumers are making payments in a timely manner. Tamil Nadu Discoms have low AT&C losses, therefore, involvement of private participation may not be required. However, the matter has been discussed with State government. Ministry of Power has suggested that option of private participation in some towns or rural areas having higher AT&C losses may be explored. Tamil Nadu Discom informed that UCO bank has sanctioned only INR 185.15 Crore out of their share of INR 610 Crore in 70% cash loss funding due to exposure norms constraint.
  2. Uttar Pradesh: FRP was finalized and bankers have verified it independently. It informed that bonds have not yet been issued as bonds could be issued only after all bankers agree to it. However, they are absolutely ready for it. Dena Bank & State Bank of India have not yet submitted the proposal to their head office & exposure limit of Allahabad Bank has been exhausted. A meeting of consortium of all bankers is being organized on 10th July to resolve the issue. MoP has asked DFS to take up the issue with Banks and requested that a suitable mechanism may be introduced to address such common issues. UP Government has informed that bonds are likely to be issued to bankers by end of July 2013. However, PFC & REC are not willing to take the bonds. The State Government also informed that out of total loan (INR 7844 Crore) sanctioned against operational losses, INR 1000 Crore has been disbursed by bankers. Tariff increase for 2012-13 is 20%, and for 2013-14 it's 9%. State Government will take over bonds amounting to INR 3500 Crore in 2013-14.
  3. Rajasthan: Earlier banks had lot of issues with regard to FRP but now bankers have agreed to it. However, except PNB no bank has yet sanctioned any amount. Rajasthan Government further informed that out of total 36, banks 9 banks have not yet sent the proposal to their head offices. Bonds are likely to be issued by end of July 2013 after banks convey their approval. State Government has given phasing of INR 3000 Crore 4500 Crore and 5700 Crore for the year 2013-14, 2014-15 & 2015-16 respectively for taking over bonds. Tariff increase for 11-12, 12-13 & 13-14 is 23%, 18.5% and 13.6% respectively.
  4. Haryana: Banks are charging higher interest on account of NPV protection on amount restructured prior to introduction of FRP scheme. The Bonds will be issued by end of September 2013. Tariff increase for 10-11, 12-13 and 13-14 is 4%, 16% and 13% respectively. Operational losses funding required for 2012-13, 2013-14 & 2015-16 is INR 3000 Crore, 3209 Crore and 3467 Crore respectively. The amount of funding of operational losses projected was increasing, which is against the spirit of FRP, this requires detailed examination by the State Government
  5. Himachal Pradesh: UCO bank was appointed as Nodal Bank for FRP. However, UCO bank has no exposure in HP Discoms; therefore UCO bank advised to appoint SBI as nodal banker, the request is pending with DFS. Due to this problem, banks have yet to respond. Tariff increase for 2011-12, 2012-131 2013-14 is 9%, 12% and 13% respectively. HP government informed that they have not yet finalized their accounts & it will take time beyond 31st July 2013.
  6. Meghalaya: Has responded to FRP very late & they got nodal bank appointed in June 2013 only. Therefore, the matter is now being taken up with the banks. Tariff increase for 10-11, 11-12, 12-13 and 13-14 is 7%, 1%, 15% and 7% respectively. Accounts of 10-11 & 11-12 are yet to be finalized.
  7. Andhra Pradesh: Discom's have huge Short term loans however books do not have corresponding accumulated losses due to their accounting policies of booking irrecoverable trade receivables in revenue. However auditors have qualified their books on this issue. Credit rating agencies like ICRA and CRISIL have also given lower rating considering the huge trade receivables.
  8. Karnataka: Has similar problem as in case of Andhra Pradesh. State Government has not yet given consent to FRP.
  9. Bihar: Electricity board has been unbundled after 31.03.2012. Transfer notification has been issued and transfer of assets has also been completed. The State government has conveyed that it is ready to abide by all conditions. MoP has stated that losses & liabilities of distribution business only be considered and AG certification will be required in this regard. The Government of Bihar assured that they will furnish details of distribution business losses certified by AG in two weeks. It has also informed that Canara Bank (Nodal Bank) has given in principle approval to FRP. Tariff increase for 11-12, 12-13, 13-14 is 19%, 12% and 6.9% respectively.
  10. Jharkhand: Jharkhand could not un-bundle as on 31.03.2012 due to Supreme Court's Stay. The Stay has been vacated and they have taken up the unbundling process & transfer notification is likely to be issued by 15th July 2013 & they have no STL outstanding to Banks. The State government has informed that they have outstanding energy bills of INR 148 Crore which have been agreed by State Government and payment of INR 50 Crore has already been received. The government has been asked to release the balance amount before 31st July 2013. Jharkhand had no dues with Banks but it has to pay INR 2300 Crore to DVC & INR 1500 Crore to TVNC. Tariff increase for 10-11, 11-12 & 12-13 is 18%, 16% and 16% respectively.
  11. Kerala: State Government decided to form strategic business units instead of unbundling into separate companies. MoP has clarified that FRP scheme cannot be taken up without fulfillment of mandatory conditions, particularly, unbundling of the State Power Utility.


Read More

Key Highlights of State Electricity Distribution Management Responsibility Bill, 2013

1 comment : Labels: , ,
Key Highlights of State Electricity Distribution Management Responsibility Bill, 2013

The new bill “State Electricity Distribution Management Responsibility Bill, 2013” aim at providing for responsibilities of the State Government to ensure financial and operational turnaround and long-term sustainability of the State-owned Distribution Licensee to enable adequate electricity supply to consumers through financial restructuring, support on sustainable basis in the areas of long term planning, corporate governance, regulatory compliances, and laying down of policy directives and various other measures. The Key highlights in the bill are discussed below.

Statement to be laid before the State Legislature
  • The State Government shall lay, in each financial year during the Budget Session,  a State Electricity Distribution Management Statement on the measures taken by the State Government in relation to electricity distribution in the State including, in the areas of long-term planning, consumer protection, regulatory compliance, corporate governance, financial restructuring of the State Distribution Licensee, so as to bring about the operational and financial viability of the State Distribution Licensee, on sustainable basis.
  • Prepare and action plan on long-term, medium term and short-term basis, laying down time bound programme to execute strategic priorities to achieve Key Performance Indicators, monitor and ensure compliance of the KPIs and strategic priorities
Long term Planning for sustainability of State Distribution Licensee
  • The State Government shall take appropriate measures on Distribution Licensee estimates of demand, AT&C Loss and availability of electricity on long term basis and, contracts, with the approval of the State Commission, through long/ medium/ short term agreements for purchase of power to meet the demand.
  • State Distribution Licensee undertakes energy accounting and auditing of all 33 kV feeders, 11 kV feeders and Distribution Transformers along with consumer indexing and time bound metering of each category of consumers.
  • State Government shall declare the quantum of subsidy in advance categorically stating the consumer or the class of consumers to whom it is to be provided and also timely release of subsidies
  • Ensure that there are no arrears of electricity charges for electricity supplied to various departments and institutions of the State Government on or before the date of coming into force of this Act.
  • Ensure that the State Load Despatch Centre is operated within six months from the date of coming into force of this Act, by a Government company or any authority or corporation.
Financial Restructuring Plan for State Distribution Licensee
  • State government to ensure that the trajectories of the operational and financial parameters in the Financial Restructuring Plan (FRP) are achieved within the stipulated time frame.
  • State Government shall make FRP or such other financial scheme a part of the State budget statements for effective monitoring of its impact on the State finances.
  • State Government shall ensure that the State Distribution Licensee does not resort to short term loans for funding operational losses except as provided in the FRP.
Accounting measures
  • State government shall establish an Empowered Committee to ensure identification, provisioning and write offs of receivables and bad and doubtful debts.
Corporate Governance
  • State Government to ensure that the Board of Directors of the State Distribution Licensee has an optimum combination of functional, nominee and independent directors.
  • State Government shall lay down a code of conduct in line with the Guidelines on Corporate Governance for Public Sector Enterprises.
Regulatory compliance and tariff filings
  • State Government shall ensure regular and timely filing of true-up petitions, Aggregate Revenue Requirement (ARR) and tariff petitions, and petitions for adjustments on account of fuel and cost of power purchased by the State Distribution Licensee.
  • State Government to make fiscal provision or provision of grant to the State Distribution Licensee.
Memorandum of Understanding
  • State Government and the State Distribution Licensee shall enter into a memorandum of understanding for setting targets for KPIs and performance evaluation.
  • State Distribution Licensee shall submit every six months, a report to the State Government, on its operational and financial performance.
Monitoring Mechanism
  • The State Government shall establish a Committee for effective implementation of this Act.
Measures to enforce compliance and Applicability
  • The committee established shall review and recommend remedial measures, if any, every quarter, compliance of the obligations cast on the State Government under this Act and the State Government shall place before the State Legislature.
  • Nothing in this Act shall apply to any Distribution Licensee that is not owned or controlled by the State Government




Source: Cerebral Business Research PVt. Ltd.
Read More
Subscribe to: Posts ( Atom )