Presentation on theme: "Regulatory Issues Dr. M. K. Iyer, Member Finance"— Presentation transcript:
1 Regulatory Issues Dr. M. K. Iyer, Member Finance GUJARAT ELECTRICITY REGULATORY COMMISSION
2 REGULATORS –Balancing the key Stakeholders Regulation is the creation and enforcement of rules that promote the efficiency and public interestERCUTILITIESCONSUMERSLENDERSENERGY MARKET PLAYERSPROJECT INVESTORSGOVERNMENT & POLICY MAKERSRegulation is ...rule-making to implement Government policiesapplication & enforcement of rulesprotecting the “public interest”ensuring consistency and transparency on the part of all parties active in the sector
3 New Avenues in Power Sector The Electricity Act, 2003 and Gujarat Electricity Industries (Reorganisation and Regulation) Act, envisages various activities for taking conducive measures to:Allow development of power marketEnvisage competitionProtect interest of consumers and supply of electricity to all areasRationalize electricity tariffPromote efficient and environmentally benign policiesOpen Access in Transmission and DistributionPower TradingImplement Availability Based Tariff
4 Making Competitive Power Market National Electricity Policy (2005) enjoins upon Appropriate Commission to undertake development of power marketPower / Energy Exchanges introduced in India enabling market to discover a uniform market clearing price and market clearing volumeTo make electricity market competitive following elements are necessary:Several buyers and sellersDemand and supply responsiveness to priceEqual access to essential facilities of transmission and distributionLiquid and efficient market placesApplication of Open Access in phased manner
5 The Regulatory Process – Timeline Floating of consultation PaperInvitation of CommentsOpen HearingsDraft RegulationsFinal Regulations and Order after considering comments
6 Regulatory Approach Enabling competition Protecting consumer interest Orderly development of electricity market – Market Rules and SurveillanceDetermine tariff determination with transparent & participatory processRegulations enforceable and predictable decisions
7 Accountability, Transparency and Public participation The transparency, efficiencies and timelines of regulatoryprocedures.Ethical and procedural obligations.All documents and information used for decision making should beavailable for public inspection.A description and analysis of all evidence taken into considerationA clear decision on the underlying issues and rationale.Various comments offered by participants during the proceedings areconsideredSpace for Public Participation in the Regulatory processInstitutional mechanism for representation of interests of weakersections / stakeholdersParticipation by civil society in the regulatory process.
8 Initiatives By Forum Of Regulators (FOR) 'FOR' Constituted Working Groups/Task Force on the following Issues:Code of EthicsDemand Side Management (DSM) & Energy EfficiencyLoss Reduction StrategiesMYT Framework and distribution marginOpen Access - Theory and practice etc.Policies on renewableProtection of consumer interestMetering IssuesStaffing of Electricity Regulatory CommissionsStandardization of Regulatory AccountsTask Force for implementation of FOR recommendationsTask Force on Renewable Energy Certificates (RECs)
9 FOR’s Commendable Contribution Adoption of best practices & experiencesDeveloped Model Regulations - to be adopted by SERCsInternational Co-operationPolicy implementation issuesLegal opinionsTraining
10 Open Access Initiatives by GERC: Capacity granted for Open Access increased from 551 MW to 750 MW.Reduced the cross subsidy charges from Rs per Unit in to Rs per Unit inRationalized Transmission and wheeling chargesComments on new Draft regulations on Open Access are invited
11 Intra-state Availability Based Tariff (ABT) Mechanism ABT – Brought about the effective day ahead scheduling and frequency sensitive charges for the deviation from the schedule for efficient real-time balancingABT - Mechanism brings grid discipline and improve efficiency of the power systemGERC Initiative:GERC is among the first regulators to introduce ABT mechanismImplementation of Intra-state ABT with effect from 5th April which is applied to generators, distribution licensees, Captive Power Plants connected with grid.
12 Promoting Renewable Sources of Energy GERC notified the regulation on Procurement of Energy from Renewable SourcesRenewable Power obligation revised - Specified Minimum Percentage of the total consumption of its consumers including T&D losses during year (for Distribution Licensees)YearMinimum Quantum of Purchase (in %) from renewable energy sources (in terms of energy in kWh)TotalWindSolarBiomass, bagasse and others5.00%4.50%0.25%6.00%0.50%7.00%5.50%1.00%Separate RPO for wind, solar and other renewable energy based on the availability of such sourcesRPO applicable to the Captive and Open Access consumers/users as and when a separate notification is issued by the Commission.
13 REC IntroductionGERC is the First State Regulatory Commission to incorporate Renewable Energy Certificate in its Regulations of 2010Necessary provisions in the Procurement of Energy from Renewable Sources Regulations, 2010 for Renewable Energy Certificate (REC)Sale of Renewable Energy under REC RegimeSale of conventional Electricity Component to Local Distribution LicenseesREC Component to Obligated EntitiesGujarat Energy Development Agency (GEDA) as the State Nodal AgencyFor accreditation and recommending the renewable energy projects for registrationFunction in accordance with the directions issued by the Commission andto act in accordance to the CERC (Terms and conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010
14 Consumer Grievances Redressal Forum Total Eight CGRF in the StateIndependent members appointed by the CommissionGrowing Awareness Amongst ConsumersYearNumber of complaints pending at the beginning of the yearNumber of complaints Received during the yearNumber of complaints resolved during the year In favor of consumerNumber of complaints resolved during the year In favor of LicenseeOthers2275035371052781497463973162129267423221956271740267115
15 Electricity Ombudsman Commission has appointed an independent State Electricity Ombudsman.Effectiveness of the Ombudsman Mechanism.YearNumber of complaints pending at the beginning of the yearNumber of complaints Received during the yearNumber of complaints resolved during the year In favor of consumerNumber of complaints resolved during the year In favor of LicenseeOthers8-41215154475155561713327111464530
16 Projected, Approved and Actual ARR Comparison YearUtilityActualApproved% DifferenceDGVCL4,4483,90713.80%MGVCL27072,34915.23%PGVCL56415,3415.60%UGVCL44984,1079.50%
17 Regulatory Challenges :Tariff issues Tariff Determination issuesActual Performance Vs Regulatory norms – how far to mitigatePrudence Check – how far useful?Consequences for disallowing amount of utilitiesIncome Tax as a pass through?Delay in filing tariff petitionsSuo-moto proceedings for tariff processWould suo-moto proceedings reduce tariff?
18 Regulatory Challenges : Competition Introducing Parallel Licensees in one areaTariff ceilings may be set by regulatorEncouraging Open AccessCross subsidySubsidy to compensate full or partial revenue loss of existing licensee?Existence of inter-category and intra-category cross subsidiesShortage of SupplyState-of-the-Art Accounting SystemRetail Business Vs Wire BusinessCompetition in Retail and ownership of wire businessDistributed Generation: Promotion of RE sources
19 Regulatory Challenges: Regulatory Effectiveness Has the Regulatory system been effective in service quantity and quality, investment, productivity growth, costs and prices?Has it helped foster a commercially viable industry?Has it encouraged progress toward best-practice regulation and industry reform?What type of sector outcomes have occurred? Are they consistent with outcomes envisaged by the Act(example increased access rates, investment, and reduction in budget subsidies)?Effectiveness of section 142 and sec 146 of EA 03 in ensuring compliance.Limited regulatory resources (Lack of money, specialized & experienced staff )Perception of consumers: Affordability vs Profit to Utilities
20 Some Solutions… Harmonization of Regulations across SERCs Need for Human Resources DevelopmentDe-regulation to some extent and promoting competitionNo “Micro-management’ of UtilityDevelopment of Regulatory Services – Cadre PostsFinancial independence of Regulatory commissions