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

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Presentation on theme: "Overview of Indian Power sector – Institutional, legal and policy framework Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates November."— Presentation transcript:

1 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 Group

2 Prayas - EGI workshop Pune 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

3 Prayas - EGI workshop Pune PUBLICPUBLIC Executive MoP Legislature Policies CERC SERCs Regulations & Orders Tariff Capacity Addition Consumer Service E. Act Schematic of institutional and policy structure

4 Prayas - EGI workshop Pune Institutional framework -1 Central Government State GovernmentPrivate 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

5 Prayas - EGI workshop Pune Institutional framework -2 Ministry 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 Dispatch Statutory 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 OperatorElectricity traders who buy & sell power; Electricity Exchanges

6 Prayas - EGI workshop Pune Regulator Power Flow Money Flow Regulation Market Institutional Framework -3 Generation: Public, Private Transmission: Public, Private Distribution: Public, Private, Bulk consumers

7 Prayas - EGI workshop Pune 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

8 Prayas - EGI workshop Pune 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 8

9 Prayas - EGI workshop Pune Electricity Act 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

10 Prayas - EGI workshop Pune 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

11 Prayas - EGI workshop Pune 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

12 Prayas - EGI workshop Pune 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

13 Prayas - EGI workshop Pune 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.

14 Prayas - EGI workshop Pune 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

15 Prayas - EGI workshop Pune 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

16 Prayas - EGI workshop Pune 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 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

17 Prayas - EGI workshop Pune 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

18 Prayas - EGI workshop Pune 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

19 Prayas - EGI workshop Pune PUBLICPUBLIC Executive MoP Legislature Policies CERC SERCs Regulations & Orders Tariff Capacity Addition Consumer Service E. Act TAP Schematic of institutional and policy structure

20 Prayas - EGI workshop Pune Consumers/Public Utility Contract Government / Policy makers Political Voice Authority / policy Regulatory Commissions Players and Interactions

21 Prayas - EGI workshop Pune 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


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