POWER SECTOR REFORMS IN INDIA

1. Vertically Integrated Utilities - Generation - Transmission - Distribution 2. Central Sector Generation 3. Central Sector Transmission Indian Power Sector (Pre-Reforms )

G1 G2 SERC SLDC SEB/STU State Govt. RLDC REB CTU CERC Central Govt. CEA ISTS ISGS Load L1L2 Intra State System IEGC to Operate on the periphery X=- GLG

COORDINATES/ RLDC REGIONAL GRID IPP STATE GENR. SHARE CENTRAL

1. Enactment of ERC Act Constitution of CERC 3. Constitution of SERC’s 4. Unbundling of State Electricity Boards 5. Privatisation of Distribution Indian Power Sector (Reforms : Milestones)

REFORMS IN INDIAN POWER SECTOR Status in Different States

Thrust areas and progress 1. SERCs constituted in 22 out of 29 states SERCs have issued tariff orders states have unbundled their SEBs Indian Power Sector Reforms

Thrust areas and progress 4. 2 states have privatised distribution states have signed MoUs with the Ministry of Power states have provided 100% metering at 11 kV Indian Power Sector Reforms (contd/-)

Thrust areas and progress 7. 5 states have provided 100% consumer metering states have provided for anti-theft legislation Indian Power Sector Reforms (contd/-)

POWER SECTOR REFORMS ROLE OF CERC & SERC’s

INDIAN ELECTRICITY ACT 2003 Chapter X Constitution Powers and Functions of CERC & SERC’s

NEED FOR AN IEGC Period Situation Early 1970sVertically integrated SEBs. Few problems – resolved either bilaterally or at REB level. Late 1970s- Entry of Central Generating Utilities. Early1980s Gradual increase in disputes but consensu generally emerged at REB level. Late 1980s Disputes/conflicts increased in direct proportion to number of Central Sector Power Stations. Limitations in resolving the same at REB level.

NEED FOR AN IEGC Period Situation Early 1990s Unresolved commercial disputes resulted in need of an umpire Transfer of RLDCs from CEA to POWERGRID Amendments to ES Act, Constitution of CERC / SERCs, Unbundling of SEBs, possible entry of mega IPPs, IPTCs - more players, more scope for confusion.

DEVELOPMENT OF IEGC Feb 1999 Special Working Group Under Shri D.P. Sinha, Member CERC Submits Its Report Indicating Modalities for Formulating IEGC. 31 st Mar 99 CERC issues directives to POWERGRID for preparing IEGC and organisational arrangements for the CTU. 9 th April 99 Draft IEGC submitted to CERC (Petition 1/99). Apr-May 99 Draft IEGC made public on the directions of CERC to elicit comments from all sections.

DEVELOPMENT OF IEGC July 1999 Public hearings by CERC on the draft IEGC on 20 th, 21 st & 23 rd July th Aug 99 Revised IEGC draft submitted by POWERGRID to CERC. 30 th Oct 99 & CERC’s orders on above IEGC draft (Aug nd Nov 99 Version) 7 th Dec 99 IEGC draft ( Aug. 99 Version ) revised as per above orders and filed before CERC.

DEVELOPMENT OF IEGC 21 st Dec 99 Final directions of CERC on the above IEGC draft. 28 th Dec 99 First version of IEGC as per above orders and circulated to all agencies & implemented w.e.from 1 st Feb th July IEGC Review Panel constitution approved 2000 by CERC 17 th Nov Rules & Guidelines of IEGC Review Panel 2000approved by CERC

DEVELOPMENT OF IEGC 29 th March Amendments to IEGC forwarded by 2001 Review Panel to CERC after meetings on 12 th Feb & 26 th March nd Feb First review of IEGC approved by CERC 2002based on the draft submitted by CTU based on orders dated 3 rd Aug 2001 and meeting of Review Panel on 10 th Dec st April First review of IEGC in force. 2002

POWER SECTOR REFORMS Orissa Model

Power Sector Reforms : Orissa Model Facts of the case: Orissa was the first State in the country to go in for reforms. OERC was set up WEF Reforms were conceived by the World Bank and funded by DFID. The Agenda included running the electricity industry in an efficient and competitive manner (--- without any major change in procedures and environment). The valuation to corporations at the time of transfer was done on the basis of assets transfer.

Orissa Model BC G G G G G D RC T G : Genco BC : Bulk Consumer T : Transco RC : Retail Consumer D : Discom

Valuation of the assets at the time of transfer to the utilities were unrealistic (…higher side). Since the transfer costs were high, the tariff was high. The concept was on cost plus return on capital, rather than on efficiency and performance based returns. Transfer policy did not stipulate any goals for loss reduction. Average tariff increased by around more than 15 % without any customer service. Power Sector Reforms : Orissa Model Pitfalls:

Distribution companies found it difficult to sustain financially and finally defaulted. Discoms defaulted to Gridco, which in turn defaulted to Gencos, and hence inadequate cash realization by all concerned agencies. T&D losses continued to remain high with 46.94% in and 46.63% even after 5 years, i.e. in Even escrow failed. Power Sector Reforms : Orissa Model Endresults:

BC Recommended Model D NG OG RC OG : Old Genco BC : Bulk Consumer NG : New Genco RC : Retail Consumer D : Discom

POWER SECTOR REFORMS IN DELHI Delhi Model of Distribution Privatization

Reforms in Delhi --- Points of Concern Heavy urbanization, unbridled influx, ballooning population, haphazard growth, abundant availability of electrical gadgets, rise in affordability level were some of the reasons that had been adding to the unplanned growth of the Power Utility of the Capital, year after year.

On the eve of privatization DVB was being rated as the SEB having large portion of total dealt energy as theft and unaccounted losses. Initial thinking was to unbundle DVB into Corporations for Generation, Transmission and Distribution businesses. But seeing the unmanageable stage where distribution had reached, it was decided to start the privatization process with Distribution first. Reforms in Delhi -- Points of Concern (contd..)

There was a continuously rising trend in the theft and losses quantam. Gap between cost of power purchased and amount of realization was widening year after year. Increasing demand was adding to the losses with each unit of power purchased or generated and inducted into the network. Reforms in Delhi -- Points of Concern (contd..)

Thank You