PROPOSED AMENDMENT TO EA,2003 OCTOBER,2015 by RAKESH NATH

OBJECTIVES OF AMENDMENT 1. TO BRING IN FURTHER COMPETITION AND EFFICIENCY IN DISTRIBUTION BY GIVING CHOICE TO THE CONSUMER Segregation of Carriage and Content Separate Supply and wires companies Multiple supply licensees one of which a Govt Company ERCs to determine Ceiling retail supply tariff All PPAs assigned to Intermediary Company

2.PROMOTION OF RENEWABLE ENERGY New Coal and Lignite based power plants to be mandated to set up renewable capacity(10% of I/C of thermal plant) Bundling of tariff No surcharge for Open Access for Renewable Energy

3. MAINTENANCE OF GRID SECURITY Building and maintaining Spinning Reserve in new generation capacity as decided by Central Govt. Ancillary Services Enhanced penalties for non-compliance of LDCs Instructions

4. RATIONALIZATION OF TARIFF Recovery of cost of electricity without revenue deficit Timely Annual tariff determination Suo-moto initiation of tariff determination by ERCs in case of delay in submission of tariff petition Reducing time for disposal of Tariff Petition

5. STRENGTHENING REGULATORY COMMISSIONS Reducing tenure of members of ERCs Review of performance of Members Changes in Constitution of Selection Committee

ISSUES IN IMPLEMENTATION 1.Segregating C & C Accounting of difference in approved and actual losses Determination of category-wise Ceiling Tariff Issues with phased implementation Treatment of past financial baggage No remedy for reducing losses UI Accounting Utilization of expensive power(85% demand tied up through long term PPAs)

2. PROMOTION OF RENEWABLE ENERGY Renewable Energy development driven by RPO specified by SERC, feed in tariff, implementation of RPOs and OA regulations Mandating of 10% capacity addition by new coal & lignite based plants unnecessary Bundling of tariffs against commercial principles

3. GRID SECURITY Building spinning reserve in new generation capacity not required. Spinning reserve to be maintained on available capacity Spinning reserve to be regulated by ERCs and not Government Spinning Reserve specified in NEP (5%- 5% of 15,0000=7500MW) too high

4. Rationalization of Tariff Timely determination of tariff without revenue gap a welcome step. However, practical aspects of determination of tariff transparently in a period of 3 months to be examined

5. STRENGTHENING OF ERCS Proposed reduction in tenure against the object of distancing Govts from Regulatory System ( Madras Bar Association case) Evaluation of performance of ERCs by independent experts instead of club of ERCs Additional provisions to strengthen the staff, their training and financial independence of SERCs needed

CONCLUSION Address anticipated problems in implementation before enactment of Amendment Act Prepare road map for implementation