Prayas Energy Group, India Regulatory process to enhance transparency and accountability: examples from India Bishkek, September 2011 Presentation By Prayas Energy Group, India

Prayas Energy Group, India ‘Prayas’ means ‘Focused Effort’ Research based, policy advocacy Voluntary Org. Based at Pune, India Focus on protection of “Public Interest” in electricity sector About Prayas … Activities: Research & intervention (regulatory, policy) Civil Society training, awareness, and support 2

Prayas Energy Group, India Interaction Plan Objective : Share examples from India about how regulatory process can enhance transparency and accountability Interaction Plan – Overview Regulatory framework Key transparency and public participation spaces – Case 1 – Reduction of ‘system losses’ – Case 2 – Managing load shedding – Lessons 3

Prayas Energy Group, India Regulatory Framework in India Central Commission – One at central level – Regulates mainly inter- state generation and transmission issues – Tariff of central public sector companies (Generation and Transmission) – Regulation of power exchanges State Commissions – One for each state – Regulates intra-state generation, transmission and distribution – Decides power purchase and tariff of all state distribution companies – Determines consumer tariff and service quality parameters 4

Prayas Energy Group, India Key transparency and public participation spaces – Consumer Tariff Revision Process Details of cost Proposed tariff structure Step 1: Application by company Check procedural compliance and completeness of the application Step 2: Preliminary scrutiny by commission Consistency of information Demand additional data, Consumer representatives participation Step 3: Technical Validation Session Information dissemination, all data available at six locations, website, local language summary Step 4: Public notice and availability of all documents Commission hears objections and suggestions from consumers and utility’s response Step 5: Public hearings at six locations Proposal, public comments, company response, commissions analysis and decision Step 6: Tariff order issued by commission 5

Prayas Energy Group, India Key transparency and public participation spaces Consumers can file petitions / cases before regulatory commission – Non-compliance with commissions orders – Exposing utility inefficiency Public hearings on important matters – Issue of license Appointment of consumer representatives Consumers can file / participate in appeals against regulatory commission 6

Prayas Energy Group, India Case 1 – System loss reduction System losses - Technical and non-technical energy losses (theft, slow meters etc.) in transmission and distribution of electricity

Prayas Energy Group, India System Loss Reduction - Context Utilities estimate ‘System losses’ ‘System losses’ = Generation (energy input) – Metered Sales – Estimated agricultural consumption Understatement of ‘system losses’ - No transparency about commercial losses, theft etc. 8

Prayas Energy Group, India System Loss Reduction – Exposing high losses Utility’s first tariff revision proposal before the commission – claimed ‘system losses’ of 18% Technical validation sessions and public hearings revealed – Utility was using ‘selective data’ to understate ‘system losses’ and overstate agricultural consumption Utility was ordered to use correct sampling methods and re- state ‘system loss’ 9

Prayas Energy Group, India System Loss Reduction – Exposing high losses 10

Prayas Energy Group, India System Loss Reduction Implications of 40% system loss Need for tariff increase due to huge system losses was established Huge media coverage and public debate about need to reduce theft and improving metering Forced regulator to set targets for reduction in ‘system losses’ Increased transparency and data made available to public Enabled utility to initiate remedial measures (metering improvements, penal actions against employees and consumers) 11

Prayas Energy Group, India System Loss Reduction : Increase in data and accountability 12 Circle % Distribution loss FY FY Akola 40.26%36.59% Amrawati 28.20%27.14% Buldhana 22.55%22.98% Washim 35.96%31.52% Yeotmal 41.31%28.75% Aurangabad (U) 28.73%24.26% Aurangabad [R] 39.81%31.12% Hingoli 56.45%39.13%

Prayas Energy Group, India System Loss Reduction : Slow but significant achievement 13

Prayas Energy Group, India Case 2 – Managing Load Shedding Load shedding – Curtailing supply (planned black out) to manage supply deficit

Prayas Energy Group, India Managing Load Shedding : Context Since 2004 shortages started increasing Utility resorted to load shedding in ad-hoc manner and to protect it’s revenue Growing public unrest – Street agitations – Litigation in High Court – Consumers raising this issue during commissions public hearing Regulatory commission mandated to evolve non- discriminatory, transparent protocol for load shedding 15

Prayas Energy Group, India Managing Load Shedding : Commission Order In 2005, Commission issued order specifying load shedding protocol Order issued after public hearings at six places Order specified – Hours of load shedding for each area – Load shedding proportional to level of ‘system losses’ and revenue recovery in each area – Utility to widely publish schedule of load shedding and any changes thereto. 16

Prayas Energy Group, India Managing Load Shedding: Increased Transparency and Accountability Several petitions and court cases when utility tried to change load shedding protocol Significantly increased public interventions in the load shedding hearings before commission and higher authorities Commission’s approach upheld by higher courts Continuously increasing transparency about supply availability, plant performance as well as demand on the system 17

Prayas Energy Group, India Managing Load Shedding: Transparency and Accountability 18

Prayas Energy Group, India Managing Load Shedding: Transparency and Accountability 19

Prayas Energy Group, India Managing Load Shedding: Outcome of increased Accountability and Transparency Utility forced to undertake load shedding in non- discriminatory manner Increased pressure on utility to increase power purchase and tie-up supplies Created incentive for loss reduction Prevented un-managable public unrest and helped addressing the crisis in peaceful manner 20

Prayas Energy Group, India Lessons Regulatory process can significantly further transparency and accountability Increased transparency and accountability helps sector, companies and consumers Need long term strategic engagement by government, consumer groups and regulators 21

Prayas Energy Group, India Thank you. Questions & Discussion Shantanu Dixit