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 interest
ERC
UTILITIES
CONSUMERS
LENDERS
ENERGY MARKET PLAYERS
PROJECT INVESTORS
GOVERNMENT & POLICY MAKERS
Regulation is ...
rule-making to implement Government policies
application & enforcement of rules
protecting 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 market
Envisage competition
Protect interest of consumers and supply of electricity to all areas
Rationalize electricity tariff
Promote efficient and environmentally benign policies
Open Access in Transmission and Distribution
Power Trading
Implement Availability Based Tariff

4. Making Competitive Power Market
National Electricity Policy (2005) enjoins upon Appropriate Commission to undertake development of power market
Power / Energy Exchanges introduced in India enabling market to discover a uniform market clearing price and market clearing volume
To make electricity market competitive following elements are necessary:
Several buyers and sellers
Demand and supply responsiveness to price
Equal access to essential facilities of transmission and distribution
Liquid and efficient market places
Application of Open Access in phased manner

5. The Regulatory Process – Timeline
Floating of consultation Paper
Invitation of Comments
Open Hearings
Draft Regulations
Final Regulations and Order after considering comments

6. Regulatory Approach Enabling competition Protecting consumer interest
Orderly development of electricity market – Market Rules and Surveillance
Determine tariff determination with transparent & participatory process
Regulations enforceable and predictable decisions

7. Accountability, Transparency and Public participation
The transparency, efficiencies and timelines of regulatory
procedures.
Ethical and procedural obligations.
All documents and information used for decision making should be
available for public inspection.
A description and analysis of all evidence taken into consideration
A clear decision on the underlying issues and rationale.
Various comments offered by participants during the proceedings are
considered
Space for Public Participation in the Regulatory process
Institutional mechanism for representation of interests of weaker
sections / stakeholders
Participation 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 Ethics
Demand Side Management (DSM) & Energy Efficiency
Loss Reduction Strategies
MYT Framework and distribution margin
Open Access - Theory and practice etc.
Policies on renewable
Protection of consumer interest
Metering Issues
Staffing of Electricity Regulatory Commissions
Standardization of Regulatory Accounts
Task Force for implementation of FOR recommendations
Task Force on Renewable Energy Certificates (RECs)

9. FOR’s Commendable Contribution
Adoption of best practices & experiences
Developed Model Regulations - to be adopted by SERCs
International Co-operation
Policy implementation issues
Legal opinions
Training

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 in
Rationalized Transmission and wheeling charges
Comments 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 balancing
ABT - Mechanism brings grid discipline and improve efficiency of the power system
GERC Initiative:
GERC is among the first regulators to introduce ABT mechanism
Implementation 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 Sources
Renewable Power obligation revised - Specified Minimum Percentage of the total consumption of its consumers including T&D losses during year (for Distribution Licensees)
Year
Minimum Quantum of Purchase (in %) from renewable energy sources (in terms of energy in kWh)
Total
Wind
Solar
Biomass, bagasse and others
5.00%
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 sources
RPO applicable to the Captive and Open Access consumers/users as and when a separate notification is issued by the Commission.

13. REC Introduction
GERC is the First State Regulatory Commission to incorporate Renewable Energy Certificate in its Regulations of 2010
Necessary provisions in the Procurement of Energy from Renewable Sources Regulations, 2010 for Renewable Energy Certificate (REC)
Sale of Renewable Energy under REC Regime
Sale of conventional Electricity Component to Local Distribution Licensees
REC Component to Obligated Entities
Gujarat Energy Development Agency (GEDA) as the State Nodal Agency
For accreditation and recommending the renewable energy projects for registration
Function in accordance with the directions issued by the Commission and
to 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 State
Independent members appointed by the Commission
Growing Awareness Amongst Consumers
Year
Number of complaints pending at the beginning of the year
Number of complaints Received during the year
Number of complaints resolved during the year In favor of consumer
Number of complaints resolved during the year In favor of Licensee
Others
227 50 35 37
105
278
149 74 63 97
316
212 92 67 42
322
195 62 71
740
267
115

15. Electricity Ombudsman
Commission has appointed an independent State Electricity Ombudsman.
Effectiveness of the Ombudsman Mechanism.
Year
Number of complaints pending at the beginning of the year
Number of complaints Received during the year
Number of complaints resolved during the year In favor of consumer
Number of complaints resolved during the year In favor of Licensee
Others 8 - 4 12 15 1 54 47 51 55 56 17 13 3 27
111 46 45 30

16. Projected, Approved and Actual ARR Comparison
Year
Utility
Actual
Approved
% Difference
DGVCL
4,448
3,907
13.80%
MGVCL
2707
2,349
15.23%
PGVCL
5641
5,341
5.60%
UGVCL
4498
4,107
9.50%

17. Regulatory Challenges :Tariff issues
Tariff Determination issues
Actual Performance Vs Regulatory norms – how far to mitigate
Prudence Check – how far useful?
Consequences for disallowing amount of utilities
Income Tax as a pass through?
Delay in filing tariff petitions
Suo-moto proceedings for tariff process
Would suo-moto proceedings reduce tariff?

18. Regulatory Challenges : Competition
Introducing Parallel Licensees in one area
Tariff ceilings may be set by regulator
Encouraging Open Access
Cross subsidy
Subsidy to compensate full or partial revenue loss of existing licensee?
Existence of inter-category and intra-category cross subsidies
Shortage of Supply
State-of-the-Art Accounting System
Retail Business Vs Wire Business
Competition in Retail and ownership of wire business
Distributed 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 Development
De-regulation to some extent and promoting competition
No “Micro-management’ of Utility
Development of Regulatory Services – Cadre Posts
Financial independence of Regulatory commissions

21. Visit Our Website: www.gercin.org
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