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. Reform Status Implemented Not Implemented Partially 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
Prayas - EGI workshop Pune 2010

3. Prayas - EGI workshop Pune 2010
Schematic of institutional and policy structure
Executive
Regulations
&
Orders P U B L I C
Policies
MoP
Tariff
Capacity Addition
Consumer Service
CERC E.
Act
Legislature
SERCs
Prayas - EGI workshop Pune 2010

4. Institutional framework -1
Central Government
State Government
Private 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
Prayas - EGI workshop Pune 2010

5. 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 Operator
Electricity traders who buy & sell power; Electricity Exchanges
Prayas - EGI workshop Pune 2010

6. Institutional Framework -3
Regulator
Power Flow
Money Flow
Regulation
Market
Generation: Public, Private
Distribution: Public, Private, Bulk consumers
Transmission: Public, Private
Prayas - EGI workshop Pune 2010

7. 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
Prayas - EGI workshop Pune 2010

8. Prayas - EGI workshop Pune 2010
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
Prayas - EGI workshop Pune 2010 8

9. Electricity Act 2003 - 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
Prayas - EGI workshop Pune 2010

10. 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
Prayas - EGI workshop Pune 2010

11. 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
Prayas - EGI workshop Pune 2010

12. 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
Prayas - EGI workshop Pune 2010

13. 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.
Prayas - EGI workshop Pune 2010

14. Prayas - EGI workshop Pune 2010
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
Prayas - EGI workshop Pune 2010

15. Prayas - EGI workshop Pune 2010
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
Prayas - EGI workshop Pune 2010

16. 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 2012.
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
Prayas - EGI workshop Pune 2010

17. 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
Prayas - EGI workshop Pune 2010

18. Prayas - EGI workshop Pune 2010
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
Prayas - EGI workshop Pune 2010

19. Prayas - EGI workshop Pune 2010
Schematic of institutional and policy structure
TAP
Executive
Regulations
&
Orders P U B L I C
Policies
MoP
Tariff
Capacity Addition
Consumer Service
CERC E.
Act
Legislature
SERCs
TAP
Prayas - EGI workshop Pune 2010

20. Players and Interactions
Consumers/Public
Utility
Contract
Regulatory Commissions
Government / Policy makers
Political Voice
Authority / policy
Prayas - EGI workshop Pune 2010

21. Prayas - EGI workshop Pune 2010
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
Prayas - EGI workshop Pune 2010