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August 2011

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Objectives-MBO-What is in it for me? How it affect by Org?

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Legal-Electricity Act,2003 Policy framework-National Electricity Policy , Tariff Policy

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Discussion on Major issues and challenges
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No Competition
‡ No choice ‡ Government makes decision

Generation Competition
‡ Single buyer has choice

Wholesale Competition
‡ Distribution/retail companies have choice

Retail Competition
‡ Consumers have choice

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G G G G

G G G G EG

G G G G EG

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T // SB T SB

T / MO

T / MO D

D/R

D/R

D/R D/R
R R R R

Consumers

Consumers

Consumers
= Who has choice

Consumers Consumers

MO EG

= Market Operator = Embedded Generator
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Act Definition: The result of public deliberation; the de cision or determination of a legislative body, council ,court of justice, etc.; a decree, edit, law, judgment, resolve, award; as, an act of Parliament, or of Congress. Three erstwhile Acts that governed the electricity sector:
‡ The Indian Electricity Act, 1910 ‡ The Electricity (Supply) Act, 1948 ‡ The Electricity Regulatory Commissions Act, 1998

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The Indian Electricity Act, 1910 ‡ Provided basic framework for electric supply industry in India. ‡ Growth of the sector through private licensees. Licence by State Govt. ‡ Provision for licence for supply of electricity in a specified area. ‡ Legal framework for laying down of wires and other works.

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The Electricity (Supply) Act, 1948 ‡ Mandated creation of SEBs. ‡ SEB had the responsibility of arranging the supply of electricity in the State ‡ Need for the State to step in (through SEBs) to extend electrification rapidly, which was limited to cities.

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The Electricity (Supply) Act, 1948 ‡ Over a period performance of SEBs deteriorated substantially. ‡ Amendments made in 1975 to enable generation in Central sector ‡ Amendment to bring in commercial viability in the functioning of SEBs ±
y Section 59 amended to make the earning of a minimum return of 3% on fixed assets a statutory requirement (w.e.f 1.4.1985)

‡ Amendment in 1991 to open generation to private sector and establishment of RLDCs ‡ Amendment in 1998 to provide for private sector participation in transmission, and also provision relating to Transmission Utilities.

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Under Indian electricity (supply) Act,1948 the SEBs had to determine tariff, but practically state Govt. determined tariff .

The Electricity Regulatory Commissions Act, 1998
‡ Provision for setting up of Central / State Electricity Regulatory Commission with powers to determine tariffs. ‡ Constitution of SERC optional for States. . ‡ Distancing of Govt. from tariff determination.

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Requirement of harmonizing and rationalizing the provisions in the existing laws to - Create competitive environment by encouraging private sector participation which will result in enhancing quality and reliability of service to consumer. - distancing of Govt. from regulatory responsibilities Obviating need for individual States to enact their own reform laws. Requirement of introducing newer concepts like power trading, open access, etc.

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This Act is divided in XVIII Parts-Total sections 185 Open Access to Transmission /Distribution Systems De-licensing of power generation Trading in electricity permitted Liberal provisions for captive power generation Rural generation and distribution freed from licensing Expanded role for the Regulatory Commissions Envisages unbundling of transmission and distribution. Regulatory Commissions to develop electricity markets.

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An Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity generally for taking measures conducive to development of electricity industry, promoting competition therein, Protecting interest of consumers and supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies,

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Central Government

in consultation with State

Govts. and Authority to prepare National Electricity Policy and Tariff Policy. CEA to prepare National Electricity Plan (Section 3)
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Central Govt. after consultation with State Govts. to notify a National Policy for rural areas permitting stand alone systems based on renewal and NonConventional energy sources in consultation with States. (Section 4)
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Central Govt. to formulate a National Policy in consultation with the concerned State Govts. for rural electrification, bulk purchase of power and management of local distribution through Users¶ Association, Franchisees etc. (Section 5)

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The concerned State Govt. and the Central govt. shall jointly endeavour to provide access to electricity to all areas including villages and hamlets through rural infrastructure and electrification of (Section 6)

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Generation free from licensing. No TEC for non-hydro generation (Section 7)-Challenge for planning by CTU Clearance of CEA for hydro projects required. Necessary due to concern of dam safety and inter-State issues. (Section 8) Captive Generation is free from controls. Open access to Captive generating plants subject to availability of transmission facility as determined by CTU or STU. (Section 9)-Challenge & Opportunity Generation from Non-Conventional Sources / Co-generation to be promoted. Minimum percentage of purchase of power from renewables may be prescribed by Regulatory Commissions. (Sections 61 (h), 86 (1) (e))- Challenge for
planning by CTU

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A generating company may supply electricity to any licensee in accordance with this Act and the rules and regulations made there under and may, subject to the regulations made under sub-section (2) of section 42, supply electricity to any consumer ( section 10)-ChallengesPlanning, Congestion Management, Stranded Assets, CERC LTA & MTOA Regulation, Regulatory Approval

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( Section 42 (2) is related to intra-State open access) ` Appropriate Government may specify that a generating company shall, in extraordinary circumstances operate and maintain any generating station in accordance with the directions of that Government ( Section 11)- Discuss Threat for
income of CTU

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License is essential for transmission, distribution and trading ( Section 12) CTU, STUs and appropriate Govts. deemed licensee (Section 14) There may be two or more distribution licensee in the same area (Section 14) For generation and distribution in rural area notified by the State Govt. no license is required. (Section 14) Distribution licensee does not require license for trading (Section 14) CTU/STU recommendation for transmission licensee (Section 15)- Perspective planning role

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NLDC for optimum scheduling and despatch of electricity among RLDCs. (section 26) RLDC shall not engage in generation or trading (section 27) Wheeling, scheduling and despatch by RLDC in accordance with the Grid Code ( section 27) RLDC shall be apex body to ensure integrated operation of the power system in the concerned region (section 28) RLDC is responsible for optimum scheduling and despatch of electricity within the region, in accordance with the contracts entered into with the licensees or the generating companies operating in the region;

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RLDC shall monitor grid operations; RLDC shall keep accounts of quantity of electricity transmitted through the regional grid; RLDC shall exercise supervision and control over the inter-State transmission system; and RLDC shall be responsible for carrying out real time operations for grid control and despatch of electricity within the region through secure and economic operation of the regional grid in accordance with the Grid Standards and the Grid Code. (section 28)
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Section 29(1) - The Regional Load Despatch Centre may give such directions and exercise such supervision and control as may be required for ensuring stability of grid operations and for achieving the maximum economy and efficiency in the operation of the power system in the region under its control. 29(2) - Every licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system shall comply with the directions issued by the Regional Load Despatch Centres under subsection (1). Penalty up to 15 Lacs for non-compliance of direction by RLDC

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Similar provisions for intra-state transmission ( section 31,32,33) ` SLDC shall comply direction of RLDC (section 33) ` Every transmission licensee shall comply with such technical standards, of operation and maintenance of transmission lines, in accordance with the Grid Standards, as may be specified by the Authority ( section 34) ` Relevant Standards for Transmission by the Authority: (i) Central Electricity Authority (Grid Standards) Regulation 2010 (ii) Central Electricity Authority (Grid Standards) Regulation ( Technical Standards for Construction of Electrical Plants and Electric Lines) regulations,2010 (iii) Central Electricity Authority Regulation ( Installation and Operation of Meters) regulations,2006 (iv) Technical Standards for Connectivity to the Grid
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The Central Government may notify any Government company as the Central Transmission Utility (CTU) Provided that the CTU shall not engage in the business of generation of electricity or trading in electricity ( section 38) Functions of CTU; (a) to undertake transmission of electricity through interState transmission system;

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(b) to discharge all functions of planning and coordination relating to inter-State transmission system with (i) State Transmission Utilities; (ii) Central Government; (iii) State Governments; (iv) generating companies; (v) Regional Power Committees; (vi) Authority; (vii) licensees; (viii) any other person notified by the Central Government in this behalf;
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(c) to ensure development of an efficient, co-ordinated and economical system of inter-State transmission lines for smooth flow of electricity from generating stations to the load centres; (d) to provide non-discriminatory open access to its transmission system ( section 38) ‡ Similar provisioning for STU ( section 39) ‡ Discuss challenges, opportunity, threats

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Duties of Transmission Licensee: ( section 40) (a) to build, maintain and operate an efficient, co-ordinated and economical inter-State transmission system or intra-State transmission system, as the case may be; (b) to comply with the directions of the RLDC and the SLDC as the case may be; (c) to provide non-discriminatory open access to its transmission system for use by(i) any licensee or generating company on payment of the transmission charges; or (ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42
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A transmission licensee may, with prior intimation to the Appropriate Commission , engage in any business for optimum utilisation of its assets (Section 41)-Telecom Provided that a proportion of the revenues derived from such business shall, as may be specified by the Appropriate Commission, be utilised for reducing its charges for transmission and wheeling Provided further that the transmission licensee shall maintain separate accounts for each such business undertaking to ensure that transmission business neither subsidises in any way such business undertaking nor encumbers its transmission assets in any way to support such business Provided also that no transmission licensee shall enter into any contract or otherwise engage in the business of trading in electricity
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The State Commission shall introduce open access in such phases and subject to such conditions, (including the cross subsidies, and other operational constraints) as may be specified within one year of the appointed date by it and in specifying the extent of open access in successive phases and in determining the charges for wheeling, it shall have due regard to all relevant factors including such cross subsidies, and other operational constraints Necessarily with effect from 27.01.2009 for consumer of more than 1 MW. (Section 42 (2) )
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Provided that such open access shall be allowed on payment of a surcharge in addition to the charges for wheeling as may be determined by the State Commission: Provided further that such surcharge shall be utilised to meet the requirements of current level of cross subsidy within the area of supply of the distribution licensee : Provided also that such surcharge and cross subsidies shall be progressively reduced in the manner as may be specified by the State Commission: Provided also that such surcharge shall not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use (section 42 (2))

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Where the Appropriate Commission has allowed open access to certain consumers under section 42, such consumers, notwithstanding the provisions contained in clause (d) of sub-section (1) of section 62, may enter into an agreement with any person for supply or purchase of electricity on such terms and conditions (including tariff) as may be agreed upon by them. (section 49)

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Authority in consultation with the State Govt., specify suitable measures in this regard (section 53) CEA has made two draft Regulations in this regard Central Electricity Authority (Safety requirements for construction, operation and maintenance of electrical plants and electric lines) Regulations, 2008 Central Electricity Authority (Measures relating to Safety and Electric Supply) Regulations, 2007
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The licensee or the generating company may, cut off the supply of electricity and for that purpose cut or disconnect any electric supply line or other works being the property of such licensee or the generating company through which electricity may have been supplied, transmitted, distributed or wheeled and may discontinue the supply until such charge or other sum, together with any expenses incurred by him in cutting off and reconnecting the supply, are paid ( section 56)
Discuss CERC Regulation of Power Supply , Regulation 2010

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(1)The Appropriate Commission may, after consultation with the licensees and persons likely to be affected, specify standards of performance of a licensee or a class of licensees. (2) If a licensee fails to meet the standards specified under sub-section (1), without prejudice to any penalty which may be imposed or prosecution be initiated, he shall be liable to pay such compensation to the person affected as may be determined by the Appropriate Commission(section 57) Every licensee has to furnish information to Commission regarding level of performance achieved and no. of cases in which compensation was made (section 59) Draft Regulation on Standard of Performance.

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The Appropriate Commission shall specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by : the generation, transmission, distribution and supply of electricity are conducted on commercial principles; the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments; safeguarding of consumers' interest and at the same time, recovery of the cost of electricity in a reasonable manner; the principles rewarding efficiency in performance; the tariff progressively reflects the cost of supply of electricity the National Electricity Policy and tariff policy: (Section 61)

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Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government. (section 63)

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Provision as to opening of street, railways etc. By the licensee for transmission or supply of electricity (section 67) Appropriate Govt. has to make rules about the cases and circumstances in which consent is required, the authority which may grant permission, compensation etc. The licensee shall cause as little damage and inconvenience as may be and shall make full compensation for it. In case of dispute matter shall be decided by the Appropriate Commission (section 67) Approval by Govt. for laying overhead lines for excceding 11 kV ( section 68)

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Constitution, Functions, duties etc of Authority, ( section 7075 ,Part IX) Constitution, functions of Central commission ( section 76-79) Constitution, functions of Central commission ( section 82-86 Establishment of fund for CERC by Central Govt. (section 99) Establishment of fund for SERC by State Govt. (section 103) Powers of Authority and CERC to make regulations ( section 177, 178) Direction in matter of policy involving public interest by Central Govt. to CERC and State Govt. to SERC ( section 107, 108)

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Theft of Electricity- ( section 135) ` Consumption < 10 kW-3 times for first time and subsequently 6 times of financial gain ` Consumption > 10 kW-3 times for first time and subsequently 6 times of financial gain and imprisonment not less than 6 months and up to five years Theft of electric lines and materials- ( section 136) ‡ first time Imprisonment up to three years or fine or both ‡ Subsequently, imprisonment not less 6 months and up to 3 years and fine not less than ten thousand. ‡ above offences are cognisable and non-bailable ( section 151 B)

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August 2011

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Total village electrification by year 2010

By year 2012 :
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Per capita availability 1000 units. Installed capacity over 200,000 MW. Spinning reserves 5% . Minimum lifeline consumption of 1 unit per household per day. Inter-regional transmission capacity 37,000 MW. Energy efficiency/ conservation savings about 15%.

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Notified by Central Govt. on 12th Feb,2005 under section 3 of the Act with the objectives:  Electricity to be available for all households in next five years  Demand to be fully met by 2012. Energy and peaking shortages to be overcome and adequate spinning reserve to be available.  Supply of Reliable and Quality Power of specified standards in an efficient manner and at reasonable rates.  Per capita availability of electricity to be increased to over 1000 units by 2012. Now it is 733 kWh(2008-09) from 567kWh in 2002-03  Minimum lifeline consumption of 1 unit/household/day as a merit good by year 2012.  Financial Turnaround and Commercial Viability of Electricity Sector.  Protection of consumers¶ interests.

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Determined efforts should be made to ensure that the task of rural electrification for securing electricity access to all households and also ensuring that electricity reaches poor and marginal sections of the society at reasonable rates is completed within the next five years. Each block should have Rural Electrification Distribution Backbone (REDB) with at least one 33/11 kv (or 66/11 kv) substation in every Block and more if required as per load, networked and connected appropriately to the state transmission system One Distribution Transformer in every village Every household electrification

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Necessary institutional framework would need to be put in place not only to ensure creation of rural electrification infrastructure but also to operate and maintain supply system for securing reliable power supply to consumers. Responsibility of operation & maintenance and cost recovery could be discharged by utilities through appropriate arrangements with Panchayats, local authorities, NGOs and other franchisees etc. The distribution licensees recover at least the cost of electricity and related O&M expenses from consumers, except for lifeline support to households below the poverty line who would need to be adequately subsidized.

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To provide availability of over 1000 units of per capita electricity by year 2012 it had been estimated that need based capacity addition of more than 1,00,000 MW would be required during the period 2002-12 Thrust on Hydro, imported coal based thermal power station, use of low ash content coal, improved Lignite mining Technology, R&M Economics of generation and supply of electricity should be the basis for choice of fuel for thermal power, . Pithead stations would be economical Private sector Partnernisp for Nuclear Power and nonconventional sources Grid inter-connection of captive generation to be facilitated to harness their capacity
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The Central Government would facilitate the continued development of the National Grid for providing adequate infrastructure for inter-state transmission of power and to ensure that underutilized generation capacity is facilitated to generate electricity for its transmission from surplus regions to deficit regions. The Central Transmission Utility (CTU) and State Transmission Utility (STU) have the key responsibility of network planning and development .The CTU would need to coordinate with the STUs for achievement of the shared objective of eliminating transmission constraints in cost effective manner. Network expansion should be planned and implemented keeping in view the anticipated transmission needs that would be incident on the system in the open access regime.

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Prior agreement with the beneficiaries would not be a pre-condition for network expansion. CTU/STU should undertake network expansion after identifying the requirements in consultation with stakeholders and taking up the execution after due regulatory approvals. {1.Regulatory approval has been granted for High capacity Corridors with estimated investment of Rs. 58,061 Cr. and Punatsangchu ±I Tr. Projects ) 2. Regulation for Regulatory approval} ` Structured information dissemination and disclosure procedures should be developed by the CTU and STUs ` Grid Code by SERC by Sep,2005
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Open access in transmission has been introduced to promote competition amongst the generating companies who can now sell to different distribution licensees across the country. This should lead to availability of cheaper power. The Act mandates non-discriminatory open access in transmission from the very beginning. When open access to distribution networks is introduced by the respective State Commissions for enabling bulk consumers to buy directly from competing generators, competition in the market would increase the availability of cheaper and reliable power supply. The Regulatory Commissions need to provide facilitative framework for non-discriminatory open access. This requires load dispatch facilities with state-of-the art communication and data acquisition capability on a real time basis. For SLDC time line was June,2006

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To facilitate orderly growth and development of the power sector and also for secure and reliable operation of the grid, adequate margins in transmission system should be created. The transmission capacity would be planned and built to cater to both the redundancy levels and margins keeping in view international standards and practices. A well planned and strong transmission system will ensure not only optimal utilization of transmission capacities but also of generation facilities and would facilitate achieving ultimate objective of cost effective delivery of power.

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To facilitate cost effective transmission of power across the region, a national transmission tariff framework needs to be implemented by CERC( 5.3.5). The tariff mechanism would be sensitive to distance, direction and related to quantum of flow. Special mechanisms would be created to encourage private investment in transmission sector so that sufficient investments are made for achieving the objective of demand to be fully met by 2012. The necessary regulatory framework for providing nondiscriminatory open access in transmission is essential for signaling efficient choice in locating generation capacity and for encouraging trading in electricity for optimum utilization of generation resources and consequently for reducing the cost of supply.
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Open Access, a mechanism for encouraging competition and providing choice to consumers

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Open Access ± Stages
Inter-State transmission Intra-State transmission network Intrastate distribution network

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Short Term Power Transactions
60.00

50.00

13.54

Volume (Billion Units)

40.00
7.09

30.00

2.77

20.00
29.83 32.37 27.76 23.60

41.69 3.93

Power Exchanges Bilateral

10.00

22.53 16.44

12.39

0.00
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 ( TillSource: June)

NLDC

Year
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25% OA retained by CTU. In 2010-11 more than income from Telecom. About 2.5% of total Income.(Data Collected from PGCIL Financial Statement.) Short Term Open Access Income
250

200

Rs .Crs.

150 211.51 124.18 50 38.75 0 52.73 61.61

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2006-07

2007-08

2008-09

2009-10

2010-11

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Rationalization of charges for Open Access by SERCs Availability of surplus power at reasonable rates Independence of SLDCs

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For achieving efficiency gains proper restructuring of distribution utilities is essential. Adequate transition financing support should be arranged and linked to attainment of predetermined efficiency improvements and reduction in cash losses and putting in place appropriate governance structure for insulating the service providers from extraneous interference while at the same time ensuring transparency and accountability. For ensuring financial viability and sustainability, State Governments would need to restructure the liabilities of the State Electricity Boards to ensure that the successor companies are not burdened with past liabilities. The Central Government would also assist the States, which develop a clear roadmap for turnaround, in arranging transition financing from various sources
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Conducive business environment in terms of adequate returns and suitable transitional model Private sector participation in distribution Multi-Year Tariff (MYT) framework open access in distribution not later than five years from 27th January 2004 to consumers >1 MW A time-bound programme by SERC for segregation of technical and commercial losses through energy audits Standards for reliability and quality of supply as well as for loss levels in line with international practices by year 2012 competition in distribution by allowing multiple licensees in the same area of supply through their independent distribution systems
High Voltage Distribution System, SCADA and data management , automation, Metering

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urgent need for ensuring recovery of cost of service from consumers to make the power sector sustainable. Efforts would be made to ensure that the subsidies are progressively reduced and reach the targeted beneficiaries in the most transparent and efficient way TECHNOLOGY DEVELOPMENT AND R&D Competition and market Development through trading and Power-Exchanges To meet the objective of ³power for all´ an investment of the order of Rs.9,00,000 crores at 2002-03 price level would be required appropriate surplus is to be generated through return on investments and, at the same time, depreciation reserve created so as to fully meet the debt service obligation

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All efforts will have to be made to improve the efficiency of operations in all the segments of the industry. Suitable performance norms of operations together with incentives and disincentives will need to be evolved along with appropriate arrangement for sharing the gains of efficient operations with the consumers . Concerted efforts would be required for restoring the financial health of the sector. For this purpose, tariff rationalization would need to be ensured by the SERCs. This would also include differential pricing for base, intermediate and peak power. The Central Government and the State Governments need to develop workable and successful models for public private partnership
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Reduction in T&D losses Energy conservation Environmental concern to be addressed Training and HR Development Co-generation and Non-conventional Energy Sources Protection of Consumer Interest and Quality Standards Co-ordinated development-consultative process

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August 2011

In Compliance with section 3 of the Act, Tariff Policy was notified by Central Govt. on 6th January,2006. ` Objectives: (a) Ensure availability of electricity to consumers at reasonable and competitive rates; (b) Ensure financial viability of the sector and attract investments; (c) Promote transparency, consistency and predictability in regulatory approaches across jurisdictions and minimise perceptions of regulatory risks; (d) Promote competition, efficiency in operations and improvement in quality of supply.
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All future requirement of power should be procured competitively by distribution licensees except in cases of expansion of existing projects or where there is a State controlled/owned company as an identified developer and where regulators will need to resort to tariff determination based on norms provided that expansion of generating capacity by private developers for this purpose would be restricted to one time addition of not more than 50% of the existing capacity. Even for the Public Sector projects, tariff of all new generation and transmission projects should be decided on the basis of competitive bidding after a period of five years or when the Regulatory Commission is satisfied that the situation is ripe to introduce such competition.

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Competition with appropriate market condition Wire Business- Natural Monopoly Return on investment-at par with, if not in preference to, other sectors ; Benchmarks on capital cost Equity Norms- Debt: Equity -70:30; Structuring of debt to reduce tariff Foreign Exchange variation Risk not to be passed through. Cost of Hedging and swapping to take care of these variations to be allowed Suitable performance norms to be evolved for sharing of gains with consumers. R&M to be encouraged Multi year Tariff Frame work w. e.f April,2006 Duties etc. by State Govts. at reasonable level
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power procurement for future requirements should be through a transparent competitive bidding mechanism using the guidelines issued by the Central Government vide gazette notification dated 19th January, 2005. These guidelines provide for procurement of electricity separately for base load requirements and for peak load requirements. This would facilitate setting up of generation capacities specifically for meeting peak. Two-part Tariff Structure for all long-term contracts Adequate PSM in PPA , provision for selling to other buyers in case of persisting default

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captive plants could inject surplus power into the grid and could also supply power to non-captive users connected to the grid. The prices should be differentiated for peak and off-peak supply and the tariff should include variable cost of generation at actual levels and reasonable compensation for capacity charges. Alternatively, a frequency based real time mechanism can be used and the captive generators can be allowed to inject into the grid under the ABT mechanism. Wheeling charges and other terms and conditions for implementation should be determined in advance by the respective State Commission, duly ensuring that the charges are reasonable and fair. Appropriate Commission shall fix a minimum percentage for purchase of energy from non-conventional and co-generation sources taking into account availability of such resources in the region and its impact on retail tariffs. Such percentage for purchase of energy should be made applicable for the tariffs to be determined by the SERCs latest by April 1, 2006.

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national tariff framework implemented should be sensitive to distance, direction and related to quantum of power flow. transmission system users to share the total transmission cost in proportion to their respective utilization of the transmission system. tariff framework not to inhibit planned development/augmentation of the transmission system, but should discourage non-optimal transmission investment. prior agreement with the beneficiaries would not be a precondition for network expansion. CTU/STU should undertake network expansion after identifying the requirements in consonance with the National Electricity Plan and in consultation with stakeholders, and taking up the execution after due regulatory approvals. The tariff of the projects to be developed by CTU/STU after the period of five years or when the Regulatory Commission is satisfied that the situation is right to introduce such competition would also be determined on the basis of competitive bidding

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ABT compliant and ToD metering ` Transactions should be charged on the basis of average losses arrived at after appropriately considering the distance and directional sensitivity, as applicable to relevant voltage level, on the transmission system. { New Regulation for Transmission pricing and loss allocation by CERC} ` Since additional flows above a level of line loading leads to significantly higher losses, CTU/STU should ensure upgrading of transmission systems to avoid the situations of overloading. ` Financial incentives and disincentives should be implemented for the CTU and the STU around the key performance indicators (KPI) for these organisations. Such KPIs would include efficient network construction, system availability and loss reduction. {}
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New Proposed Regulation for Performance Standards by CERC
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MYT Frame work. sharing of excess profits and losses with the consumers as part of the overall MYT framework All power purchase costs need to be considered legitimate unless it is established that the merit order principle has been violated or power has been purchased at unreasonable rates. Consumers, particularly those who are ready to pay a tariff which reflects efficient costs have the right to get uninterrupted 24 hours supply of quality power. ATC loss reduction should be incentivised by linking returns in a MYT framework to an achievable trajectory Appropriate Commission shall be guided by the objective that the tariff progressively reflects the efficient and prudent cost of supply of electricity Extent of subsidy for different categories of consumers can be decided by the State Government. But provision of free electricity is not desirable as it encourages wasteful consumption of electricity

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The computation of cross subsidy surcharge, therefore, needs to be done in a manner that while it compensates the distribution licensee, it does not constrain introduction of competition through open access. Progressive reduction of cross-subsidy within + 20% by 2010-11. The additional surcharge for obligation to supply as per section 42(4) of the Act should become applicable only if it is conclusively demonstrated that the obligation of a licensee, in terms of existing power purchase commitments, has been and continues to be stranded, or there is an unavoidable obligation and incidence to bear fixed costs consequent to such a contract. In case of outages of generator supplying to a consumer on open access, standby arrangements should be provided by the licensee on the payment of tariff for temporary connection to that consumer category as specified by the Appropriate Commission.

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Appropriate Commission shall fix a minimum percentage for purchase of energy from such sources considering Availability of such resources in the region, and its impact on retail tariffs. Procurement by distribution companies shall be done at preferential tariffs (through competitive bidding as far as possible). CERC should lay down guidelines for pricing non-firm power, especially from non±conventional sources, where procurement is not through competitive bidding

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Vijay Menghani, Joint Chief, CERC 70

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Understand Opportunity, Threat and Weakness Understand role of Regulator is Not only Tariff Determination
Term & Conditions of Tariff Regulation Capital Cost benchmarking.

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Planning : Electricity Act, Grid Code, Regulation of Connectivity, Long Term & Medium Term Section 8(8), Regulatory Approval Operation: OA, Congestion Management, SOP Sharing of Transmission Charges

Vijay Menghani, Joint Chief, CERC

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CERC Sharing of Transmission Charges and losses Regulation-15.6.2011- Action in accordance with Electricity and Tariff Policy
No impact on Tariff but totally changed Business environment in respect of Planning, Construction ,enhanced role & Risk CTU role as Centralized agency for Billing , Collection and disbursement Investment in Transmission Sector without prior agreement Distance Direction and Usage sensitive- It bring out Utilization too ,planning aspects relook.
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Objective: To ensure standards of performance of interstate transmission licensees within the permissible limits in a natural monopoly like transmission of electricity and for providing an efficient, reliable, coordinated and economical system of electricity transmission, non-adherence of which would entitle compensation to the affected parties. Key Performance indicators are yet to be prepared by CTU on efficient network construction, system availability and loss reduction.

Vijay Menghani, Joint Chief, CERC

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Sl. No. 1. 2. 3. Insulator failure

Types of failures

Restoration Time (Days) 2 12

Tower after collapse by Emergency Restoration System (ERS) Tower after collapse Plain Terrain River Bed Hilly Terrain 30 50 50

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Snapping of phase conductor Plain Terrain Hilly Terrain 2 3

5.

Failure of earth wire Plain Terrain Hilly Terrain 2 3

6.

Failure of Inter Connecting Transformers (ICTs) Restoration of the faulty transformer by spare transformer
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Power Purchase cost assumed(Rs.4/kWh)

S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

State Assam Chhattisgarh (Short term) Haryana Himachal Pradesh Karnataka (BESCOM) - ST Maharashtra (MSEDCL area) - LT Orissa ( WESCO) Punjab ( short term) Rajasthan Uttar Pradesh ( short term) Madhya Pradesh - ST Uttarakhand ( Long term) Gujarat - LTOA West Bengal - short term Tamil Nadu Delhi Jharkhand Andhra Pradesh Kerala Bihar ( HTS)

Net OA Charge (Rs./kWh) 2.94 1.00 1.07 1.33 0.97 0.71 1.82 1.77 0.97 0.66 1.00 1.47 1.43 2.81 2.47 1.93 3.14 0.97 2.38 2.56

Net cost of power from Open Access (Rs./kWh) 6.94 5.00 5.07 5.33 4.97 4.71 5.82 5.77 4.97 4.66 5.00 5.47 5.43 6.81 6.47 5.93 7.14 4.97 6.38 6.56

Tariff (Discom) (Rs./kWh) 3.25 3.38 4.57 3.04 4.85 4.53 2.91 5.09 3.98 4.29 4.57 3.9 7.39 3.95 3.96 4.05 4.48 3.49 3.94 4.35

*Tariff for an embedded consumer of 5MW at 11 KV (33 KV in some cases). ** Effective Open Access Charges for consumer of 5MW at 11 KV (33 KV in some cases) in addition with a assumption of power purchase cost of 4 Rs./KwH.

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Vijay Menghani, Joint Chief, CERC 76

Power Purchase cost assumed(Rs.3/kWh)

S. No. 1 2

State Assam Chhattisgarh (Short term)

Net OA Charge (Rs./kWh) 2.61 0.88

Net cost of power from Open Access (Rs./kWh) 5.61 3.88

Tariff (Discom) (Rs./kWh) 3.25 3.38

3
4

Haryana
Himachal Pradesh

0.98
1.20

3.98
4.20

4.57
3.04

5 6
7

Karnataka (BESCOM) - ST Maharashtra (MSEDCL area) - LT
Orissa ( WESCO)

0.89 0.59
1.69

3.89 3.59
4.69

4.85 4.53
2.91

8 9 10 11
12

Punjab ( short term) Rajasthan Uttar Pradesh ( short term) Madhya Pradesh - ST
Uttarakhand ( Long term)

1.65 0.88 0.53 0.94
1.27

4.65 3.88 3.53 3.94
4.27

5.09 3.98 4.29 4.57
3.90

13
14 15 16 17 18 19 20

Gujarat - LTOA
West Bengal - short term Tamil Nadu Delhi Jharkhand Andhra Pradesh Kerala Bihar ( HTS)

1.27
2.68 2.35 1.57 2.54 0.82 2.21 2.45

4.27
5.68 5.35 4.57 5.54 3.82 5.21 5.45

7.39
3.95 3.96 4.05 4.48 3.49 3.94 4.35

*Tariff for an embedded consumer of 5MW at 11 KV (33 KV in some cases). ** Effective Open Access Charges for consumer of 5MW at 11 KV (33 KV in some cases) in addition with a assumption of power purchase cost of 3 Rs./KwH.

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Vijay Menghani, Joint Chief, CERC 77