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8/6/2019 AMIT K MISHRA- 05
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THE ELECTRICITY REGULATORYTHE ELECTRICITY REGULATORY
EXPERIENCE IN INDIA:EXPERIENCE IN INDIA:EVALUATION AND EFFECTIVENESSEVALUATION AND EFFECTIVENESS
Presented By :
AMIT KUMAR MISHRAROLL NO. 05
MBA (Power Management)
NPTI, Faridabad
Presented By :
AMIT KUMAR MISHRAROLL NO. 05
MBA (Power Management)
NPTI, Faridabad
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� A robust and independent regulatory framework is
crucial for the healthy growth of the Electricity industry in
India.
� The Regulatory agency is intended to provide the ³high
quality institution´ which permits and fosters sustained
growth in capacity and efficiency in the utility.
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Objective of the ProjectObjective of the Project
The Presentation aims to determine whether Electricity
Regulation in India has met the dual goals of
'effectiveness' and 'efficiency'.
This helps to understand the status of the current
Regulatory environment and provides an insight on how
the effectiveness can be improved.
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Profile of Regulatory Commissions in IndiaProfile of Regulatory Commissions in India
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� Electricity Regulatory commissions came into existence
to shield the Power sector from the erratic decisions of
the State Government.
� The state of Orissa initiated the establishment of first
Electricity Regulatory commission in Aug¶1996.
� In July¶1998, the Parliament enacted the Electricity
Regulatory Commissions Act to bring the Indian Power Sector as a whole under independent regulation.
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� On one hand ERC¶s are expected to prevent political
interference in the Power sector, rationalize tariffs and
on the other hand they are also expected to protect
consumers by regulating the operations of Power utilitiesand the tariff chargeable to consumers.
� To carry out these functions successfully, it is widely
accepted that ERC¶s must be provided with adequate
financial and manpower resources.
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Institutional Framework and Process
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Responsibilities of Regulatory CommissionResponsibilities of Regulatory Commission
� Tariff setting;
� General regulatory rulemaking;
� Utility system resource planning;
� Environmental impacts of resource utilization;
� Conservation and efficient use of utility and societal
resources;
� Consumer protection;
� Assuring high system reliability.
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Key characteristics of Regulatory CommissionKey characteristics of Regulatory Commission
� Independence from the political process;
� Independence from the regulated enterprise;
� A broad mandate to protect the public interest;
� Technical expertise in the functions and business of the
regulated enterprise; and
� Continuing monitoring and enforcement of rules and
orders.
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Independence of the CommissionersIndependence of the Commissioners
The Commissioners should be bound by a strong ethical
code.The key components of such a code include:
� Prohibition against any ownership or in other material of
economic interest in the regulated utility;
� Prohibition against any ownership or in other material of
economic interest in any consumer or consumer group
affected by the commission decision;
� Prohibition against communications with parties in apending matter; and
� Prohibition against political influence or interference.
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The Prayas Energy Group¶s survey
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The Prayas Group sent a questionnaire to 12 Indian
State Electricity Regulatory Commissions (ERC¶s) and
the Central Electricity Regulatory Commission. The
questionnaire covered issues such as:
� Commission Staff and Resources;
� Use of Consultants;
� Review and Implementation of Commission Orders;
� Transparency and� Public Participation.
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Among the key findings of the Prayas questionnaire are:
� Inadequate funding levels;
� Grossly inadequate staff resources;
� Problems over Appointment, Continuity and
Independence of Regulatory Commissioners;
� Serious problems in implementing and enforcing
compliance with ERC directives;
� Weak transparency and public participation;� Growing number of disputes with State Governments.
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Determinants for effective regulation
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Independence and autonomy
As quasi-judicial bodies, the ERCs should be
multimember bodies and should function as independent
and autonomous institutions.
In the normal course, it should not be desirable to select
serving or retired Government officials as members of
the ERC as it sends a wrong signal on the independence
of the Commission as perceived by the public.
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Tenure of the Commission Members and Secretaries
For consistency of decision-making in the Regulatory
Commissions, it is desirable for members to serve their
full term.
This will in turn help to improve the quality of the
Regulatory process and of the decisions of
Commissions.
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Vacancies and Appointments
Any vacancy in the Commission needs to be filled up
expeditiously. Timely appointments to the Regulatory
Commissions are crucial, as lack of any one member
might make the entire Commission inoperative.
About 2/3rd of the technical staff in SERC¶s is from
regulated utilities. With high proportion of technical staff
from Regulated utilities (who come on deputation) in the
Commission, it is difficult to envisage independent andfresh analysis.
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Empowerment of the ERCs
� Empowerment of the ERCs is necessary for
safeguarding the interests of the consumers.
� Even the basic requirement of submission of full data in
support of the tariff increase proposals is not being met
by the Utilities.
� The Regulator thus has poor information from the
companies, according to which it decides on tariff. Butbecause of unreliable data , there is a huge mismatch
between the estimated(proposed) and actual numbers.
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Transparency & public participation
All proceedings of the ERC¶s should be translated into
local languages and made available to the public, if
necessary by suitably pricing them and through
publication on the web.
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Need to enhance the quality of professional inputs
Government restraints on salaries should not be
applicable to ERC staff and flexibility must be agreed on
the pay package offered to Regulatory Commission
members.
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Improving Regulatory effectiveness
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Accountability of Regulator to Stakeholders
� Of the several stakeholders in the sector, it is the utilities
that appear to be the strongest while the consumers
appear to be the weakest.
� In the interest of actual effectiveness, the Regulators
need to nurture a consumer body, which can act as an
effective countervailing force to the utility.
� It is necessary for Regulators to ensure that consumersare enabled to participate in an informed and effective
way in the regulatory process.
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Consumer Protection Issues
Consumer protection policies of the Commission should
foster the following goals:
� Public access to the Commission and its processes;
� Public education;
� Fairness in act;
� Efficient utilization of commission resources; and
� Timely resolution of complaints.
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Public Access to the Commission and its Processes
� Small commercial, agricultural, and
household/residential customers need a consumer-
friendly forum for addressing their questions and
complaints.
� The Commission should utilize a toll-free telephone
number to receive calls from the public. In addition, the
rules and forms for resolution of consumer complaints
should be made easily understandable to the public.
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Public Education
Educational efforts should be oriented toward the
following goals:
� Information about the customer¶s relationship with the
utility;
� Information about the commission and what role it plays
in consumer protection;
� Information about energy usage, conservation and
demand-side management;� Information about low-income assistance programs.
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Regulatory Impact Analysis
� RIA is a systematic method for assessing the impact of
existing regulations (ex-post) as well as the potential
impact of proposed new regulatory measures (ex-ante).
� Its purpose is to explain the objectives of the regulatory
proposal, the risks to be addressed and the options for
delivering the objectives.
� The potential impacts are identified as being positive(benefits) and negative (costs), and the information is
conveyed to decision-makers.
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A properly carried out RIA usefully addresses both
regulatory goals and the regulatory process and leads to:
� Improved regulatory capability,
� Improved regulatory effectiveness,
� Improved regulatory efficiency,
� Improved regulatory assessment methods,
� Improved regulatory co-ordination.
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CONCLUSION AND RECOMMENDATIONS
� As per available estimates India's energy consumption is
to grow at a phenomenal pace.
� This calls for massive investments in infrastructure
creation on grand scale through efforts from public,
private sector and joint partnerships.
� The investments would also need the policy makers to
work towards creating an environment with appropriatepolicy, legislative and Regulatory framework.
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� The Indian electricity sector is still majority owned by the
State and Central Governments. Regulating state-owned
enterprises is a difficult task.
� The model of Chief Election Officers in the States who
are serving Government officers but quite independent of
the Government during their tenure as CEO¶s is worth
examining for Regulatory Commissions as well.
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� The commissions must provide for truly independentsearch committees that find professionals and not retiringGovernment servants as members and chairpersons.
� Vacancies in the commission must be filled in timestipulated by the law.
� They must have flexibility in offering salaries that canattract the best experts.
� Regulators must ensure that consumers are enabled toparticipate in an informed and effective way in theregulatory process.
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Thank YouThank You
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