AMIT K MISHRA- 05

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



� 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.



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.



Profile of Regulatory Commissions in IndiaProfile of Regulatory Commissions in India



� 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.



� 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.



Institutional Framework and Process



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.



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.



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.



The Prayas Energy Group¶s survey



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.



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.



Determinants for effective regulation



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.



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.



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.



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.



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.



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.



Improving Regulatory effectiveness



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.



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.



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.



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.



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.



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.



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.



� 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.



� 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.



Thank YouThank You

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AMIT K MISHRA- 05