Friday, August 17, 2012

Despite power being one of the critical focus areas for India

Despite power being one of the critical focus areas for India, increasing complexity in power regulation coupled with ambiguous interpretation of current laws is enhancing clashes between various stakeholders. by Anchal Gupta

Apart from locking horns with exchanges, the CERC’s is also taking on state governments in the backdrop of complexities in existing laws. Tata Power Company (TPC), one of the major suppliers of electricity in Mumbai, had gobbled up 30000 consumers of Anil Ambani owned Reliance Infra in the city. TPC has 1877 MW installed capacity as against R-Infra’s 500 MW. R-Infra sourced 500 MW from Tata but with no capacity addition by the latter and a measly 250 MW addition by the private sector in last 7 years in the region, TPC refused to supply power beyond May ’10 to R-Infra citing that its own cost of buying excess power from outside would jump by 79 paise per unit. When R-Infra took to political lobbying, the state government jumped in issuing orders to TPC to continue supply in excess of 350 MW to R-Infra citing Section 108 of the Electricity Act, 2003 under which it can issue directive to Maharashtra Electricity Regulatory Commission (MERC) to bring the 2 companies to the resolution table.

The state government order to TPC resulted in immediate intervention by CERC making a strong point about how the Section 11 in the Electricity Act 2003 prohibited government or even the regulator to intervene in matters like this one. Interestingly, Central Power Minister Sushil Kumar Shinde, a former Maharashtra CM, had earlier this year emphatically told a conference of CMs to implement the open access policy rigorously and the same was stressed on in a letter to all states in March. Is it another case of populist action directed from Delhi or blatant disregard for the law of the land? Take your pick.

In countries like the United States, a consumer can shift between energy providers with ease – it seems it’ll be decades before CERC even understands what is meant by “connection portability,” an issue that many consumers are asking today in India, wanting to shift their electricity suppliers. The power regulator in the power centre of India is raging another battle with the Delhi distribution companies (discoms). BSES Yamuna, BSES Rajdhani and NDPL, the 3 Delhi discoms violated a directive issued by the Delhi Electricity Regulatory Commission (DERC) not to disclose tariff related issues to public till the subject remains sub-judice. But, the discoms publicly claim a total revenue gap of Rs. 26 billion if a revised tariff order comes into force based on much lower estimates of power purchase costs by DERC. The Delhi government stepped in and stalled the order. DERC hit back stating that the discoms own tariff petition filed earlier stated a huge profit instead of loss as claimed in the media declaration. Thus, with the power outages in Delhi compounding the effect of the simmering heat, the bout between DERC and the discoms is hotting up too. The Shiela Dikshit government had to bow to populist sentiment despite her stern stance on raising utility tariffs lately. Where DERC’s autonomy goes is anybody’s guess now.



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