act & policiy 2011 pgcil vm office 2003

8/3/2019 Act & Policiy 2011 PGCIL Vm Office 2003

http://slidepdf.com/reader/full/act-policiy-2011-pgcil-vm-office-2003 1/77

August 2011



` Objectives-MBO-What is in it for

me? How it affect by Org?

` Legal-Electricity Act,2003

` Policy framework-National

Electricity Policy , Tariff Policy

` Discussion on Major issues and

challenges

2Vijay Menghani, Joint Chief, CERC



5



G

T

D/R

Consumers

G

T / SB

T / SB

D/R

Consumers

G G G G G G G EG G G G G EG

T / MO T / MO

D/R

D/R

Consumers

D

R R R R

No Competition

No choice

Gover nment makes

decision

Generation Competition

Single buyer has choiceWholesale Competition

Distribution/retail

companies have choice

Retail Competition

Consumers have choice

Consumers

Consumers

= Who has choice

MO = Market Operator

EG = Embedded Generator

G

T

D/R

Consumers

G

T / SB

T / SB

D/R

Consumers

G G G G G G G EG G G G G EG

T / MO T / MO

D/R

D/R

Consumers

D

R R R R

No Competition

No choice

Gover nment makes

decision

Generation Competition

Single buyer has choiceWholesale Competition

Distribution/retail

companies have choice

Retail Competition

Consumers have choice

Consumers

Consumers

= Who has choice

MO = Market Operator

EG = Embedded Generator




` Act Definition: The result of public deliberation; the decision 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




The Indian Electricity Act, 1910

Provided basic framework for electric supplyindustry in India.

Growth of the sector through private licensees.Licence by State Govt.

Provision for licence for supply of electricity ina specified area.

Legal framework for laying down of wires andother works.




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.




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 intransmission, and also provision relating to Transmission Utilities.




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.




Requirement of harmonizing and rationalizing theprovisions in the existing laws to

` - Create competitive environment by encouragingprivate 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 ownreform laws.

Requirement of introducing newer concepts like power trading, open access, etc.




` 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.




` An Act to consolidate the laws relating to generation,transmission, distribution, trading and use of electricity

` generally for taking measures conducive todevelopment of electricity industry, promotingcompetition 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 benignpolicies,




` 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)

` 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)




Generation free from licensing. No TEC for non-hydrogeneration (Section 7)-Challenge for planning by CTU

Clearance of CEA for hydro projects required. Necessary dueto concern of dam safety and inter-State issues. (Section 8)

Captive Generation is free from controls. Open access toCaptive generating plants subject to availability of transmission facility as determined by CTU or STU. (Section9)-Challenge & Opportunity

Generation from Non-Conventional Sources / Co-generationto be promoted. Minimum percentage of purchase of power

from renewables may be prescribed by RegulatoryCommissions. (Sections 61 (h), 86 (1) (e))- Challenge for planning by CTU




` A generating company may supply electricity to anylicensee in accordance with this Act and the rules andregulations made there under and may, subject to theregulations made under sub-section (2) of section 42,

supply electricity to any consumer ( section 10)-Challenges-Planning, Congestion Management,

` Stranded Assets, CERC LTA & MTOA Regulation, Regulatory Approval

( Section 42 (2) is related to intra-State open access)

` Appropriate Government may specify that a generatingcompany shall, in extraordinary circumstances operate andmaintain any generating station in accordance with thedirections of that Government ( Section 11)- Discuss Threat for

income of CTU




` License is essential for transmission, distribution andtrading ( Section 12)

` CTU, STUs and appropriate Govts. deemed licensee(Section 14)

` There may be two or more distribution licensee in thesame area (Section 14)

` For generation and distribution in rural area notified bythe 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




` 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 contractsentered into with the licensees or the generating companies

operating in the region;




` RLDC shall monitor grid operations;

` RLDC shall keep accounts of quantity of electricitytransmitted through the regional grid;

`

RLDC shall exercise supervision and control over the inter-State transmission system; and

` RLDC shall be responsible for carrying out realtime operations for grid control and despatch of electricity within the region through secure and

economic operation of the regional grid inaccordance with the Grid Standards and the GridCode. (section 28)




` 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




` 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 technicalstandards, of operation and maintenance of transmission lines, inaccordance 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 ( TechnicalStandards for Construction of Electrical Plants and Electric Lines)regulations,2010

(iii) Central Electricity Authority Regulation ( Installation and Operationof Meters) regulations,2006

(iv) Technical Standards for Connectivity to the Grid




` 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 inter-

State transmission system;




` (b) to discharge all functions of planning and co-

ordination 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;




(c) to ensure development of an efficient, co-ordinated andeconomical 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 itstransmission system ( section 38)

Similar provisioning for STU ( section 39)

Discuss challenges, opportunity, threats




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




` 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 suchbusiness 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 maintainseparate accounts for each such business undertaking toensure that transmission business neither subsidises in anyway 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 inelectricity




` The State Commission shall introduce open access insuch phases and subject to such conditions, (includingthe 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, itshall have due regard to all relevant factors includingsuch cross subsidies, and other operational

constraints` Necessarily with effect from 27.01.2009 for consumer

of more than 1 MW. (Section 42 (2) )




` Provided that such open access shall be allowed on paymentof a surcharge in addition to the charges for wheeling as maybe determined by the State Commission:

` Provided further that such surcharge shall be utilised to meetthe 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 specifiedby the State Commission:

` Provided also that such surcharge shall not be leviable in

case open access is provided to a person who hasestablished a captive generating plant for carrying theelectricity to the destination of his own use (section 42 (2))




` Where the Appropriate Commission has allowed openaccess 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)




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 electriclines) Regulations, 2008

` Central Electricity Authority (Measures relating

to Safety and Electric Supply) Regulations, 2007




` 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 beensupplied, 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




` (1)The Appropriate Commission may, after consultation withthe licensees and persons likely to be affected, specifystandards 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 maybe imposed or prosecution be initiated, he shall be liable topay such compensation to the person affected as may bedetermined by the Appropriate Commission(section 57)

`

Every licensee has to furnish information to Commissionregarding level of performance achieved and no. of cases inwhich compensation was made (section 59)

` Draft Regulation on Standard of Performance.




` The Appropriate Commission shall specify the terms and conditionsfor 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 optimuminvestments;

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)




` 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 withthe guidelines issued by the Central Government.

(section 63)




` Provision as to opening of street, railways etc. By thelicensee for transmission or supply of electricity (section67)

` Appropriate Govt. has to make rules about the casesand 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 fullcompensation 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)




` Constitution, Functions, duties etc of Authority, ( section 70-75 ,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 ( section177, 178)

` Direction in matter of policy involving public interest byCentral Govt. to CERC and State Govt. to SERC ( section107, 108)




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 yearsTheft 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)




August 2011



` Total village electrification by year 2010

By year 2012 :

` Per capita availability 1000 units.

` Installed capacity over 200,000 MW.

` Spinning reser ves 5% .

` Minimum lifeline consumption of 1 unit per household per

day.

` Inter -regional transmission capacity 37,000 MW.

` Energy efficiency / conser vation savings about 15%.




Notified by Central Govt. on 12th Feb,2005 under section 3 of the Actwith the objectives:

Electricity to be available for all households in next five years

Demand to be fully met by 2012. Energy and peaking shortages tobe 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 meritgood by year 2012.

Financial Turnaround and Commercial Viability of Electricity Sector.

Protection of consumers¶ interests.




` 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




` Necessary institutional framework would need to be put inplace 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.




`

To provide availability of over 1000 units of per capitaelectricity by year 2012 it had been estimated that needbased capacity addition of more than 1,00,000 MWwould be required during the period 2002-12

` Thrust on Hydro, imported coal based thermal power

station, use of low ash content coal, improved Lignitemining Technology, R&M

` Economics of generation and supply of electricity shouldbe the basis for choice of fuel for thermal power, . Pit-head stations would be economical

` Private sector Partnernisp for Nuclear Power and non-conventional sources

` Grid inter-connection of captive generation to befacilitated to harness their capacity




` The Central Government would facilitate the continueddevelopment of the National Grid for providing adequateinfrastructure for inter-state transmission of power and toensure that underutilized generation capacity is facilitated togenerate electricity for its transmission from surplus regionsto deficit regions.

` The Central Transmission Utility (CTU) and StateTransmission Utility (STU) have the key responsibility of network planning and development .The CTU would need tocoordinate with the STUs for achievement of the sharedobjective of eliminating transmission constraints in costeffective manner.

` Network expansion should be planned and implementedkeeping in view the anticipated transmission needs that wouldbe incident on the system in the open access regime.




`

Prior agreement with the beneficiaries would not be apre-condition for network expansion. CTU/STU shouldundertake network expansion after identifying therequirements in consultation with stakeholders andtaking up the execution after due regulatory approvals.

{1.Regulatory approval has been granted for High capacityCorridors 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




`

Open access in transmission has been introduced to promotecompetition 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 bulkconsumers 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 dispatchfacilities with state-of-the art communication and data acquisition

capability on a real time basis. For SLDC time line was June,2006




`

To facilitate orderly growth and development of thepower 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 keepingin 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 wouldfacilitate achieving ultimate objective of cost effective

delivery of power.




`

To facilitate cost effective transmission of power across theregion, 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 privateinvestment 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 non-

discriminatory 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.




` Open Access, a mechanism for encouraging

competition and providing choice to consumers

`

Open Access ± Stages

Inter-State transmission

Intra-State transmission network

Intrastate distribution network

51 51Vijay Menghani, Joint Chief, CERC



Vijay Menghani, Joint Chief, CERC 52

0.00

10.00

20.00

30.00

40.00

50.00

60.00

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12( Till

June)

16.44

22.53 23.60

29.8327.76

32.37

41.69

12.39

2.77

7.09

13.54

3.93

V o l u m e ( B i l l i o n U n i t s )

Year

Short Term Power Transactions

Power Exchanges

Bilateral

Source: NLDC



` 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.)


0

50

100

150

200

250

2006-07 2007-08 2008-09 2009-10 2010-11

38.7552.73 61.61

124.18

211.51

R

s . C r s .

Short Term Open Access Income



` Rationalization of charges for Open Access by SERCs

` Availability of surplus power at reasonable rates

` Independence of SLDCs




`

For achieving efficiency gains proper restructuring of distribution utilities is essential.

` Adequate transition financing support should be arranged andlinked to attainment of predetermined efficiencyimprovements and reduction in cash losses and putting inplace appropriate governance structure for insulating the

service providers from extraneous interference while at thesame time ensuring transparency and accountability.

` For ensuring financial viability and sustainability, StateGovernments would need to restructure the liabilities of theState 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 arrangingtransition financing from various sources




` 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 27thJanuary 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 distributionsystems

` High Voltage Distribution System, SCADA and data management ,automation, Metering




` urgent need for ensuring recovery of cost of service fromconsumers to make the power sector sustainable.

` Efforts would be made to ensure that the subsidies areprogressively reduced and reach the targeted beneficiaries inthe 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 theorder of Rs.9,00,000 crores at 2002-03 price level would berequired

` appropriate surplus is to be generated through return oninvestments and, at the same time, depreciation reservecreated so as to fully meet the debt service obligation




` 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

partnership58Vijay Menghani, Joint Chief, CERC



`

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




August 2011



` In Compliance with section 3 of the Act, Tariff Policy wasnotified by Central Govt. on 6th January,2006.

` Objectives:

(a) Ensure availability of electricity to consumers atreasonable and competitive rates;

(b) Ensure financial viability of the sector and attractinvestments;

(c) Promote transparency, consistency and predictability inregulatory approaches across jurisdictions and minimiseperceptions of regulatory risks;

(d) Promote competition, efficiency in operations andimprovement in quality of supply.




` All future requirement of power should be procuredcompetitively by distribution licensees except in cases of expansion of existing projects or where there is a Statecontrolled/owned company as an identified developer andwhere regulators will need to resort to tariff determinationbased on norms

` provided that expansion of generating capacity by privatedevelopers for this purpose would be restricted to one timeaddition of not more than 50% of the existing capacity.

` Even for the Public Sector projects, tariff of all newgeneration and transmission pr ojects should be decided

on the basis of competitive bidding after a period of fiveyears or when the Regulatory Commission is satisfied that thesituation is ripe to introduce such competition.




` 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 -7

0:30; Structuring of debt toreduce 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




` power procurement for future requirements should bethrough a transparent competitive bidding mechanismusing the guidelines issued by the Central Governmentvide gazette notification dated 19th January, 2005.

` These guidelines provide for procurement of electricity

separately for base load requirements and for peak loadrequirements.

` This would facilitate setting up of generation capacitiesspecifically 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




` 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 andreasonable compensation for capacity charges.

` Alternatively, a frequency based real time mechanism can be used andthe 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 purchaseof energy from non-conventional and co-generation sources taking into

account availability of such resources in the region and its impact onretail 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.




` 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 thetransmission system, but should discourage non-optimal transmissioninvestment.

` prior agreement with the beneficiaries would not be a pre-condition f or network expansion. CTU/STU should undertakenetwork expansion after identifying the requirements in consonancewith the National Electricity Plan and in consultation with stakeholders,and taking up the execution after due regulatory appr ovals.

` 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 thesituation is right to introduce such competition would also bedetermined on the basis of competitive bidding




` ABT compliant and ToD metering

` Transactions should be charged on the basis of average lossesarrived at after appropriately considering the distance anddirectional sensitivity, as applicable to relevant voltage level, on thetransmission system.

{ New Regulation for Transmission pricing and loss allocation byCERC}

` Since additional flows above a level of line loading leads tosignificantly 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 networkconstruction, system availability and loss reduction.

{}

67

New Proposed Regulation for Performance

Standards by CERC

Vijay Menghani, Joint Chief, CERC



` 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 whichreflects 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 thetariff progressively reflects the efficient and prudent cost of supply of electricity

` Extent of subsidy for different categories of consumers can bedecided by the State Government. But provision of free electricity isnot desirable as it encourages wasteful consumption of electricity




` The computation of cross subsidy surcharge, therefore, needs to bedone in a manner that while it compensates the distributionlicensee, it does not constrain introduction of competition throughopen access. Progressive reduction of cross-subsidy within + 20%by 2010-11.

` The additional surcharge for obligation to supply as per section42(4) of the Act should become applicable only if it is conclusivelydemonstrated that the obligation of a licensee, in terms of existingpower purchase commitments, has been and continues to bestranded, or there is an unavoidable obligation and incidence tobear 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 licenseeon the payment of tariff for temporary connection to that consumer category as specified by the Appropriate Commission.




` Appr opriate Commission shall fix a minimum percentage f or

purchase of energy fr om such sources considering

Availability of such resources in the region, and its impact on retail tariffs.

` Pr ocurement by distribution companies shall be done at

preferential tariffs (thr ough competitive bidding as far as

possible).

` CERC should lay down guidelines f or pricing non-firmpower, especially fr om non±conventional sources, where

pr ocurement is not thr ough competitive bidding




` Understand Opportunity, Threat and Weakness` Understand role of Regulator is Not only Tariff

Determination Term & Conditions of Tariff Regulation

Capital Cost benchmarking.` 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




` 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.




` 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 Perf ormance indicators are yet to be

prepared by CTU on efficient network construction,

system availability and loss reduction.




Sl. No. Types of failures Restoration Time

(Days)

1. Insulator failure2

2. Tower after collapse by Emergency Restoration System (ERS)12

3. Tower after collapse

Plain Terrain30

River Bed50

Hilly Terrain 50

4. Snapping of phase conductor

Plain Terrain2

Hilly Terrain3

5. Failure of earth wire

Plain Terrain2

Hilly Terrain3

6. Failure of Inter Connecting Transformers (ICTs)

Restoration of the faulty transformer by spare

transformer 120




75



S. No. StateNet OA

Charge (Rs. /kWh)

Net cost of

power fr om

Open Access

(Rs. /kWh)

Tariff (Discom)

(Rs. /kWh)

1 Assam 2.94 6.94 3.25

2 Chhattisgarh (Short term) 1.00 5.00 3.38

3 Haryana 1.07 5.07 4.57

4 Himachal Pradesh 1.33 5.33 3.04

5 Kar nataka (BESCOM) - ST 0.97 4.97 4.85

6 Maharashtra (MSEDCL area) - LT 0.71 4.71 4.53

7 Orissa ( WESCO) 1.82 5.82 2.918 Punjab ( short term) 1.77 5.77 5.09

9 Ra jasthan 0.97 4.97 3.98

10 Uttar Pradesh ( short term) 0.66 4.66 4.29

11 Madhya Pradesh - ST 1.00 5.00 4.57

12 Uttarakhand ( Long term) 1.47 5.47 3.9

13 Gujarat - LTOA 1.43 5.43 7.39

14 West Bengal - short term 2.81 6.81 3.95

15 Tamil Nadu 2.47 6.47 3.96

16 Delhi 1.93 5.93 4.05

17 Jharkhand 3.14 7.14 4.4818 Andhra Pradesh 0.97 4.97 3.49

19 Kerala 2.38 6.38 3.94

20 Bihar ( HTS) 2.56 6.56 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.

Power Purchase cost assumed(Rs.4 /kWh)




*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.

S. No. State Net OA Charge(Rs. /kWh)

Net cost of power fr om Open Access

(Rs. /kWh)

Tariff (Discom)(Rs. /kWh)

1 Assam 2.61 5.61 3.25

2 Chhattisgarh (Short term) 0.88 3.88 3.38

3 Haryana 0.98 3.98 4.57

4 Himachal Pradesh 1.20 4.20 3.04

5 Karnataka (BESCOM) - ST 0.89 3.89 4.85

6 Maharashtra (MSEDCL area) - LT 0.59 3.59 4.53

7 Orissa ( WESCO) 1.69 4.69 2.91

8 Punjab ( short term) 1.65 4.65 5.099 Rajasthan 0.88 3.88 3.98

10 Uttar Pradesh ( short term) 0.53 3.53 4.29

11 Madhya Pradesh - ST 0.94 3.94 4.57

12 Uttarakhand ( Long term) 1.27 4.27 3.90

13 Gujarat - LTOA 1.27 4.27 7.39

14 West Bengal - short term 2.68 5.68 3.95

15 Tamil Nadu 2.35 5.35 3.96

16 Delhi 1.57 4.57 4.05

17 Jharkhand 2.54 5.54 4.4818 Andhra Pradesh 0.82 3.82 3.49

19 Kerala 2.21 5.21 3.94

20 Bihar ( HTS) 2.45 5.45 4.35

Power Purchase cost assumed(Rs.3 /kWh)

77

act & policiy 2011 pgcil vm office 2003

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