regulatory issues dr. m. k. iyer, member finance gujarat electricity regulatory commission
TRANSCRIPT
Regulatory Issues
Dr. M. K. Iyer, Member FinanceGUJARAT ELECTRICITY REGULATORY COMMISSION
REGULATORS –Balancing the key Stakeholders
Regulation is the creation and enforcement of rules that promote the efficiency and public interest
Regulation is ...
rule-making to implement Government policies
application & enforcement of rules
protecting the “public interest”
ensuring consistency and transparency on the part of all parties active in the sector
New Avenues in Power Sector
• The Electricity Act, 2003 and Gujarat Electricity Industries (Reorganisation and Regulation) Act, 2003 envisages various activities for taking conducive measures to: Allow development of power market Envisage competition Protect interest of consumers and supply of
electricity to all areas Rationalize electricity tariff Promote efficient and environmentally benign
policies Open Access in Transmission and Distribution Power Trading Implement Availability Based Tariff
Making Competitive Power Market
National Electricity Policy (2005) enjoins upon Appropriate Commission to undertake development of power market
Power / Energy Exchanges introduced in India enabling market to discover a uniform market clearing price and market clearing volume
To make electricity market competitive following elements are necessary: Several buyers and sellers Demand and supply responsiveness to price Equal access to essential facilities of transmission and
distribution Liquid and efficient market places Application of Open Access in phased manner
The Regulatory Process – Timeline
Regulatory Approach
• Enabling competition
• Protecting consumer interest
• Orderly development of electricity market – Market Rules and Surveillance
• Determine tariff determination with transparent & participatory process
• Regulations enforceable and predictable decisions
Accountability, Transparency and Public participation
• The transparency, efficiencies and timelines of regulatory procedures.• Ethical and procedural obligations.• All documents and information used for decision making should
be available for public inspection.
• A description and analysis of all evidence taken into consideration
• A clear decision on the underlying issues and rationale.• Various comments offered by participants during the
proceedings are considered
• Space for Public Participation in the Regulatory process• Institutional mechanism for representation of interests of
weaker sections / stakeholders
• Participation by civil society in the regulatory process.
Initiatives By Forum Of Regulators (FOR)
'FOR' Constituted Working Groups/Task Force on the following Issues:
• Code of Ethics• Demand Side Management (DSM) & Energy
Efficiency• Loss Reduction Strategies• MYT Framework and distribution margin• Open Access - Theory and practice etc.• Policies on renewable• Protection of consumer interest• Metering Issues• Staffing of Electricity Regulatory Commissions• Standardization of Regulatory Accounts• Task Force for implementation of FOR
recommendations• Task Force on Renewable Energy Certificates (RECs)
FOR’s Commendable Contribution
• Adoption of best practices & experiences
• Developed Model Regulations - to be adopted by SERCs
• International Co-operation
• Policy implementation issues
• Legal opinions
• Training
Open Access
Initiatives by GERC:
Capacity granted for Open Access increased from 551 MW to 750 MW.
Reduced the cross subsidy charges from Rs. 1.80 per Unit in 2005-06 to Rs. 0.51 per Unit in 2008-09
Rationalized Transmission and wheeling charges
Comments on new Draft regulations on Open Access are invited
Intra-state Availability Based Tariff (ABT) Mechanism• ABT – Brought about the effective day ahead
scheduling and frequency sensitive charges for the deviation from the schedule for efficient real-time balancing
• ABT - Mechanism brings grid discipline and improve efficiency of the power system
• GERC Initiative: GERC is among the first regulators to introduce ABT
mechanism Implementation of Intra-state ABT with effect from 5th April
2010. which is applied to generators, distribution licensees, Captive Power Plants connected with grid.
Promoting Renewable Sources of Energy
GERC notified the regulation on Procurement of Energy from Renewable Sources
Renewable Power obligation revised - Specified Minimum Percentage of the total consumption of its consumers including T&D losses during year (for Distribution Licensees)
Year Minimum Quantum of Purchase (in %) from renewable energy sources (in terms of energy in kWh)
Total Wind Solar Biomass, bagasse and others
2010 - 11 5.00% 4.50% 0.25% 0.25%
2011-12 6.00% 5.00% 0.50% 0.50%
2012-13 7.00% 5.50% 1.00% 0.50%
Separate RPO for wind, solar and other renewable energy based on the availability of such sources
RPO applicable to the Captive and Open Access consumers/users as and when a separate notification is issued by the Commission.
REC Introduction GERC is the First State Regulatory Commission to incorporate
Renewable Energy Certificate in its Regulations of 2010
Necessary provisions in the Procurement of Energy from Renewable Sources Regulations, 2010 for Renewable Energy Certificate (REC)
Sale of Renewable Energy under REC Regime
Sale of conventional Electricity Component to Local Distribution Licensees
REC Component to Obligated Entities
Gujarat Energy Development Agency (GEDA) as the State Nodal Agency
For accreditation and recommending the renewable energy projects for registration
Function in accordance with the directions issued by the Commission and
to act in accordance to the CERC (Terms and conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010
Consumer Grievances Redressal Forum
Total Eight CGRF in the State
Independent members appointed by the Commission
• Growing Awareness Amongst Consumers
Year Number of complaints pending at the beginning
of the year
Number of complaints Received during the
year
Number of complaints resolved during the year In favor of consumer
Number of complaints resolved during the year In favor of Licensee
Others
2005-06 0 227 50 35 372006-07 105 278 149 74 632007-08 97 316 212 92 672008-09 42 322 195 62 712009-10 50 740 267 115 63
Electricity Ombudsman
Year Number of complaints pending at the beginning of
the year
Number of complaints Received during the
year
Number of complaints resolved during the year In favor of consumer
Number of complaints resolved during the year In favor of Licensee
Others
2005-06 0 8 - - 42006-07 4 12 - - 152007-08 1 54 - - 472008-09 8 51 - - 552009-10 4 56 17 13 32010-11 27 111 46 45 30
Commission has appointed an independent State Electricity Ombudsman.
Effectiveness of the Ombudsman Mechanism.
Projected, Approved and Actual ARR Comparison
Year 2009-10
Utility Actual Approved % DifferenceDGVCL 4,448 3,907 13.80%MGVCL 2707 2,349 15.23%PGVCL 5641 5,341 5.60%UGVCL 4498 4,107 9.50%
Regulatory Challenges :Tariff issues
Tariff Determination issues
Actual Performance Vs Regulatory norms – how
far to mitigate
Prudence Check – how far useful?
Consequences for disallowing amount of utilities
Income Tax as a pass through?
Delay in filing tariff petitions
Suo-moto proceedings for tariff process
Would suo-moto proceedings reduce tariff?
Regulatory Challenges : Competition
Introducing Parallel Licensees in one area Tariff ceilings may be set by regulator
Encouraging Open Access Cross subsidy
Subsidy to compensate full or partial revenue loss of existing licensee?
Existence of inter-category and intra-category cross subsidies Shortage of Supply State-of-the-Art Accounting System
Retail Business Vs Wire Business Competition in Retail and ownership of wire business
Distributed Generation: Promotion of RE sources
Has the Regulatory system been effective in service quantity and quality,
investment, productivity growth, costs and prices?
Has it helped foster a commercially viable industry?
Has it encouraged progress toward best-practice regulation and industry
reform?
What type of sector outcomes have occurred? Are they consistent with
outcomes envisaged by the Act(example increased access rates, investment, and
reduction in budget subsidies)?
Effectiveness of section 142 and sec 146 of EA 03 in ensuring compliance.
Limited regulatory resources (Lack of money, specialized & experienced staff )
Perception of consumers: Affordability vs Profit to Utilities
Regulatory Challenges: Regulatory Effectiveness
Some Solutions…
Harmonization of Regulations across SERCs
Need for Human Resources Development
De-regulation to some extent and promoting competition
No “Micro-management’ of Utility
Development of Regulatory Services – Cadre Posts
Financial independence of Regulatory commissions
