role of electricity regulatory commision

8/10/2019 Role of Electricity Regulatory Commision

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In this presentation

Overview

Legal/Policy framework

Regulatory framework

Regulatory scope/activities

Market Development - CERC

initiatives & impact

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OVERVIEW

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Sectoral Parameters

Unelectrified rural households (2001Census)

77.8 million

(57%)

Power Supply Position during July2010

- Energy shortages- Peaking deficit 8.3%12.1%

Generating plantsPLF (2009-10) AllIndia

77.53%

Generation performance (2009-10) 771 BUs(7.0 % growth over

corresponding period ofprevious year)

Cumulative High Voltage Transmissionlinks (220 KV and above) (upto April2010)

2,26,458 ckt km

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Installed Generation Capacity in India(as on 31.01.2011)

Total Installed Capacity(as on 31.01.2011)

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Installed Renewable Generation Capacity in India

(end December10)

6


Contributes 4% of total ElectricityGeneration

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70%

16%

5%8%

1%

Renewable Energy Installed Capacity (MW)

Wind Power

Small Hydro Power

Biomass Power

Bagasse Cogeneration

Waste to Power

Solar Power (SPV)

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Power Infrastructure in India

(as on 31.01.2011)


48%

31%

21%

State CENTRAL SECTOR PRIVATE SECTOR

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Ownership Status of Transmission

and Distribution Almost 100% of Electricity Transmission

in India is owned by public sector.

About 13 % of Electricity Distribution in

India is owned by private sector.

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Electricity Requirement 2031 - 32

8% 9%

Total Energy Requirement 3880 4806

Energy Requirement at Bus Bar 3628 4493

592 733

778 960

Billion kWh

Projected Peak Demand (GW)

Installed Capacity Requirement (GW)

GDP Growth Rate

Source: Integrated Energy Policy

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LEGAL/POLICY

FRAMEWORK

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Basic Legal Framework

Electricity a concurrent subject as per

Constitution of India.

Both Centre and States can legislate.

In case of repugnancy, Central

legislation prevails.

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Legal Framework under old laws

Regulatory authorities under IE Act, 1910 and E(S)Act, 1948

Central Government State Government CEA

SEB Central GovernmentPowers to fix capital ceiling for

TEC clearance etc.

State GovernmentPowers to grant licence etc. CEA TEC of generation projects, technical norms

etc.

SEB Several powers as main advisor of StateGovt.

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Legal Framework Contd

Regulatory authorities under ERC Act,1998

CERC

SERCs JERC

Objective distancing of Govt./Govt.organization from regulation.

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Legal FrameworkElectricity Act, 2003

Consolidates laws of electricity relating to generation,

transmission, distribution and trading of electricity.

Creates environment conducive for development of

electricity industry.

Introduction of competition.

Constitution of Central and State Regulatory

Commissions to rationalize electricity tariffs.

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Electricity Act 2003 -Key Features

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.

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Government

Formulation of

National Electricity Policy

Tariff Policy

National Electricity Policies on rural electrification.

Powers to issue directions to the Regulatory

Commissions on issues involving public

interest.

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National Electricity Policy

Total village electrification by year 2010

By year 2012 :

Per capita availability 1000 units.

Installed capacity over 200,000 MW.

Spinning reserves 5% .

Minimum lifeline consumption of 1 unit per household per

day.

Inter-regional transmission capacity 37,000 MW.

Energy efficiency/ conservation savings about 15%.

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Tariff Policy Mandates competitive procurement of power and

transmission servicestransitional window of 5 years period

given to public sector companies.

Encourage efficiency in operations by sharing of gains

between licensees and consumers. Promote Multi-Year Tariff (MYT) framework.

Encourage loss reduction Strategies.

Tariff design : Linkage of tariffs to cost of service

gradual reduction in cross subsidy (+/- 20% of average cost

of supply)

Progressive reduction in Cross-subsidy surcharge for open

access.12/8/2014 19CERC


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REGULATORY FRAMEWORK

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Regulatory Commissions

At the CenterCERC Powers to regulate centrally owned generating companies

and companies having composite scheme for generation and

sale of electricity in more than one State.

To regulate inter-State transmission/Trading.

In the StatesSERCs

Powers to regulate intra-State generation, transmission and

distribution.

CERC vis a vis SERCs

No hierarchical relationship. However, SERCs are to be

guided by the principles of tariff determination specified by

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Functions of CERC

Advisory Functions:

formulation of National electricity Policy and tariff policy;

promotion of competition, efficiency and economy in the activities of

the electricity industry;

promotion of investment in electricity industry;

any other matter referred to the Central Commission by the Central

Government

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Functions of SERCs determine the tariff for generation, supply, transmission and wheeling

of electricity, wholesale, bulk or retail within the State

regulate electricity purchase and procurement process of distribution

licensees

facilitate intra-State transmission and wheeling of electricity

issue licences for intra state transmission, distribution and trading.

promote co-generation and generation of electricity from renewable

sources of energy

adjudicate upon the intra-state disputes

specify or enforce standards with respect to quality, continuity and

reliability of service by licensees;

fix the trading margin in the intra-State trading of electricity

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Regulatory Commission - a quasi judicial body

Powers of Civil Court for the purposes of

inquiry or proceedings under the Act.

(Section 94)

Powers to impose penalty for non-

compliance of direction of Regulatory

Commissions.

Powers to adjudicate

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Accountability of Regulators

Annual Report to be laid before the Parliament.

Accounts of Regulatory Commissions to be

audited by CAG.

Appeal against the orders of Regulatory

Commissions to lie before the Appellate

Tribunal.

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Procedure for Regulations

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PROCEDURE FOR PETITIONS

PETITIONER RESPONDANTS

ARGUMENTS

ORDERSREVIEW

PROCEEDINGS

Appeal in

Appellate

Tribunal

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Appellate Tribunal Constitution of Appellate Tribunal consisting of Chairman,

three Members (Technical and Judicial) and one Member

with specialization in Petroleum Sector.

Appellate Tribunal to hear appeals against the orders of

CERC/SERC/PNGRB.

The appeal to Appellate Tribunal should be filed within 45

days of order issued by CERC/SERC/PNGRB.

Appeal against the orders of Appellate Tribunal to lie before

the Supreme Court within 65 days.

Appellate Tribunal considered necessary to-

Reduce litigation and delay in decisions through High Court.

Provide technical expertise in decision on appeals.12/8/2014 31CERC


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REGULATORY

SCOPE/ACTIVITIES12/8/2014 32CERC


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Generation

No requirement of licence. Full freedom to captive generation.

For hydro-generation clearance of CEA is necessary

due to concern of dam safety and inter-State issues.

Generation from Non-Conventional Sources / Co-

generation to be promoted. Minimum percentage of

purchase of power from renewables may be prescribed

by Regulatory Commissions.

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Trading/ Market development

Trading distinct activity permitted with licensing.

Regulatory Commission to specify technical

requirement, capital adequacy requirement and credit

worthiness for a trader.

Regulatory Commission may fix ceiling on trading

margin to avoid artificial price volatility.

The Regulatory Commission to promote development

of market including trading.

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Tariff

Regulatory Commissions to determine tariff for

Supply by Generating Company to distribution licensee

through long term contract. For short term contracts only

minimum and maximum ceiling of tariff.

Transmission of electricity.

Wheeling of electricity

Retail sale to consumers by Licensee.

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Market Development - CERC initiatives

Regulations on

Short-term Open Access

Grant of Connectivity, Long-term Access and Medium-

term Open Access in inter-State Transmission.

Grant of Regulatory Approval for execution of Inter-State

Transmission Scheme to CTU

Transmission Pricing

Power Market

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CERC initiatives Special Features of CERC regulations on short-term open

access

Timelines for concurrence of SLDC in case use of

intra-State system is involved

Provision of deemed concurrence if SLDC does not

decide within above timelines.

SLDC to look at only two aspects:

existence of metering infrastructure, and

availability of surplus transmission capacity in the

State network.

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CERC initiatives Features of CERC regulations on Grant of Connectivity,

Long-term Access and Medium-term Open Access in inter-

State Transmission

Enabling transmission products of different varieties, standardization of

procedures, defining time lines and ensuring level playing field among

different categories of market players.

Introduced medium-term Open Access to inter-State grid - for a period

ranging from 3 months to 3 years.

New regulatory provisions for seeking connectivity to grid.

Discrimination between public and private sector generators on

connectivity to grid, abolished.

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CERC initiatives

Regulations on Grant of Regulatory Approval for executionof Inter-State Transmission Scheme to Central

Transmission Utility

This is to facilitate network expansion keeping in view

the anticipated transmission needs without the

requirement of prior agreement with the beneficiaries

CERC has granted approval for investment (of about Rs.

58000 Cr. ) to CTU for nine high capacity transmission

corridors.

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CERC initiatives

Regulations on Sharing of Inter State Transmission

Charges and Losses

National transmission tariff framework in line with

vision of tariff policy.

Sensitive to direction, distance and quantum;

Addresses short-comings of existing system like

pan-caking of charges, sharing of charges not

being fully sensitive to distance and direction,

pricing not efficient enough to address emerging

market requirements.12/8/2014 42CERC


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CERC initiatives

Power Market Regulations

Provide a road map for development of power

market

Define roles of various players in the market

and phases of introduction of

products/contracts.

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Volume of Open Access transactions

(inter-State transmission)

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Market Development- Impact

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

11.8514.19 15.02

20.96 21.92

26.82

2.77

7.09

Volume(BUs)

Electricity Transacted by Trading Licensees Electricity Transacted by Power Exchanges

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Investment promotion:

CTU has received 225 applications from privatedevelopers for Long Term Open Access amounting to

1,62,898 MW

Phase 1: 42,108 MW (LTOA granted to 43 applicants )

Bank guarantee of 875 Cr given by developers andBPTA signed Geographical locations

Pit-head coal Orissa, Chhattisgarh, Jharkhand Coastal with port facilities - Andhra Pradesh, Tamil

Nadu Hydel sitesSikkim

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MarketDevelopment-Impact

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Grid discipline - IEGC

IEGC and UI regulations amended to ensure greater griddiscipline .

Operational frequency band tightened from 50.3 Hz

to 49.2 Hzto 50.2 to 49.5 Hz.

This is aimed at ensuring better performance of

generating stations and user appliances.

All users of inter-State grid including distribution

utilities will also now be directly responsible for griddiscipline and load management, in addition to

SLDCs.

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Grid Discipline - Restructured UI mechanism UI regulations amended to send a message that UI mechanism should not be

used as a trading tool

Underdrawls and over injections beyond the permissible quantities,

disincentivised and priced at lower rates

in order to push more electricity to organized electricity markets and

to further discourage use of UI mechanism for sale of electricity,

Additional UI charge of 40% on the normal UI rate (Rs. 8.73 per unit),

applicable at grid frequency below 49.5 Hz instead of 49.2 Hz

to more effectively curb the tendency of some states to heavily

overdraw

Additional UI rate has been made 100% on overdrawals when grid

frequency is below 49.2 Hz

to put further exemplary deterrent on overdrawls

Improvements in grid frequency profile subsequent to CERC regulation on IEGC

and UI

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Improvement in Grid profile

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0

10

20

30

40

50

60

70

80

90

100

1 6 11 16 21 26

Percentage

Day

NEW Grid Fequency Profile April 10- May10

Frequency Profile in May10 ( 49.5-50.2)

Frequency Profile in April10 ( 49.5-50.3)

Frequency Profile in June10 ( 49.5-

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Grid discipline - constraints

Disconnection almost impossible in meshed system

Centre-State issues

J&K defaulting in UI payments, difficulties in

disconnection.

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Thank Youwww.cercind.gov.in

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