LEGAL FRAMEWORK, POLICIES AND LEGAL FRAMEWORK, POLICIES AND REGULATIONS AND ORGANIZATIONAL REGULATIONS AND ORGANIZATIONAL

SET UP IN INDIASET UP IN INDIA

-Dr. Aditi Raja-Dr. Aditi RajaDirector, Finance , KPTCLDirector, Finance , KPTCL

5.7.20115.7.2011

CONSTITUTION OF INDIACONSTITUTION OF INDIA

• ARTICLE 246(2)ARTICLE 246(2)

• LIST 3 OF SEVENTH SCHEDULELIST 3 OF SEVENTH SCHEDULE

• CONCURRENT SUBJECTCONCURRENT SUBJECT

• CENTRAL GOVERNMENT HAS PRE-CENTRAL GOVERNMENT HAS PRE-EMPTIVE POWERS IN CASE OF A EMPTIVE POWERS IN CASE OF A CONFLICTCONFLICT

EARLY LEGISLATIONEARLY LEGISLATION

• INDIAN ELECTRICTY ACT, 1910INDIAN ELECTRICTY ACT, 1910

• ELECTRICITY SUPPLY ACT,1948ELECTRICITY SUPPLY ACT,1948

• AMENDMENTS TO THESE ACTSAMENDMENTS TO THESE ACTS

EARLY ORGANIZATIONAL EARLY ORGANIZATIONAL LOGICLOGIC

• ELECTRICITY IS A NATURAL MONOPOLYELECTRICITY IS A NATURAL MONOPOLY• VERTICAL INTEGRATION OF THE VERTICAL INTEGRATION OF THE

SECTOR ESSENTIALSECTOR ESSENTIAL• CO-ORDINATION REQUIRED THROUGH CO-ORDINATION REQUIRED THROUGH

A STRONG BODYA STRONG BODY• ECONOMIES OF SCALE TO BE ECONOMIES OF SCALE TO BE

CAPTUREDCAPTURED• PUBLIC OWNERSHIP BESTPUBLIC OWNERSHIP BEST

MODIFIED MODIFIED ORGANIZATIONAL LOGICORGANIZATIONAL LOGIC

• SCALE ECONOMIES NO LONGER REQUIREDSCALE ECONOMIES NO LONGER REQUIRED

• CO-ORDINATION CAN BE BETTER DONE BY CO-ORDINATION CAN BE BETTER DONE BY THE MARKETTHE MARKET

• REGULATION SHOULD BE THROUGH REGULATION SHOULD BE THROUGH PERFORMANCE INCENTIVESPERFORMANCE INCENTIVES

• EFFICIENT CONSUMPTION WILL BE EFFICIENT CONSUMPTION WILL BE PROMOTED AUTOMATICALLYPROMOTED AUTOMATICALLY

• PUBLIC, PRIVATE AND PUBLIC-PRIVATE PUBLIC, PRIVATE AND PUBLIC-PRIVATE OWNERSHIP POSSIBLEOWNERSHIP POSSIBLE

STEPS FOR FURTHER STEPS FOR FURTHER LEGISLATIONLEGISLATION

• GOVERNMENT OF INDIA GOVERNMENT OF INDIA RESOLUTION-POLICY ON PRIVATE RESOLUTION-POLICY ON PRIVATE PARTICIPATION IN THE POWER PARTICIPATION IN THE POWER SECTOR, 1991SECTOR, 1991

• MEGA POWER POLICY,1995MEGA POWER POLICY,1995

• COMMON MINIMUM NATIONAL COMMON MINIMUM NATIONAL ACTION PLAN FOR POWER,1997ACTION PLAN FOR POWER,1997

IN THE CENTREIN THE CENTRE

• CENTRAL GOVERNMENT OVERALL POLICY CENTRAL GOVERNMENT OVERALL POLICY MAKER FOR THE COUNTRYMAKER FOR THE COUNTRY

• MINISTRY OF POWER AT THE HELM OF MINISTRY OF POWER AT THE HELM OF AFFAIRSAFFAIRS

• EXISTENCE OF A CENTRAL ELECTRICITY EXISTENCE OF A CENTRAL ELECTRICITY AUTHORITYAUTHORITY

• LARGE FINANCIAL INSTITUTIONS AT THE LARGE FINANCIAL INSTITUTIONS AT THE CENTRECENTRE

• LARGE GENERATION AND TRANSMISSION LARGE GENERATION AND TRANSMISSION BODIESBODIES

IN THE STATESIN THE STATES

• MONOLITHIC UTILITIES BROKEN MONOLITHIC UTILITIES BROKEN DOWN DOWN

• DEGREE OF AUTONOMY VARIESDEGREE OF AUTONOMY VARIES

• PRIVATE SECTOR VERY ACTIVEPRIVATE SECTOR VERY ACTIVE

• LOAD DESPATCH CENTRES LOAD DESPATCH CENTRES DEVELOPED AS INDEPENDENT UNITSDEVELOPED AS INDEPENDENT UNITS

• EVEN BEFORE THE ELECTRICITY ACT EVEN BEFORE THE ELECTRICITY ACT FORMALLY CAME INTO FORMALLY CAME INTO EXISTENCE…….EXISTENCE…….

STEPS TOWARDS RESTRUCTURING STEPS TOWARDS RESTRUCTURING

OF EXISTING UTILITIESOF EXISTING UTILITIES

• DE-INTEGRATE SEBs INTO DE-INTEGRATE SEBs INTO GENERATION, TRANSMISSION AND GENERATION, TRANSMISSION AND DISTRIBUTIONDISTRIBUTION

• FURTHER DE-INTEGRATE EACH OF FURTHER DE-INTEGRATE EACH OF THESE UNITSTHESE UNITS

• OWNERSHIP TO BE MODIFIEDOWNERSHIP TO BE MODIFIED

• REGULATION TO BE INTRODUCED AS REGULATION TO BE INTRODUCED AS A SURROGATE FOR COMPETITIONA SURROGATE FOR COMPETITION

ELECTRICITY ACT, 2003ELECTRICITY ACT, 2003

• COMPETITION IS THE BUZZ WORDCOMPETITION IS THE BUZZ WORD• OPEN ACCESSOPEN ACCESS• INDEPENDENT LOAD DESPATCH CENTRESINDEPENDENT LOAD DESPATCH CENTRES• PRIVATE TRANSMISSION LICENSEESPRIVATE TRANSMISSION LICENSEES• EMPAHSIS ON RURAL ELECTRIFICATIONEMPAHSIS ON RURAL ELECTRIFICATION• DECENTRALIZED MANAGEMENT OF DECENTRALIZED MANAGEMENT OF

DISTRIBUTIONDISTRIBUTION• ATTENTION TO EFFICIENCYATTENTION TO EFFICIENCY• THEFT TO BE CURTAILEDTHEFT TO BE CURTAILED

LEGISLATIONLEGISLATION

• ELECTRICITY ACT,2003ELECTRICITY ACT,2003

-NATIONAL ELECTRICITY POLICY-NATIONAL ELECTRICITY POLICY

-NATIONAL TARIFF POLICY-NATIONAL TARIFF POLICY

-RURAL ELECTRIFICATION POLICY-RURAL ELECTRIFICATION POLICY

-GUIDELINES AND REGULATIONS CAN -GUIDELINES AND REGULATIONS CAN BE ISSUED BY THE CERC AND STATE BE ISSUED BY THE CERC AND STATE ERCsERCs

RELEVANT PROVISIONSRELEVANT PROVISIONS

• SEC 11-IN CONJUNCTION WITH SEC 40cSEC 11-IN CONJUNCTION WITH SEC 40c

• SEC 39-TRANSMISSION AGENCY SEC 39-TRANSMISSION AGENCY SHOULD NOT TRADE SHOULD NOT TRADE

• SEC 65-SUBSIDYSEC 65-SUBSIDY

• SEC 135- THEFT OF ELECTRICITYSEC 135- THEFT OF ELECTRICITY

• SEC 150-ABETMENTSEC 150-ABETMENT

• SEC 178-IN CONJUCTION WITH SEC SEC 178-IN CONJUCTION WITH SEC 28(4)28(4)

LOAD DESPATCH CENTRESLOAD DESPATCH CENTRES

• SEC 26 FOR SETTING UP LDC AT CENTRE.SEC 26 FOR SETTING UP LDC AT CENTRE.

• SEC 27 FOR SETTING UP REGIONAL LDCs. SEC 27 FOR SETTING UP REGIONAL LDCs.

• SEC 28 FUNCTIONS OF REGIONAL LAOD SEC 28 FUNCTIONS OF REGIONAL LAOD DESPATCH CENTRES ( SUB-SEC 4 OF DESPATCH CENTRES ( SUB-SEC 4 OF PARTICULAR IMPORTANCE) PARTICULAR IMPORTANCE)

• SEC 31 LDCs IN THE STATEsSEC 31 LDCs IN THE STATEs

• SEC 32 FUNCTIONS OF LDC IN THE STATEsSEC 32 FUNCTIONS OF LDC IN THE STATEs

NATIONAL ELECTRICITY NATIONAL ELECTRICITY POLICYPOLICY • ACCESS TO ELECTRICITY TO ALL ACCESS TO ELECTRICITY TO ALL

HOUSEHOLDSHOUSEHOLDS• AVAILABILITY OF POWER FOR PEAK LOADSAVAILABILITY OF POWER FOR PEAK LOADS• ENHANCING PER CAPITA AVAILABILITYENHANCING PER CAPITA AVAILABILITY• FINANCIAL TURNAROUND OF THE SECTORFINANCIAL TURNAROUND OF THE SECTOR• CONSUMER INTERESTS TO BE PROTECTEDCONSUMER INTERESTS TO BE PROTECTED• RURAL ELECTRIFICATION IMPORTANTRURAL ELECTRIFICATION IMPORTANT• ENERGY CONSERVATIONENERGY CONSERVATION• INDEPENDENCE OF LOAD DESPATCH INDEPENDENCE OF LOAD DESPATCH

CENTRESCENTRES

INDEPENDENCE OF LOAD INDEPENDENCE OF LOAD DESPATCH CENTRESDESPATCH CENTRES

• RING FENCING OF THE LDCsRING FENCING OF THE LDCs

• INDEPENDENCE TO LDCsINDEPENDENCE TO LDCs

• CREATION OF NATIONAL LOAD CREATION OF NATIONAL LOAD DESPATCH CENTREDESPATCH CENTRE

• FORMATION OF POSOCO (POWER FORMATION OF POSOCO (POWER OPERATION SYSTEM COMPANY)OPERATION SYSTEM COMPANY)

BIRTH OF POSOCOBIRTH OF POSOCO

• RLDCs AND SLDCs WERE SET UP UNDER RLDCs AND SLDCs WERE SET UP UNDER THE UNIFIED LOAD DESPATCH AND THE UNIFIED LOAD DESPATCH AND COMMUNICATIONS PROJECT.COMMUNICATIONS PROJECT.

• NATIONAL LOAD DESPATCH CENTRE NATIONAL LOAD DESPATCH CENTRE (NLDC) CONSTITUTED IN 2009(NLDC) CONSTITUTED IN 2009

• POSOCO CREATED BY MERGING NLDC POSOCO CREATED BY MERGING NLDC WITH THE RLDCs in March 2010WITH THE RLDCs in March 2010

• CERC REGULATORY COMMISSION (FEES CERC REGULATORY COMMISSION (FEES AND CHARGES OF REGIONAL DESPATCH AND CHARGES OF REGIONAL DESPATCH CENTRE AND OTHER RELATED MATTERS) CENTRE AND OTHER RELATED MATTERS) REGULATIONS, 2009.REGULATIONS, 2009.

NATIONAL TARIFF NATIONAL TARIFF POLICYPOLICY • EMPAHSIS ON COMPETITIONEMPAHSIS ON COMPETITION• PROMOTE INVESTMENT IN THE SECTOR PROMOTE INVESTMENT IN THE SECTOR • CAPTIVE GENERATION TO BE CAPTIVE GENERATION TO BE

ENCOURAGEDENCOURAGED• MULTI YEAR TARIFFMULTI YEAR TARIFF• TWO PART TARIFFTWO PART TARIFF• ALL POWER PURCHASE COSTS TO BE ALL POWER PURCHASE COSTS TO BE

LEGITIMATELEGITIMATE• OPEN ACCESSOPEN ACCESS• CDM BENEFITS TO BE TAKENCDM BENEFITS TO BE TAKEN

RURAL ELECTRICFICATION RURAL ELECTRICFICATION POLICYPOLICY

• COMMON MINIMUM PROGRAMMECOMMON MINIMUM PROGRAMME

• LAUNCH OF RAJIV GANDHI LAUNCH OF RAJIV GANDHI VIDYUTIKARAN YOJNAVIDYUTIKARAN YOJNA

• CREATION OF REDB, VEI AND DDBCREATION OF REDB, VEI AND DDB

• LOCAL INVOLVEMENT IN RURAL LOCAL INVOLVEMENT IN RURAL ELECTRIFICATION TO BE ELECTRIFICATION TO BE ENCOURAGEDENCOURAGED

REGULATIONSREGULATIONS

• SEC 178 OF ELECTRICITY ACT SEC 178 OF ELECTRICITY ACT PERMITS CERC TO ISSUE PERMITS CERC TO ISSUE REGULATIONSREGULATIONS

• SEC 181 OF ELECTRICITY ACT SEC 181 OF ELECTRICITY ACT PERMITS STATE ERCs TO ISSUE PERMITS STATE ERCs TO ISSUE REGULATIONSREGULATIONS

• SEC 110-APPELLATE TRIBUNAL FOR SEC 110-APPELLATE TRIBUNAL FOR ELECTRICITYELECTRICITY

THANK YOU THANK YOU

Doubts!Doubts!