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In a
bid to improve the functioning of electricity
regulatory commissions (ERC), the Planning
Commission has mooted an exclusive
first-of-its-kind state-wise ranking system of
these regulatory bodies based on their efficiency.
Speaking at a function organised by the NGO ‘CUTS
International’ on Saturday, Planning Commission
deputy chairperson Montek Singh Ahluwalia said “It
is important to have a comparative assessment of
ERCs. The CII (Confederation of Indian Industry)
or any independent body should rank ERCs on basis
of their efficiency and quality of their
decisions.”
So
far, only state electricity boards and electricity
distribution companies have been ranked, and that
too by some private magazines. However, there is
no ranking system in the country for ERCs.
Industry officials said such a ranking will also
indicate the progress made by the state in the
power sector. It will also help in attracting more
investments to those states where ERCs function in
an independent and autonomous manner, and not as a
mere extension of the state governments, they
said.
Supporting the Planning Commission proposal,
Central Electricity Regulatory Commission
chairperson Pramod Deo told FE “It is important
that the ranking be done by an independent body
that commands respect. May be it can be done by an
Indian Institute of Management (IIM) or an NCAER
(National Council for Applied Economic
Research)-type body or even the Planning
Commission. But the methodology has to be
transparent and they can consult the ERCs
themselves to finalise the parameters.”
Deo
said the parameters of ranking can include the
various charges paid by the consumer to get open
access (the lesser per unit of electricity, the
better), the cross-subsidy surcharges, the rates
of green power and multi-year tariff.
V
Raghuraman, principal advisor and chief
coordinator (energy, environment & natural
resources), CII told FE that the planning
commission’s study should include sub-categories
like the ability to reduce transmission and
distribution losses as well as the enabling
conditions that they have created for the states
to achieve the power generation capacity as
envisaged in their plans.
He
said the populist measures of state governments,
including providing free power, besides increasing
transmission and distribution losses and lack of
transparency in functioning have turned the State
Electricity Boards from being bankable to
bankrupt. “More investments will flow into those
states where regulation is on right lines and is
predictable. Many states are not following central
guidelines,” he added.
A
senior official in an electricity regulatory body
told FE on condition of anonymity that most of the
reforms in the power sector, like allowing open
access in inter-state transmission and
discontinuation of exclusive power purchase
agreements and encouraging private sector
participation, have to be done at the state level.
“At
the moment, SERCs have no independence. Their
annual report goes to the state assembly. The
states have the power to give them policy
directions. Also, in several states there are no
funds for SERCs to empower them to function in an
autonomous manner. Therefore, the states should be
blamed for the present condition,” the official
said.
A
study by CUTS International says the independent
functioning of ERCs is hampered by the lack of
financial autonomy as many of these bodies have
not exercised the right given to them by the
Electricity Act 2003 to generate revenues by
levying license fees and regulation fees. Besides,
they are unable to attract the best experts in the
field due to the government-imposed caps on the
salaries of the ERC officials, the study found.
Though
the Act provides for selection of regulators
within a stipulated period of time by an
independent committee and gives immunity to all
the members of ERCs from removal (except when
found guilty in acts of misconduct), several
states have disregarded the norms. In many
instances, either there are vacancies for a long
period of time or appointments to the ERCs are
politically motivated and not on the basis of
merit, the study found.
As a
result, ERCs are forced to remain as “mute
bystanders” while several state governments force
distribution companies (discoms) to provide free
power. On many occasions, states have violated the
norms of the Electricity Act that asks states to
shell out subsidy amounts in advance to discoms,
the study says.
Pradeep S Mehta, secretary general, CUTS
International, said “ERCs should make use of
provisions of financial autonomy to leverage
functional autonomy.”
He
added that appointment of regulators should be
neutral and based on merit.
“Also,
ERCs can be faulted for not making adequate
efforts for capacity building and disseminating
the required regulatory information,” according to
the study
This news item can also be viewed at:
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