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MERC has invited comments and suggestions on its proposed amendment to the Maharashtra Electricity Regulatory Commission (Distribution Open Access) Regulations, 2016.

With increasing cost of supply and falling prices of renewable energy based generation sources, sales migration on account of open access and captive consumption is expected to continue and increase. This has significant impact on the operations, planning and finances of the distribution company. At the same time, consumers who avail open access also face several challenges such as procedural delays and uncertainty regarding the nature and extent of various charges being levied.

Given the flux in the sector, it is extremely important to formulate a clear set of rules and regulations that will guide and channelise this process while protecting the interests of both, the distribution companies (and hence that of its regulated consumers) and the open access consumers.

In this regard, the proposed amendments is a welcome initiative and an opportunity to provide a way forward to address the issues being faced by licensees, generators and consumers. Prayas (Energy Group)’s comments and suggestions in this matter highlight areas where more clarity is needed to ensure smooth implementation and also suggest some additional changes that can be made to safeguard the interests of the DISCOM while broadening and deepening electricity markets.

The Tamil Nadu Electricity Regulatory Commission issued draft guidelines on the procedure for verification of the status of captive generating plants in accordance to requirements in Rule 3 of Electricity Rules 2005. In the guidelines the Commission has clearly outlined the process for verification of status and has also suggested that the TANGEDCO launch a web-portal to manage the process of verification in a transparent manner. While we welcome the initiative of the Commission to streamline the processes for verification, there are some provisions where there is lack of clarity. Given that the number of captive users has increased significantly in the state, there could be impacts on regulated consumers and cash strapped DISCOMs as well.  Thus, there is also a need to monitor and analyse key trends in the captive power market in the state. In line with all these observations and concerns we made the following comments:

  • Clarity is required on applicability of guidelines in case of captive generating plants with users outside the state or captive consumers obtaining power from generators in other states. This is especially a concern with respect to the process for verification of captive consumption outside the state for such plants and jurisdiction in case of dispute resolution.
  • Whether the consumption considered for captive status verification includes transmission and distribution losses or is based on the final energy received by the consumers must be clarified.
  • Commission must mandate the web portal to track compliance, consumption, generation and status of captive plants.
  • The web portal must track information related to type of captive generator, captive consumer/s, and data related to captive generation, captive consumption, consumption deemed as open access sale in case of loss in captive status, transmission and wheeling charges paid, payment of penalties and shareholding patterns and changes in them.
  • DISCOMs should publish quarterly reports that include relevant data related to all captive generating plants. 

The Ministry of Power published the draft guidelines for short-term sale of power through tariff-based bidding process on the 6th of March 2019 for public consultation.Revision of the short-term bidding guidelines is a much needed exercise and we welcome the Ministry of Power’s proposal to permit open access consumers to participate in DEEP.

In order to ensure specific requirements are catered to and to ensure less information asymmetry, we propose an e-bidding system where both buyers and sellers can initiate events and both parties can participate in each other’s events. In addition, we also suggest that:

  • A model short-term Power Purchase and/or Power Supply Agreement is published after due public consultation.
  • Information on bids and events be published on the e-bidding portal continuously in an easily accessible format.
  • There is clarity in the guidelines to prevent unnecessary legal disputes and implementation issues
  • The clauses on regulatory approval for short-term power procurement by DISCOMs in the existing guidelines be retained.
  • Guidelines should specify that regulators should mandate all DISCOMs to procure short-term power only through the e-bidding platform or power exchanges to encourage transparent and competitive bidding practices.
  • The guidelines should also specify mechanisms for market monitoring.

Tuesday, 02 April 2019 16:48

100% rural electrification is not enough

This is a short opinion piece on the steps to be taken after providing electricity connections to all households. While appreciating the efforts in providing connections, we highlight the importance of providing affordable supply and good service to consumers, especially the rural poor. A version of this article appeared in the Hindu Business Line on 27th of March, 2019.

Indian electricity sector has been in a state of flux from 1990s, when the reforms started with the entry of private power projects. The Enron power project and Odisha state reforms that followed have thrown up many controversial issues. The Electricity Act 2003, prepared with the reform spirit initiated another major policy upheaval in the sector. Today, Electricity Regulatory Commissions are operational in all the states. With all villages electrified and nearly all households connected to the grid, the demand now is for quality power supply. The whole country is connected to one national grid. Renewable energy is no more on the side-lines, and is expected to be a significant source of power. We are witnessing the entry of many new players, introduction of open access and a movement towards cost based tariff. The trend is towards an increasing role of private sector and markets under a regulatory regime. 

A public-spirited citizen, who wishes to respond to this flux and participate in the policy and regulatory processes, is faced with too many new issues. A basic understanding of the technical and economic aspects of the sector is necessary to gain a foothold. An insight into the policy, planning and regulatory processes, along with an appreciation of their linkages with the technical and economic issues, is essential to equip oneself for meaningful engagement with the sector.

This 3rd Revised Edition of the primer, giving a comprehensive macro perspective of the Indian electricity sector, is part of our attempts to assist such citizens in their efforts.

The electronic version of the Primer will be uploaded soon.

The RERC published the Draft Rajasthan Electricity Regulatory Commission Terms and Conditions for Determination of Tariff) Regulations, 2019 for public comments and suggestions. PEG submission on the draft regulations to be applicable for the control period FY 2019-20 to FY 2023-24 focuses on the following key issues:

  • MYT process, frequency of tariff revision.
  • Mechanism for gain and loss sharing, definition of controllable and uncontrollable factors.
  • Principles for determination and escalation of operations and maintenance related costs.
  • Compliance with the revised environmental norms and regulations along with data formats for easy monitoring of the same.
  • Comments and suggestions for determining fuel price for thermal projects based on captive coal mines.
  • Comments and suggestions for better demand estimation and power procurement planning in the face of uncertainties.
  • Improved energy accounting in order to estimate losses more efficiently, especially with increase in sales migration, proliferation of distribution franchises and short term/renewable energy procurement.
  • Price cap and regulatory vetting of fuel surcharge.
  • Data formats on power procurement, sales migration, subsidy and fuel surcharge to improve transparency and accountability.

Submission is attached below.

CERC staff published a discussion paper ‘Market Based Economic Dispatch of Electricity (MBED): Re-designing of Day-Ahead Market (DAM) in India’ on the 31st of December for public comments.
While there is a need for optimal scheduling, Prayas (Energy Group)’s comments and suggestions on the paper highlight a number of areas where more clarity is needed and detail certain gaming possibilities as well as implementation issues.
The proposal outlined in the CERC staff paper for Market Based Economic Dispatch needs further analysis especially to ensure:

  1. Estimation of potential savings based on multiple studies
  2. Assessment of potential risks to DISCOMs, generators and grid users, especially with respect to fuel sector uncertainties, various potential bidding and gaming strategies by generators and changes due to applicable transmission charges. Before implementing this proposal, mechanisms to address potential risks should also be detailed.
  3. Analysis of legal and institutional changes needed to operationalise this mechanism and implications of the same, particularly in the context of power procurement, the role and powers of market monitoring institutions and load dispatch centers.

The changes proposed in the paper are fundamental and need to be implemented cautiously and slowly. However, in the intervening period, several steps, which require limited legal and institutional changes, could be implemented to avoid loss of many crucial years in moving towards market based operations and improving efficiency. Thus, urgent action on the issues listed below is imperative.

  1. Implementing  gate closure
  2. Instituting mechanisms to ensure automatic sale of unrequisitioned power in power exchanges
  3. Creating a nodal trading agency for the sale of unrequisitioned power
  4. Broadening and deepening the scope of transparent, bilateral, short-term and medium-term trades of DEEP
Friday, 22 March 2019 18:19

The Percentage Problem

Transmission and Distribution loss (T&D) and Aggregate Technical and Commercial (AT&C) loss are both crucial metrics used to assess the health of the power sector.

Not considering challenges due to poor interface and consumer metering, there are significant variations in loss estimates depending on the methodology used for calculating losses.

The estimation methodologies used in many states do not consider energy as handled by the system, especially to account for the following recent trends:

  • Energy required to meet open access and off-site captive demand
  • Treatment of sale to  consumers in distribution franchisee areas
  • Energy input in the inter-state transmission network as well as the distribution network due to renewable energy generators, net metered consumers, etc.

Using a spread-sheet based tool, developed by Prayas, Energy Group called Calculating Loss and Energy Accounting in Regulatory practice (CLEAR), this paper, by comparing methodologies shows that there could potentially be a variation in losses calculated up to 4 percentage points.

Such stark variations call for a disaggregated and standardised approach to estimating T&D losses. Only then will efforts such as fixing trajectories for loss reduction in the regulatory process, comparing performance of DISCOMs across years and across states, and charting the progress of programmes like UDAY and IPDS that use these metrics be meaningful.

The report and the calculator can be downloaded from the links given below.

CLEAR works best with Microsoft Excel 2010 and above.

Friday, 08 March 2019 17:22

Whose T&D loss is it anyway?

The Transmission and Distribution (T&D) loss and the Aggregate Technical and Commercial (AT&C) loss are often quoted metrics to assess the health of the electricity distribution sector.Given the methodological discrepancies in the calculation of these losses, there is need for a model methodology. In this context, PEG wrote an article which was published by Hindu Business Line on February 27, 2019.

Prayas (Energy Group) organised a two-day training workshop at YASHADA in Pune on 11 and 12 February, 2019. The objective of the workshop was to provide a comprehensive overview of the Indian electricity sector and to introduce the upcoming challenges in its operation and planning. The workshop was attended by more than 40 participants working in the electricity sector- generation and distribution companies, regulatory commissions, trade unions, NGOs, policy think tanks, and consumer activists - representing around 8 states in India.

The workshop was aimed at helping the participants and researchers to improve the quality of their regulatory and policy engagement. Sessions were based on the recent work of Prayas, including the following:

More details about the event, like agenda, participant list and presentations can be downloaded from below.

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