Regulatory process to enhance transparency
and accountability: examples from India
Bishkek, September 2011
Presentation
By
Prayas Energy Group, India
www.prayaspune.org/peg
Prayas Energy Group, India
About Prayas …
www.amulya-reddy.org.in
‘Prayas’ means
‘Focused Effort’
Based at Pune, India
Research based, policy Focus on protection of
advocacy Voluntary
“Public Interest” in
Org.
electricity sector
Activities:
• Research & intervention (regulatory, policy)
• Civil Society training, awareness, and support
Prayas Energy Group, India
2
Interaction Plan
• Objective : Share examples from India about how
regulatory process can enhance transparency and
accountability
• Interaction Plan
– Overview
• Regulatory framework
• Key transparency and public participation spaces
– Case 1 – Reduction of ‘system losses’
– Case 2 – Managing load shedding
– Lessons
Prayas Energy Group, India
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Regulatory Framework in India
• Central Commission
– One at central level
– Regulates mainly interstate generation and
transmission issues
– Tariff of central public
sector companies
(Generation and
Transmission)
– Regulation of power
exchanges
• State Commissions
– One for each state
– Regulates intra-state
generation, transmission
and distribution
– Decides power purchase
and tariff of all state
distribution companies
– Determines consumer
tariff and service quality
parameters
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Key transparency and public participation spaces
– Consumer Tariff Revision Process
Step 1: Application by
company
• Details of cost
• Proposed tariff structure
Step 2: Preliminary scrutiny • Check procedural compliance and completeness
of the application
by commission
Step 3: Technical Validation
Session
• Consistency of information Demand additional
data, Consumer representatives participation
Step 4: Public notice and
• Information dissemination, all data available at
six locations, website, local language summary
availability of all documents
Step 5: Public hearings at six • Commission hears objections and suggestions
from consumers and utility’s response
locations
Step 6: Tariff order issued by • Proposal, public comments, company response,
commissions analysis and decision
commission
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Key transparency and public participation spaces
• Consumers can file petitions / cases before regulatory
commission
– Non-compliance with commissions orders
– Exposing utility inefficiency
• Public hearings on important matters
– Issue of license
• Appointment of consumer representatives
• Consumers can file / participate in appeals against regulatory
commission
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Case 1 – System loss reduction
System losses - Technical and non-technical
energy losses (theft, slow meters etc.) in
transmission and distribution of electricity
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System Loss Reduction - Context
• Utilities estimate ‘System losses’
‘System losses’ = Generation (energy input) – Metered Sales –
Estimated agricultural consumption
• Understatement of ‘system losses’ - No transparency about
commercial losses, theft etc.
60%
% of Energy Available
50%
40%
30%
20%
10%
0%
1975
1980
1985
T&D loss
1990
Agri.
1995
2000
Unmetered Share
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System Loss Reduction – Exposing high losses
• Utility’s first tariff revision proposal before the commission –
claimed ‘system losses’ of 18%
• Technical validation sessions and public hearings revealed
– Utility was using ‘selective data’ to understate ‘system losses’
and overstate agricultural consumption
• Utility was ordered to use correct sampling methods and restate ‘system loss’
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System Loss Reduction – Exposing high losses
60%
% of Energy Available
50%
40%
30%
20%
10%
0%
1975
1980
1985
T&D loss
1990
Agri.
Prayas Energy Group, India
1995
2000
Unmetered Share
10
System Loss Reduction
Implications of 40% system loss
• Need for tariff increase due to huge system losses was
established
• Huge media coverage and public debate about need to reduce
theft and improving metering
• Forced regulator to set targets for reduction in ‘system losses’
• Increased transparency and data made available to public
• Enabled utility to initiate remedial measures (metering
improvements, penal actions against employees and
consumers)
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System Loss Reduction : Increase in data and
accountability
Circle
% Distribution loss
Aurangabad (U)
FY 2007-08
40.26%
28.20%
22.55%
35.96%
41.31%
28.73%
FY 2008-09
36.59%
27.14%
22.98%
31.52%
28.75%
24.26%
Aurangabad [R]
39.81%
31.12%
Hingoli
56.45%
39.13%
Akola
Amrawati
Buldhana
Washim
Yeotmal
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System Loss Reduction : Slow but significant
achievement
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Case 2 – Managing Load Shedding
Load shedding – Curtailing supply
(planned black out) to manage
supply deficit
Prayas Energy Group, India
Managing Load Shedding : Context
• Since 2004 shortages started increasing
• Utility resorted to load shedding in ad-hoc manner and
to protect it’s revenue
• Growing public unrest
– Street agitations
– Litigation in High Court
– Consumers raising this issue during commissions public hearing
• Regulatory commission mandated to evolve nondiscriminatory, transparent protocol for load shedding
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Managing Load Shedding : Commission Order
• In 2005, Commission issued order specifying load
shedding protocol
• Order issued after public hearings at six places
• Order specified
– Hours of load shedding for each area
– Load shedding proportional to level of ‘system losses’ and
revenue recovery in each area
– Utility to widely publish schedule of load shedding and any
changes thereto.
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Managing Load Shedding: Increased
Transparency and Accountability
• Several petitions and court cases when utility tried to change
load shedding protocol
• Significantly increased public interventions in the load
shedding hearings before commission and higher authorities
• Commission’s approach upheld by higher courts
• Continuously increasing transparency about supply
availability, plant performance as well as demand on the
system
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Managing Load Shedding: Transparency and
Accountability
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Managing Load Shedding: Transparency and
Accountability
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Managing Load Shedding: Outcome of increased
Accountability and Transparency
• Utility forced to undertake load shedding in nondiscriminatory manner
• Increased pressure on utility to increase power purchase and
tie-up supplies
• Created incentive for loss reduction
• Prevented un-managable public unrest and helped addressing
the crisis in peaceful manner
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Lessons
• Regulatory process can significantly further
transparency and accountability
• Increased transparency and accountability helps
sector, companies and consumers
• Need long term strategic engagement by
government, consumer groups and regulators
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Thank you.
Questions & Discussion
Shantanu Dixit
shantanu@prayaspune.org
www.prayaspune.org/peg
Prayas Energy Group, India