One of the pertinent questions to ask while developing power reform is whether the present setup of distribution which aims to provide every household in the country with electricity needs to revamp its technical, social or the business domain. Currently, there are about 80 distributors most of which are state owned barring a few private, co-operative societies and PPP models.
As per EA 2003 , all network below 66 K which is maintained for retail sale to a population of 20 crore consumers from the distribution network i.e. Industrial, residential, commercial and agricultural sectors make use of generators to fulfil their power requirements. The transfer of energy whether it is thermal, nuclear,gas, hydel or renewable is done through transmitters with energy as high as 765 kV. To ensure smooth operation the model employs power management planning division as well as system operators.
The Act has already shown its effects on the power consumption market. EA 2003 has precipitated energy levels from 78,000 Mw to the current 2.50 lakh Mw. This has also resulted in a per capita increase in consumption from 250 Kw to 1000 Kw while increasing general supply from 6 hours to almost 24 hours a day. What then remains cause of concern for the industry? The inherent technical issues such as resistance of electron in iron wires and transformation in copper are coupled with commercial losses mainly as a result of theft, pilferage or poor loaded led to an average loss of 30% in the country with the median variation from 80% in some parts to 12% in urban areas.Further the average country tariff of 380 leads to a loss for the distribution company where average cost of supply is 480. Most of the parties involved such as the power supplier, transmitter and the government are not willing to share this loss. Issues such as increased cost of coal and government barriers on agricultural and residential tariff augment this obstacle to a secure market.
Aside from these concerns tariff is a major part of a healthy electrical market. Currently in the country, tariff policy determines that tariffs and cost of supply should not vary by more than 20%. Yet the tariff from the regulator’s side has not applied this rule in their costs and cross subsidy remains as high as Rs. 2. Open market policies have also not shown any improvement due to faulty policy making. One of the major blocks is that consumers are required to buy in Mw ( 1000 Kwh) which they can use in multiples of Kwh, this makes it impossible to bear losses and thus the proposition of marketing power remains a mockery. Tariff categorization is another issue in tariff policies that needs revisiting. At the time, tariff is subcategorized by voltage and consumption levels with some states like Andhra having 80 categories and most other states,40 categories.With all these concerns the most apt way of dealing with the situation would be to firstly, set energy charge categorization according to voltage and irrespective of use. Furthermore, an opening of the market to consumer choice would be the most liberal and efficient way of bring power to consumers. In order to do so, we must also explore how power is sold on the open market now. While NTPC can provide power for a charge of 1.25 Rs whereas Tata is unable to supply for even Rs. 5.50. This is mainly due to fuel costs which can vary from Rs 700 to Rs 7000 per Mt of coal with quality of 4200-5500 Kcal.The market then must be revamped at the level of policy through a comparison of generation costs between private and public sectors instead of levying heavy tariff and needless categorization of consumer requirements by type.
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