Conference Proceedings: Power on Demand by 2012

Transmission initiatives
Inadequate investments in transmission & distribution infrastructure have resulted in power evacuation constraints from the generating stations. The problem has been severe in the eastern region. Concentration of coal reserves and hydel sources in a few geographic pockets calls for an effective inter-regional network to transmit the electricity generated in fuel rich regions to other regions. Accordingly, a perspective plan has been developed to build 30,000 MW inter-regional transmission capability by 2012. The formation of a national grid will improve reliability, quality and economics of power supply. Ultimately, national grid is the solution to the problem of inter-regional imbalances. However, in view of idling of surplus power capacity in eastern region, immediate steps to facilitate transfer of power from eastern region are being undertaken.

Pursuant to the enactment of legislation in 1998, permitting private investment in transmission, detailed guidelines have been issued for attracting private invstment in transmission projects. Due to mismatch in generation and demand, there is a tendency among state utilities to overdraw from the grid. This coupled with inadequate capacitors, results in low frequency and low voltages in the grid and the cascading effect could lead to collapse of the entire regional grid. Both short and long-term measures are being adopted to prevent grid failure.

Distribution Reforms - The Core of Sector Reforms
The toughest roadblock stalling power sector development has been the poor financial health of the State Electricity Boards (SEBs), which in turn, is mainly due to poor performance on the distribution front. Out of total energy generated, only 55% is billed and only 41% is realized. The gap between average revenue realization and average cost of supply has been constantly increasing. During the year 2000-2001, the average cost of supply was 304 paise per unit and average revenue per unit was 212 paise per unit i.e. there was a gap of 92 paise of every unit of power supplied. All this has caused erosion in the volume of internal resources generation by the SEBs. The annual losses of SEBs have reached a level of about Rs. 26,000 crores. Consequently they are unable to make fully payments to CPSUs for purchase of power and coal. This has resulted in accumulation of outstandings of more than Rs. 40,000 Crores by the SEBs.

The major factors responsible for financial sickness of SEBs are:

Skewed tariff structure leading to unsustainable cross subsidies
Huge T & D losses, largely due to outright theft and unmetered supply. It has been estimated that theft along causes loss of about Rs. 20,000 crores annually.
Lack of accountability in distribution.

Power sector development cannot accelerate until the above issues are addressed with full commitment at all levels. Accordingly, distribution reforms have been identified as the key area for putting the sector on the right track. The strategies identified by Ministry of Power in this direction include:

Development of district level distribution improvement plans/projects for all districts.
Setting up of district level energy committees for monitoring and resource planning.
Development of 60 distribution circles as Centres of Excellence for distribution reform. These Centres would act as models for replication in other districts.
Hundred per cent metering and effective Management Information System (MIS) for monitoring at feeder level, backed up by detailed energy audit to bring accountability into the system at all levels.
Taking high voltage lines up to the load center to prevent theft of power and reduce technical losses.
Singning of MOUs with States for undertaking distribution reforms in a time bound manner and linking the support of Government of India to achievement of pre-determined milestones. (Sixteen states have signed the MOUs so for).
Privatisation/corporatisation of distribution
Tariff rationalization by State Electricity Regulatory Commission (SERC) (16 States have set up SERCs and 9 have issued tariff orders).

Steps are also being taken to expedite the enactment of a composite Electricity Bill to accelerate the reform process and harmonise the provisions in the existing laws.