23 July 2003

Electricity Act 2003

Opportunities

for Investment & Growth

in Distribution Sector

By

Anil Kr. Sardana

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Overview of the Presentation Before and After EA 2003 Distribution Sector Provisions

– Distribution by generators– Distributed Generation – Trading, Open Access & Multiple Licensing– Anti Theft Provisions– Franchise– Privatization

Way Forward

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EA 2003- Come to a full EA 2003- Come to a full Circle ?Circle ?

Electricity Act 1887 & 1903 Private Capital

Minimal Regulations

Electricity Act 1910 Private Capital

More Regulations

Electricity Supply Act 1948, Constitution 1950, IPR 1956

State Ownership

State Regulations

Electricity (Amend) Acts 1991 &1998

Private Capital

“Generation & Transmission”

ERC Act 1998 & State reforms Acts

Autonomous Regulations Unbundled SEBs &

Privatistaion

Electricity Act 2003 Autonomous Regulations Private Capital, Open Access

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Attempt to consolidate laws – Generation, Transmission, Distribution, Trading & Use of Electricity

Take measures conducive to Development of electricity industry,

Promoting competition

Protecting interest of consumers

Supply of electricity to all areas,

Rationalization of electricity tariff,

Ensuring transparent policies regarding subsidies

Promotion of efficient and environmentally benign policiesHas it been able to fill the voids fully ???Has it been able to fill the voids fully ???

The Salient The Salient FeaturesFeatures

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The Political Will - Is it really there? – Perhaps Yes, but past experience ??

Employees - Change mind set – need to take firm and positive decisions

Consumers - Payment habits

Investors - Market conditions, Commercial viability

Clarity of policy, laws etc. – Yes – A big achievement by

EA 2003

Let’s not repeat the history of 1991 Let’s not repeat the history of 1991 ……… ………

Critical Success Critical Success FactorsFactors

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Distribution By Distribution By GeneratorsGeneratorsOpportunity

Generators may supply directly. Choose your customer

Concerns Hardware - Availability of adequate and

robust T&D system Software - Commercial Arrangements

Caution The Imbalance of Economics

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Distributed GenerationDistributed Generation

Opportunity Self developed and self run electric

supply system Big boost to rural/urban supply as well

as for industrial estates

Concern Not significant

Caution Consumer Protection

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OpportunityAcknowledges “trading” (purchase of electricity for resale) as a distinct

but licensed activity in the electricity business.

Competition through multiple licenses

The Advent of Consumerism and Commercialization in the electricity supply business. Consumers to benefit in the long term.

Concerns

Availability of network

Surcharge – Clarity / Viability

CautionConflict of Interests

Trading,Open Access and Multiple LicensingTrading,Open Access and Multiple Licensing

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Antitheft ProvisionsAntitheft ProvisionsOpportunities

The provision for antitheft legislation will help in reducing the commercial losses of the utilities

Concerns

Socio Political Will How fast government set up courts

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FranchiseFranchise

Opportunity A distribution licensee can distribute electricity

through another person within its distribution area.

This will make way for micro distribution system

concept through franchisees

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Private Sector InvestmentPrivate Sector InvestmentOpportunity

Lot many – IPPs, CPPs, Rural, Trading …..

Concerns Policy Decisions Market Conditions Political Will Power

Caution If it does not happen now, It may never

happen

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National Electric Plan and Tariff Policy

CERC and ERCs to frame the Tariff guidelines within one year

Policy for Open Access – With in one year

Existing Distribution Licensees to be issued new license with in one year.

Norms for Trading License

Norms for setting up parallel distribution network

Notification for Rural Areas

Appellate Tribunal

clarity to emerge after these are issued…clarity to emerge after these are issued…

Still Awaited …Still Awaited …

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While Power For All, On Demand, Anywhere and from Anywhere, is Nation’s dream - the key to emergence of a consumer friendly competitive electricity market scenario will depend on …

Building up adequate capacity both in generation and transmission

Reforms of SEBs – MUST at distribution level

Regional Players

Political will power – still a major factor

The Way ForwardThe Way Forward … …

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Thank YouThank You