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Electricity Act 2003, Amendments and way forward
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Presented by – R R Mehta
EA 2003 : Amendments & Way Forward
Confidential Slide
Flow Of Presentation
Improvement Areas
EA 2003 Amendments
Last 10 Years performance
2
EA 2003 Agenda
Reliance Energy- Overview
Confidential Slide
Overview – Mumbai Distribution
Data As on 31-Mar-14
Serving Mumbai Since 85 Years !!!
Distribution Area 400 Sq. km
No. of Customers ~2.9 Million
Max. System Demand 1,697 MVA
Distribution Loss ~9.4%
Reliability Index 99.97 %
Distribution Transformers 4,613 MVA
Power Transformers 3,042 MVA
HT Cable Length 4,137 Kms
LT Cable Length 5,892 Kms
3As on 31st Mar 2014
Confidential Slide
Our National Footprint
Distribution Assets in 3 States I Engaged with 7 States
IT Implementation AgencyChattisgarh & Bihar
-
IT Consultancy Karnataka
SCADA / DMS Consultancy - Haryana, Maharashtra - Chattisgarh. Bihar - Chandigarh
SCADA / DMS Consultancy
DistributionDistribution
Distribution
SCADA / DMS Consultancy
AMR Installation
ITCITIA
Confidential Slide
Leading to a System Reliability of 99.97%
Network : SCADA & DMS
Country’s only Integrated (G-T-D) SCADA
State-of-the-Art Upgraded SCADA (SCADA security - ISO 27001)
Distribution Management System (11kV)(1st Utility in India - DMS S/S in 4 Digits - >1000)
Fully integrated with GIS-OMS
5OMS : Outage Management System; GIS : Geographical Info System
Confidential Slide
Customer : Engagement
Proactive & Personalised communication for customer engagement
Website
- Personalized response
- ‘My-Account’ service
- E-bills to customers
- Online Chat
SMS services on :
- Scheduled outages
- Meter Reading
- All transactions
Information on Bill: -
Customized messages
- Conservation / Safety tips
- Regulatory Updates
Social Media
- FB : 1,00,000+ Fans
- Twitter : 19,000+ Followers
- You Tube :150+ Subscribers
6
Confidential Slide
Unique home grown solutions being patented
7
For prevention of theft in notorious theft-prone slum areas
Pilot implementation has led to loss reduction by 10%
Patented
Theft Proof Pillar
Innovations
Confidential Slide
Patentapplied
Portable solution for accuracy checking of Energy meters
Innovations
Accu-check Easy-check
Compact and sturdy Dust proof and water proof Phantom load redesigned to reduce the weight (2 kg)
8
Confidential Slide
Meter Data Acquisition & Management System- PrimeRead
MDA & MDM
AMI
AMREnergy Input
Utility
Meter Data Management
9
Stepping stone for Smart Grid Applications
Confidential Slide 10
SAP Business Objects-Dashboard Features & Functionalities
•Operation Control•Trend Analysis•Triggers and Alerts
•System Data Integration• Display & Formatting• Adhoc Analysis
Visual Analytics & Interactive Dashboards :- Need of an Hour!!!
Dashboard
Confidential Slide
Flow Of Presentation
Improvement Areas
EA 2003 Amendments
Last 10 Years performance
11
EA 2003 Agenda
Reliance Energy- Overview
Confidential Slide
EA 2003 : Agenda
• Open Access & Franchisee• Competitive bidding• Power Trading
Competition
• Establishing SERC / APTEL• Unbundling
Accountability & Transparency
• Tariff Setting• State Govt Subsidy
Commercial Viability
• USO• Rural electrificationAccess
• Consumer Grievance• Reduction in T&D losses
Quality & affordability
• Mandatory RPOs• REC mechanism
Renewable Energy
12
Confidential Slide
Flow Of Presentation
Improvement Areas
EA 2003 Amendments
Last 10 Years performance
13
EA 2003 Agenda
Reliance Energy- Overview
Confidential Slide
Slow Pace of Reforms
Avg implementation score across all states
is 0.54
Maharashtra, Delhi & Orissa are
forefront in implementing
reforms
Source : Deloitte 2013 14
Confidential Slide
Deterioration of Distribution finances
• Accumulated losses to the tune of Rs 2000 Bn • Sector losses = ~1.5% of GDP• Distribution sector contributes 80% of the above losses
Source : Khurana & Banerjee 2013, Referred in WB Report 2014
15
Confidential Slide
Increasing Gap
• Cost – Revenue gap has doubled since 2003• Avg Cost rose about 7% a yr over 2003-11• Cost – Revenue gap grew about 6% a yr over 2003-11
16
Source : Khurana & Banerjee 2013, Referred in WB Report 2014
Confidential Slide
Flow Of Presentation
Improvement Areas
EA 2003 Amendments
Last 10 Years performance
17
EA 2003 Agenda
Reliance Energy- Overview
Confidential Slide
Shunglu Committee
In Dec 2011, a High Level Panel headed by V.K Shunglu recommended
following key corrective actions:
• No write-offs, repayment period can be elongated
• State Govt not to be let-off the hook
• Suo-Motu tariff determination
• Cost reflective tariffs
• Increase in Power Purchase cost to be passed immediately
• SERC to act independently
• SERCs to be evaluated for their performance
• No mis-use of Sec 108 by State Govt
• Support to Discoms for T&D reduction
18
Confidential Slide
Forward Path Franchisee or Privatisation Model would not deliver desired outcomes Well formulated PPP model in DISCOM is the way forward Wire & Supply Segregation is highly desirable
Concession Concessionaire required to obtain a license to comply with EA 2003 Concession period - 25 Yrs Ownership of Assets with Govt, Concessionaire exclusive rights to use No Govt shareholding except “Golden Share” for public policy matters Principles for determination of termination payment (after expiry of concession period) to
be specified upfront Tariff
Govt can provide existing subsidy to prevent tariff shock for initial years Supply tariff will include cost of electricity and a predetermined margin Pre-determined system of incentives / penalties based on the KPIs Trajectory of AT&C loss reduction to be part of bid, Over or Under performance to be borne
by Concessionaire
Chaturvedi Committee
In Nov 2010, task force under B K Chaturvedi was formed to develop a
framework for private participation in Distribution by way of PPP:
19
Confidential Slide
ATE Directives
In Nov’11 ATE suo-motu issued the following directions :
• SERCs to ensure APR, true-up of past expenses, ARR & tariff
determination to be conducted year on year as per regulations
• SERC’s to decided the Tariffs before 1st Apr of the tariff year
• In case of delay, SERC can suo-motu proceed for tariff determination
• Regulatory Assets should not be created as a matter of course
• Recovery of RA should be time bound and within a period not
exceeding three years and preferably within control period
• Carrying cost of RA to be allowed to the utilities in ARR
• Fuel & Power Purchase cost adjustment should be done preferably
monthly but in no case exceeding a Quarter
20
Confidential Slide
Lavasa Committee
In Oct 2012, Ashok Lavasa committee prepared the following FRP for
all loss making Discoms:
Financial Restructuring Plan:• 50% of the outstanding short term liabilities upto 31/03/12 to be serviced by
State Govt by issuance of bonds to participating lenders.• Balance 50% short term loans & payables for power purchase to be
rescheduled & serviced by the Discoms with a moratorium of 3 yrs & to be repaid in 5 yrs thereafter duly backed by a State Govt guarantee
• The State Govt will eliminate the gap between ACS & ARR within the period of moratorium of the bonds issued by the State Govt
Strategy for Discom turanround:• Regular Tariff Hike• Increase in Quantum of Power Sold• Rescheduling/ restructuring of existing loans• Continued short term lending by banks/financial institutions• Availability of surplus tradable power after a few years
FRP package would cost Rs 1.9 Trillion
21
Confidential Slide
Flow Of Presentation
Improvement Areas
EA 2003 Amendments
Last 10 Years performance
22
EA 2003 Agenda
Reliance Energy- Overview
Confidential Slide
Need s for EA 2003 Amendments
23
• Creation of Regulatory Assets should not be allowed• Tariffs to be revised every yr, suo-moto determination by SERC
Sustainability
Accountability
Competition
Access
• SERCs to be more accountable• State Government to use sec 108 powers only in exceptional situations
• 24 X 7 supply in rural areas for all domestic purposes• Build proper infrastructure, financed by REC, considering 1 KW / house in rural
• Open Access encouraged• Wire & Retail Separation
Confidential Slide
Needs of Administrative Changes:
• Existing expectations of EA2003 and Policies should be
implemented/enforced by Regulators
• EA 2003 should lay down framework for SERCs for uniformity in
implementation
• All SERCs should be aligned to such Framework through Model
documents prepared by FOR (Forum of Regulators)
Thank You
Confidential Slide
Increasing State Subsidy
• Cumulative subsidies booked between 2003-11 : Rs 1.75 Tr• Cumulative subsidies recd between 2003-11 : Rs 1.30 Tr • Avg State support to power sector in 2011 : 1.3% of State GDP
Source : Khurana & Banerjee 2013, WB Report 2014 26
Confidential Slide
Impact of Power Purchase Cost
• Share of Power Purchase Cost increased from 56% to 74% • Share of fuel cost on total Generation cost is ~80%• Increase mainly due to – extreme shortfall in coal, leading to use of imported coal and higher short term power purchases
56%
74%
27
Source : Khurana & Banerjee 2013, Referred in WB Report 2014
Confidential Slide
Cross Subsidy in tariffs
• Industrial Tariff is highest in 18 States• Commercial Tariff is highest in 11 States• Domestic Tariff is the lowest in all States - State Subsidy & Cross Subsidy
Source : WB Report 2014 28