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CII's Presentation On National Electricity Policy – An Overview (July 2005)

CII's Presentation On National Electricity Policy – An Overview (July 2005). Introduction. In compliance with section 3 of EA 2003, GoI notifies "National Electricity Policy" on 12th Feb 2005 in consultation with State Governments, CEA, CERC & other stakeholders

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CII's Presentation On National Electricity Policy – An Overview (July 2005)

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  1. CII's Presentation On National Electricity Policy – An Overview (July 2005)

  2. Introduction • In compliance with section 3 of EA 2003, GoI notifies "National Electricity Policy" on 12th Feb 2005 in consultation with State Governments, CEA, CERC & other stakeholders • Aim of policy - Access to Electricity for all households in next 5 years • Availability of Power, Reliable & Quality of specified standards. Per capita availability over 1000 units by 2012 • Financial turnaround and commercial viability of Electricity Sector • Protection of CONSUMER'S Interest • Based on this policy, CEA to prepare plan Presentation is made available by Infraline.com

  3. Issues Addressed Presentation is made available by Infraline.com

  4. Rural Electrification • Rural Electrification Corporation of India - Nodal agency for RE • Rural Electrification Distribution Backbone - 33/11kV substation in every block - household electrification to dalit basti, tribal areas & weaker sections • Govt. to provide capital subsidy & soft long term debt financing in RE to reduce the cost of supply • Responsibility of O&M and cost recovery through Panchayats, Local Authorities, NGOs etc Presentation is made available by Infraline.com

  5. Generation • Capacity addition of more than 1,00,000 MW • Hydro Generation • Large capital investment & longer debt financing - Central Govt. to ensure financing of viable hydro projects • State Govts. to review procedure of land acquisition and other clearances for speedy implementation of projects • Central Govt. to support states in developments of projects - Services of NHPC etc. • Proper implementation of R&R and EAP • Thermal Generation • Coal main fuel. Imported coal based plants at coastal locations. • Significant lignite resource - improve mining tech. to reduce cost • National gas grid covering various parts of the country to facilitate development of gas based stations Presentation is made available by Infraline.com

  6. Generation (Cont…) • Existing plants using liquid fuel to shift to use Natural Gas / LNG to reduce cost of generation • Generating companies to have medium to long term fuel supply agreement (imported fuel) for commercial viability & security of supply • Nuclear Power - To meet base load demand • Non - conventional Energy Sources - to be developed fully • Renovation & Modernization (R&M) - To improve availability and PLF. GoI is providing financial support. R&M as per defined plan and cost benefit analysis. If economic operation not feasible - closure of plants • Captive Generation - Liberal provisions. Grid connectivity to supply power to licensees. Presentation is made available by Infraline.com

  7. Transmission • Transmission system to match generation capacity addition • Central Govt. to develop National Grid for adequate interstate transmission. The CTU is responsible for national & regional system while STU for intra-state transmission system. • Non-discriminatory open access in transmission system will increase competition & result in availability of cheaper power • To facilitate cost effective transmission across the region, CERC to implement national transmission tariff sensitive to distance, direction & quantum of flow. • Special mechanism to encourage private investment Presentation is made available by Infraline.com

  8. Distribution • Distribution is the most critical segment of the business chain. • Regulatory framework for distribution licensees to safeguard consumer interests. • Restructuring of distribution utilities with adequate transition financing to achieve efficiency and ensure financial viability and sustainability. • Conducive business environment - adequate returns. • SERCs to notify regulations to enable "Open Access" in distribution network. • Energy audit - segregation of technical & commercial losses. An action plan for reduction of losses. Presentation is made available by Infraline.com

  9. Distribution (Contd..) • Multiple licensees. For second & subsequent licensee – a revenue district, a Municipal Council or Municipal Corporation - minimum area. • Supply through correct meters, encourage pre-paid meters. TOD meters for large consumers (1 MVA) to be encouraged • Modern IT systems to be implemented on priority. Support being provided for IT based system under APDRP • High voltage distribution system to be implemented. SCADA and data management system to be used. Presentation is made available by Infraline.com

  10. Recovery of Cost & Subsidies • Urgent need to ensure recovery of cost of service to make sector sustainable. • Consumer below poverty line (Consumption 30 units / month) to receive support. Tariff to be at least half of average cost of supply • Cross subsidies have reached to unsustainable levels. To be reduced progressively and gradually. • State Govts. may provide advance subsidy to the extent they consider appropriate through budgetary provisions Presentation is made available by Infraline.com

  11. Competition Aimed at Consumer Benefits • CERC to issue license for inter-state trading which would include authorization for trading through out the country • The ABT regime introduced by CERC at national level has positive impact. SERCs to introduce ABT regime at State Level within one year • Captive generating plants to sell electricity to licensees and consumers when allowed open access by SERCs • The Regulatory Commissions to notify various regulations expeditiously. Ensure implementation to encourage competition & protect consumers Presentation is made available by Infraline.com

  12. Financing Power Sector including Private Sector Participation • To meet the objective of rapid economic growth and 'Power for All' an investment of the order of.Rs.9,00,000 Crores at 2002-03 price level is required. • Public sector to raise internal resources to meet the equity requirement of investment. • An appropriate surplus is generated through return on investment and at the same time depreciation reserves created to meet debt service obligations. This will enable financial closure and improve bankability of projects • SERCs to levy surcharge and additional surcharge on consumers switching to alternate supplies under open access This is to meet cross subsidy and fixed cost of incumbent distribution licensees. The amount of surcharge and additional surcharge should not become so onerous that it eliminates the intended advantages. Presentation is made available by Infraline.com

  13. Financing Power Sector including Private Sector Participation – (Cont…) • Tariff determination through competition to be encouraged. • To generate investor's confidence steps to be taken for independence of regulatory commissions and transparency in their functioning. • State Govts. to prepare Five Year Plan with annual milestones to bring down T&D losses. Present level of losses is about 40% Presentation is made available by Infraline.com

  14. Energy Conservation • The Energy Conservation Act has been enacted and Bureau of Energy Efficiency (BEE) setup • Periodic energy audit compulsory for power intensive industries under the Energy Conservation Act • In agriculture sector, pump sets and water delivery system engineered for high efficiency to be promoted • Difference between peak and off peak demand to be reduced through suitable load management and differential tariff structure. Time of day metering Presentation is made available by Infraline.com

  15. Cogeneration and Non -Conventional Energy Sources • Urgent need to promote Non-conventional sources of energy being most environmental friendly.  • SERCs to provide suitable measures for connectivity with grid and sale of such electricity by specifying a percentage of total consumption of electricity in the area of distribution licensee. • SERCs to promote arrangements between co-generator and distribution licensee for purchase of surplus power from such plants both during peak and off peak periods. Presentation is made available by Infraline.com

  16. Coordinated Development • Electricity being a concurrent subject, well coordinated approach is essential to meet the targets • The State Governments have major role to play and Central Govt. will assist the States in attaining the targets. • The Regulatory Commissions are required to perform wide-ranging responsibilities and they should ensure transparency in exercise of their powers • The ultimate aim is to achieve "Power for All" Presentation is made available by Infraline.com

  17. Thank You

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