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Piqued by the “complacency” and lack of boldness of the state-level electricity regulators that stymie the UDAY scheme, grid efficiency and assorted other reforms meant to make the sector economically viable and competitive, the power and coal minister did some tough talking to them last Friday, as they assembled here under the banner of Forum of Regulators.
“Look inside you,” he told the regulators, and added: “If you are so weak and cannot take action, then (you have) no business to be where you are.” Asking why issues of “10-50 paise” could not be resolved expediently — the minister was alluding to non-viable tariffs jeopardising huge capital investments in power generation and regulators not undertaking tariff revisions on time — Goyal said the largely self-financed regulators could look forward to succour from the Centre if lack of funds crippled them in any manner. Goyal expressed concerns over 10,000 MW of solar modules capacity going a-begging as the state utilities refuse to honour their renewable purchase obligations and regulators doing not enough to correct the situation.
The minister was particularly angered by the regulators refusing to break the custom of doing the bidding of (unobliging) state governments. Urging the regulators to “act independently and professionally”, he told them “to be part of the system of new way of doing things” being laid down by the Modi government. Some friction between the regulators and those who appointed them was in order, the minister said, lamenting the complete absence of this in the power sector. “Take suomotu actions to bring in reforms,” he exhorted the regulators.
Under UDAY, launched in 2015, the country’s discoms, bogged down under a debt burden of Rs 4.3 lakh crore, were given a major relief on the condition that henceforth they unfailingly stick to certain operational parameters. While Goyal and other government functionaries have remained optimistic of this latest bid to salvage the discoms, the progress on the ground hasn’t really matched expectations. And the regulator not cracking the whip as they should is seen to be one of the reasons for this, although it is another matter that UDAY doesn’t include penal provisions.
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Discoms in 12 UDAY states reported increases in their aggregate technical and commercial (AT&C) losses between March 2016 and December 2016. And in at least three other states among the 18 that furnished the relevant data, the discoms could not reduce the AT&C losses to the extent required under UDAY. Metering of distribution transformers plays a major role is lowering AT&C losses. However, for the target set for December 2017, not even 50% of distribution transformers were metered by March, 2017. UDAY also envisaged the installation of smart meters for consumers using more than 200 units of electricity every month by December 2019, but only 1% of this target was met by March this year.
Under the renewable purchase obligations (RPOs), discoms should purchase/produce a minimum specified quantity of their electricity requirements from renewable-energy sources. However, Icra said last month that the state electricity regulatory commissions in only 16 out the 29 states have stipulated RPO norms for the period till FY19.
Further, the RPO levels for a majority of the states continue to remain lower than recommended under the guidelines. The regulators tend to carry forward shortfalls in RPO compliance to the subsequent period instead of levying any penalty for non-compliance. Monitoring of RPO compliance, either on a quarterly or a monthly basis, by the designated nodal agencies also remains absent across states, Icra had noted.
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