Electricity Act: Transmission & Power Systems

• In compliance with section 3 of the Electricity Act 2003, the Central Government notifies the National Electricity Policy.
• Electricity is essential and a basic human need, critical for socio-economic development.
• Supplying electricity at reasonable rates to rural India is essential for overall development.
• Reliable, quality power at competitive rates is important for Indian industry to be globally competitive and generate employment.
• Quality electricity supply is critical for sustained growth.
• The nation targets providing electricity access to all households within five years.
• As of Census 2001, approximately 44% of households lack electricity access.
• Universal access requires adding generation capacity and expanding transmission/distribution networks.
• The Indian Power sector is undergoing major changes due to demand outstripping availability.
• Peak and energy shortages occur due to generation, transmission, and distribution inadequacies, as well as inefficient electricity use.
• High technical and commercial losses and a lack of commercial approach in utility management have led to unsustainable finance.
• Cross-subsidies have increased to unsustainable levels.
• Poor supply quality is due to distribution network inadequacies.
• The electricity industry is capital-intensive with long gestation periods.
• Power generation resources are unevenly dispersed.
• Electricity cannot be stored in the grid, requiring continuous balancing of demand and supply.
• Widely distributed and rapidly increasing demand needs to be met in an optimum manner.
• The Electricity Act of 2003 enables accelerated, more efficient power sector development and encourages competition.
• Competition is hoped to increase efficiency and ensure quality electricity supply at competitive consumer rates.
• Section 3 (1) of the Electricity Act 2003 requires the Central Government to formulate the National Electricity Policy with the Central Electricity Authority (CEA) and State Governments, for optimal resource utilization.
• Section 3 (3) of the Act allows the Central Government to review or revise the National Electricity Policy.
• The goals of the National Electricity Policy are accelerated power sector development, electricity supply to all areas, and consumer and stakeholder protection.
• These goals consider available energy resources, technology, economics, and energy security.
• The National Electricity Policy was developed in consultation with State Governments, the Central Electricity Authority (CEA), the Central Electricity Regulatory Commission (CERC), and other stakeholders.
• Section 3 (4) of the Electricity Act requires the Central Electricity Authority (CEA) to create and revise a National Electricity Plan every five years, consistent with the National Electricity Policy.

Aims & Objectives

• Access to electricity to be available for all households in the next five years.
• Power availability: demand to be fully met by 2012, energy and peaking shortages to be overcome, and adequate spinning reserve to be available.
• The electrical supply with specified standards is to be reliable and of good quality, efficient, and at reasonable rates.
• By 2012, electricity availability per head is to be increased to over 1000 units.
• By 2012, minimum lifeline consumption will equal 1 unit/household/day.
• Goals include a financial turnaround and the commercial viability of the electricity sector.
• Protection for utility-using consumers.

National Electricity Plan

• Section 73 (a) provides for short-term/perspective plans for electricity system development, coordinating planning agencies for optimal resource utilization.
• The plan involves the Central Electricity Authority (CEA) and can be used by generating companies, transmission utilities, and licensees as a reference.
• The National Electricity Plan should be a short-term framework of five years with a 15-year perspective.
• The plan would include short and long-term demand forecasts, capacity additions for generation and transmission, system losses, load center requirements, grid stability, security of supply, power quality, and environmental considerations.
• It also includes the integration of possible locations with transmission systems, national grid development, and different technologies for generation, transmission and distribution.
• Fuel choices are based on economy, energy security, and environmental issues.
• When developing the National Electricity Plan, CEA will consult stakeholders, and state governments will coordinate with stakeholders, licensees and STUs at the state level.
• CEA will interact with institutions and agencies having economic expertise, particularly in demand forecasting.
• Projected growth rates for different sectors of the economy will also be taken into account for demand forecasting.
• The National Electricity Plan for several plan periods will be prepared and notified after reviewing the existing plan.
• This will be done within six months.

Issues Addressed

• Issues the National Electricity Policy addresses:
• Rural Electrification
• Generation
• Transmission
• Distribution
• Recovery of Cost of services & Targetted Subsidies.
• Technology Development and Research and Development (R&D)
• Competition aimed at Consumer Benefits
• Financing Power Sector Programmes Including Private Sector Participation.
• Energy Conservation
• Environmental Issues
• Training and Human Resource Development
• Cogeneration and Non-Conventional Energy Sources
• Protection of Consumer interests and Quality Standards

Rural Electrification

• The key development goal of the power sector is to supply electricity to all areas.

• Both the central and state governments will work to achieve this objective early.

• Consumers ready to pay tariffs that reflect efficient costs have the right to 24 hour supply of quality power.

• Determined efforts should ensure rural electrification secures electricity access for all households.

• Also electricity should reach the needy at reasonable rates.

• A reliable system for electrification in rural areas needs to create:

• Rural Electrification Distribution Backbone (REDB) with at least one 33/11 kv (or 66/11 kv) substation in every Block.

• More substations may be required depending on load, networked and connected appropriately to the state transmission system.

• Supply feeders and at least one distribution transformer in every village settlement will emanate from REDB.

• Every household will have access to household electrification via distributors on demand.

• Decentralized distributed generation facilities and local distribution networks are to be offered wherever grid connectivity is not feasible/cost-effective.

• Electricity can be generated using either traditional/non-traditional techniques based on suitability and economy.

• Non-conventional energy sources could be used even if a grid connection exists if it is cost effective.

• Developing infrastructure would be undertaken for irrigation pump sets, small and medium industries, khadi and village industries, cold chains and social services.

• Attention will be given to dalit bastis, tribal areas and other weaker sections in household electrification.

• The Rural Electrification Corporation of India is the agency for the Government of India to implement the goal the National Common Minimum Programme is attempting to achieve.

• Its role is being suitably enlarged to ensure timely implementation of rural electrification projects.

• Targeted expansion in access to electricity requires distribution licensees to recover the cost of electricity and related expenses from consumers, excluding support to those below the poverty line.

• Subsidies should be targeted and subsidies are needed while maintaining cost of debt finances.

• A system is needed to maintain reliable power supply, including maintaining and operating infrastructure.

• Operation & maintenance and cost recovery could be arranged by utilities with Panchayats, local authorities, NGOs etc.

• Proper cooperation is needed among various agencies of the State and Central Governments and community participation for rural electrification.

• Education and awareness is essential for creating electricity demand and for community participation.

Generation

• Inadequate generation has characterized power sector operation in India.
• Over 100,000 MW of need-based capacity addition would be required between 2002 and 2012 to provide over 1000 units of per capita electricity.
• The Government has reformed to add to new capacity.
• The Electricity Act of 2003 places a very liberal framework for generation with no licensing necessary.
• CEA techno-economic clearance for thermal generation projects is no longer needed.
• Capital expenditure above the limits on hydroelectric generation will suitably increase from the present level requiring CEA concurrence.
• The need to create an adequate margin in reserve capacity means creating a spinning reserve.
• Progress of implementation of addition plans and growth of demand would need to be monitored.
• Appropriate technology will need to be used.

Hydro Generation

• Hydroelectricity is a clean, renewable energy source.
• Emphasis would be placed on fully developing the feasible hydro potential in the country.
• The 50,000 MW hydro initiative has been launched and is under preparation with DPRs for projects of 33,000 MW capacity.
• Harnessing hydro potential speedily will facilitate economic zones for certain states.
• The states with hydro potential need to focus on its full development.
• Hydel projects call for capital investment and debt financing and the Central Government is committed to policies that ensure financing projects.
• State Governments need to review procedures for land acquisition and other approvals.
• The Central Government will support State Governments for expeditious project development through Central Public Sector Undertakings.
• Proper implementation of the National Policy on Rehabilitation and Resettlement (R&R) would be essential.
• Adequate safeguards are needed for environmental protection with suitable monitoring.

Thermal Generation

• With full development of the feasible hydro potential, coal would remain the fuel for meeting electricity demand.

• Imported coal-based thermal power stations near coastal locations are encouraged based on viability.

• Using low ash content coal would help in reducing the problem of fly ash emissions.

• Coal must remain the primary fuel.

• Using Lignite resources should be increased for power generation, and mining technology needs improvement.

• The use of gas would depend upon its availability.

• New power generation capacity could come up based on indigenous gas and can emerge as a source if prices are reasonable.

• Also, a national grid could facilitate development.

• Imported LNG based power plants are a potential source and their development depends on viability.

• The plants using liquid fuels should shift to Natural Gas/LNG at the earliest to reduce generation costs.

• The thermal power and economics of supply should be the basis for fuel choice.

• Generating stations should be located near the sources such as pitheads locations and load centres.

• Generating companies may enter fuel supply agreements with respect to imported fuels for viability and security.

Nuclear Power

• Nuclear power is an established base load, being set up away from coalmines.
• Economics of the nuclear power and tariff are important considerations.
• Public sector investments will need to be stepped up, as well as private sector partnership.
• Non-conventional energy sources should not only achieve targets but to exceed them.
• Wind and bio-mass would also need to be created.
• Non-conventional sources in mixing electricity will encourage private sector participation.
• Achieved one of the major power sector achievements for thermal power stations when renovating.
• Minimizing risks for utilities, consumers, and promoting rapid system losses.
• Projects should be well-defined plans featuring costs

Captive Generation

• The Electricity Act, 2003's provision has been made to secure reliable and efficient industry growth.
• Power plants should also be aimed at enabling small industries for cost effective expansion.
• Captive generating stations have surplus capacity to supply power to the grid.
• Generators have access to licensees and consumers who are allowed open access.
• Inter-connections are done to become available as distributed.
• Electricity sources could also play a role, and appropriate arrangements would be administered.
• Regulatory Commission shall exercise oversight on tariff generators and licensees.

Transmission

• Adequate and timely investments is required and efficient operation of the grid needs adequate margins.
• The well-planned grid will ensure capacities, but also of capacities and cost effective powers.
• Sensitive mechanisms would be distance, directions, volumes, and consistency in intra and interstate.
• Deficiencies do not result in unreasonable requirements.
• Regulatory framework mandated in Act 2003 for efficient choice in locating capacities and reducing cost of supply.
• The Act is dispatch centres must operated by the Government through NLDC's, RLDC'S, and SLDC's.
• Government needs to be improve and create investment and demand by the year 2012

Distribution

• Reforms lies in the efficient sector management.
• Regulatory framework must exist for licences to safeguard costumers interest
• Competition should exist within the business' licences.
• To achieve efficiency the distribution utilities needs restructures.
• To restructure the liabilities, successor industries, and roadmap, the central government would assist
• Transitions need to be improved and efficient for distribution, the business improves, investment can be funded, public interest is promoted, and private sectors encourages service.
• Act enables and requires open access by SERC's for licences who has a consumer supply
• Commissions should separate the energy and account for the results.

Cost of services & Targetted Subsidies

• There is an urgent need for recover the costs and making the sector sustainable.
• Consumers below poverty may need certain levels of support
• Over the past decade subsidies have increased and create imbalances
• Effort would need to be made for utility operation

Technology Development and Research & Development

• Should be efficient and effective with paramount effort on management, cost control measures and coordination to control systems, losses improve service
• Should be research, develop and commercialize to specifications and performance need to be improved
• Introduced with the effectiveness cost established
• Increase and ensure proper utilisation to technology and industry and user friendly interface.

Competition

• Markets can be developed and projects that could compete in prices.

• Inter-state trading is function to issue licence.

• AbT regime is advise to have in place and provide licences where deficits and need.

• Act should be able to sell electricity to consumers and power can be regulated and need in consultation .

• Regulatory consumers can to notified in cases of regulations expeditiously regulations.

• Regulations and guidelines must be notified to ensure State trading and power

• To the achievement growth for all it is needed that investment be estimated and government and the investments are both in the central level

• Investments also need to be provided from the segment private

• Will improve public service operations and that services can be provided from licences if a surcharge is provided. The sector needs to be and investments have to be evaluated and an appropriate balance needs to be made

• All segments needs to be improved

• Operations in all segments needs to have performance improves and it needs to be sustainable.

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