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Electricity Governance

Indian electricity sector has seen significant changes over the last decade, initiated by the Electricity Act 2003. The Act allows anyone to set up power plants, while making transmission, a government company, and distribution being government or privately owned. The Act has also strengthened the State Electricity Regulatory Commissions (SERCs) which are empowered to set the tariff for various consumer categories. The Act also has enabling provisions for participation of consumers in the functioning of the electricity sector such as planning, policy, regulatory matters (price setting etc) and provides venues to redress grievances.

However, it is seen from experience that electricity consumers do not have adequate knowledge of these institutions and processes. Further, lack of technical, policy, administrative and regulatory knowledge pose a serious challenge in enabling consumers to take advantage of the above to demand quality power supply. As a result, there is a constant need to empower and educate electricity consumers about their rights. Education comprises of making them understand their rights to access and demand quality electricity services, provide quality inputs in the governance of the electricity sector while increasing consumer participation to push for transparent and accountability in its functioning.


Energy and Electricity Planning

Energy is one of the important primary inputs required for economic development and India being one of fast growing emerging nations of the world the availability and efficient use of energy is very much essential. The demand for and supply of electricity is only expected to increase exponentially in the coming decades. About 300 million people in India do not have access to electricity and many more suffer from erratic power supply from unreliable power grid. Nearly 96% of the villages in India are electrified but only about 70% of the houses have electricity connections. Hence access to reliable and quality power is one of the key development challenges facing our country. India has also committed to increase its share of renewable power to meet the growing need of electricity and achieve its climate change targets.

Traditional approach of fixing quantitative supply targets is no longer appropriate. To address these above challenges there is a greater need for Integrated Resources Planning as different fuels can be substituted for each other for various purposes. If energy system is to be efficient, the policies are to be integrated. With separate ministries concerning the energy sector in India there is always a sub optimal result and hence calls for integrated planning to address various challenges plaguing the electricity sector. 

Electricity Governance

The Indian Constitution places electricity in the concurrent list wherein broad rights to legislate are granted to the central government but the responsibility for implementation is electricity sector is organized but also its functioning. The electricity utility has moved from being a service company to a profit oriented organization. Independent state and central electricity regulatory processes dictates the price at which the utility is to charge consumers and provides oversight on excessive spending and purchase of electricity. Additionally, a number of other aspects including safety, reliability and operational standards of their services are also regulated. The role of government is confined to policy directions and providing capital support. However, political economy and institutional priorities overlap with each other. There is always a danger that regulators and dispute resolution mechanisms are ‘captured’ by the utility so as to allow unnecessary costs and burdens to be passed on to consumers. On the other hand, the policy makers may not take measure to protect consumers interests. Further, governance problems also occur when consumers are not properly representated in planning, policy, regulation and grievance redress mechanisms thus skewing their interests in favor of the utility assigned to state governments. 

Consumer Participation

One of the aims of the Electricity Act 2003 is to facilitate greater public participation and collaboration of civil society, policymakers, regulators, and other electricity sector actors to ensure that the sector decisions reflect public interest. The Act mandates consumer representation and participation in planning, policy and regulation and grievance redressal. For this purpose, regulators and policy makers must ensure that consumers/public participate to make utilities accountable. However, it is increasingly noted that consumer participation is limited by two factors quality and the level of participation. The quality of participation refers to the inputs given by consumers. Since, electricity is both technical and financial subject it is not easily understood by the consumer, this inhibits quality participation in the sector. For this purpose, access to information by the public and disclosure of information by the utility is essential in ensuring high quality comments are received to promote accountability and transparency in the functioning of the sector. 


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