Regulatory process to enhance transparency and accountability: examples from India Bishkek, September 2011

1. Regulatory process to enhance transparency and accountability: examples from IndiaBishkek, September 2011 Presentation By Prayas Energy Group, India www.prayaspune.org/peg

2. www.amulya-reddy.org.in ‘Prayas’ means ‘Focused Effort’ Based at Pune, India Research based, policy advocacy Voluntary Org. Focus on protection of “Public Interest” in electricity sector About Prayas … • Activities: • Research & intervention (regulatory, policy) • Civil Society training, awareness, and support

3. Interaction Plan • Objective : Share examples from India about how regulatory process can enhance transparency and accountability • Interaction Plan • Overview • Regulatory framework • Key transparency and public participation spaces • Case 1 – Reduction of ‘system losses’ • Case 2 – Managing load shedding • Lessons

4. Regulatory Framework in India • Central Commission • One at central level • Regulates mainly inter-state generation and transmission issues • Tariff of central public sector companies (Generation and Transmission) • Regulation of power exchanges • State Commissions • One for each state • Regulates intra-state generation, transmission and distribution • Decides power purchase and tariff of all state distribution companies • Determines consumer tariff and service quality parameters

5. Key transparency and public participation spaces – Consumer Tariff Revision Process

6. Key transparency and public participation spaces • Consumers can file petitions / cases before regulatory commission • Non-compliance with commissions orders • Exposing utility inefficiency • Public hearings on important matters • Issue of license • Appointment of consumer representatives • Consumers can file / participate in appeals against regulatory commission

7. Case 1 – System loss reduction System losses - Technical and non-technical energy losses (theft, slow meters etc.) in transmission and distribution of electricity

8. 60% 50% 40% % of Energy Available 30% 20% 10% 0% 1975 1980 1985 1990 1995 2000 T&D loss Agri. Unmetered Share System Loss Reduction - Context • Utilities estimate ‘System losses’ ‘System losses’ = Generation (energy input) – Metered Sales – Estimated agricultural consumption • Understatement of ‘system losses’ - No transparency about commercial losses, theft etc.

9. System Loss Reduction – Exposing high losses • Utility’s first tariff revision proposal before the commission – claimed ‘system losses’ of 18% • Technical validation sessions and public hearings revealed • Utility was using ‘selective data’ to understate ‘system losses’ and overstate agricultural consumption • Utility was ordered to use correct sampling methods and re-state ‘system loss’

10. System Loss Reduction – Exposing high losses

11. System Loss Reduction Implications of 40% system loss • Need for tariff increase due to huge system losses was established • Huge media coverage and public debate about need to reduce theft and improving metering • Forced regulator to set targets for reduction in ‘system losses’ • Increased transparency and data made available to public • Enabled utility to initiate remedial measures (metering improvements, penal actions against employees and consumers)

12. System Loss Reduction : Increase in data and accountability

13. System Loss Reduction : Slow but significant achievement

14. Case 2 – Managing Load Shedding Load shedding – Curtailing supply (planned black out) to manage supply deficit

15. Managing Load Shedding : Context • Since 2004 shortages started increasing • Utility resorted to load shedding in ad-hoc manner and to protect it’s revenue • Growing public unrest • Street agitations • Litigation in High Court • Consumers raising this issue during commissions public hearing • Regulatory commission mandated to evolve non-discriminatory, transparent protocol for load shedding

16. Managing Load Shedding : Commission Order • In 2005, Commission issued order specifying load shedding protocol • Order issued after public hearings at six places • Order specified • Hours of load shedding for each area • Load shedding proportional to level of ‘system losses’ and revenue recovery in each area • Utility to widely publish schedule of load shedding and any changes thereto.

17. Managing Load Shedding: Increased Transparency and Accountability • Several petitions and court cases when utility tried to change load shedding protocol • Significantly increased public interventions in the load shedding hearings before commission and higher authorities • Commission’s approach upheld by higher courts • Continuously increasing transparency about supply availability, plant performance as well as demand on the system

18. Managing Load Shedding: Transparency and Accountability

19. Managing Load Shedding: Transparency and Accountability

20. Managing Load Shedding: Outcome of increased Accountability and Transparency • Utility forced to undertake load shedding in non-discriminatory manner • Increased pressure on utility to increase power purchase and tie-up supplies • Created incentive for loss reduction • Prevented un-managable public unrest and helped addressing the crisis in peaceful manner

21. Lessons • Regulatory process can significantly further transparency and accountability • Increased transparency and accountability helps sector, companies and consumers • Need long term strategic engagement by government, consumer groups and regulators

22. Thank you. Questions & Discussion Shantanu Dixit shantanu@prayaspune.org www.prayaspune.org/peg