Electricity Act 2003 Opportunities for Investment & Growth in Distribution Sector

1. Electricity Act 2003 Opportunities for Investment & Growth in Distribution Sector By Anil Kr. Sardana

2. Overview of the Presentation • Before and After EA 2003 • Distribution Sector Provisions • Distribution by generators • Distributed Generation • Trading, Open Access & Multiple Licensing • Anti Theft Provisions • Franchise • Privatization • Way Forward

3. EA 2003- Come to a full Circle ?

4. The Salient Features • Attempt to consolidate laws – Generation, Transmission, Distribution, Trading & Use of Electricity • Take measures conducive to Development of electricity industry, • Promoting competition • Protecting interest of consumers • Supply of electricity to all areas, • Rationalization of electricity tariff, • Ensuring transparent policies regarding subsidies • Promotion of efficient and environmentally benign policies Has it been able to fill the voids fully ???

5. Critical Success Factors • The Political Will - Is it really there? – Perhaps Yes, but past experience ?? • Employees - Change mind set – need to take firm and positive decisions • Consumers - Payment habits • Investors - Market conditions, Commercial viability • Clarity of policy, laws etc. – Yes – A big achievement by EA 2003 Let’s not repeat the history of 1991 ………

6. Distribution By Generators Opportunity • Generators may supply directly. • Choose your customer Concerns • Hardware - Availability of adequate and robust T&D system • Software - Commercial Arrangements Caution • The Imbalance of Economics

7. Distributed Generation Opportunity • Self developed and self run electric supply system • Big boost to rural/urban supply as well as for industrial estates Concern • Not significant Caution • Consumer Protection

8. Trading,Open Access and Multiple Licensing Opportunity • Acknowledges “trading” (purchase of electricity for resale) as a distinct but licensed activity in the electricity business. • Competition through multiple licenses • The Advent of Consumerism and Commercialization in the electricity supply business. Consumers to benefit in the long term. Concerns • Availability of network • Surcharge – Clarity / Viability Caution • Conflict of Interests

9. Antitheft Provisions Opportunities • The provision for antitheft legislation will help in reducing the commercial losses of the utilities Concerns • Socio Political Will • How fast government set up courts

10. Franchise Opportunity • A distribution licensee can distribute electricity through another person within its distribution area. • This will make way for micro distribution system concept through franchisees

11. Private Sector Investment Opportunity • Lot many • IPPs, CPPs, Rural, Trading ….. Concerns • Policy Decisions  • Market Conditions • Political Will Power Caution • If it does not happen now, It may never happen

12. Still Awaited … • National Electric Plan and Tariff Policy • CERC and ERCs to frame the Tariff guidelines within one year • Policy for Open Access – With in one year • Existing Distribution Licensees to be issued new license with in one year. • Norms for Trading License • Norms for setting up parallel distribution network • Notification for Rural Areas • Appellate Tribunal clarity to emerge after these are issued…

13. The Way Forward … While Power For All, On Demand, Anywhere and from Anywhere, is Nation’s dream - the key to emergence of a consumer friendly competitive electricity market scenario will depend on … • Building up adequate capacity both in generation and transmission • Reforms of SEBs – MUST at distribution level • Regional Players • Political will power – still a major factor

14. Thank You