General

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This Blog is written by Ayushi  Aggrwal from University of Petroleum and Energy Studies, Dehradun. Edited by Swati Pragyan.

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INTRODUCTION

“Electricity is the soul of the universe” was once said by John Wesley. Benjamin Franklin while inventing electricity might have never thought himself that his invention would become so essential for the universe and could do wonders in the future. The importance of electricity could be observed from the fact that whenever in most parts of India, after cutoff power supply gets restored people happily acknowledge to each other that “electricity has arrived!” But why do we face cut-offs and who is behind regulating the supply of electricity across the country? There could be many reasons behind power cut-offs amongst which some of them are the shortage of production, damage to transmission lines, fault at power stations, substations, or different parts of the transmission system. The authority which regulates the distribution of electricity is the Central Electricity Regulatory Commission (CERC).

What is CERC?

CERC or Central Electricity Regulatory Commission is a crucial statutory body that regulates the transmission of power in India. It functions with quasi-judicial status under section 76 of the Electricity Act, 2003. By quasi-judicial body, one means anybody whose functions, powers and procedures resemble that of a court but it can’t be said to be a judicial body. In the 1990s when the government and most of the electricity industries were suffering heavy losses due to mismanagement in distribution and supply of electricity independent regulatory commissions were created by the government. In 1996 first state commission in Orissa and 1998 central commission has been created under the Ministry of Power’s Electricity Regulatory Commissions Act, 1998 whose main functions were to regulate electricity tariffs and transmission of electricity up to the boundaries of the state.

Initially due to low revenues and heavy losses government was tardy in providing services to the commissions; to save money government hired only government and judicial officials as the embers of the commission all over the country. Various steps have been taken by the commission to improve electricity-related issues in the country some of them were creating commissions both central and state, mega power projects, and opening out power generation, transmission, and distribution for new private investment. But various important steps such as enhancement of discipline in grid and power quality, performance-based regulations in tariffs, attracting more investment, meeting local surplus with demands by stimulation of trade, improvement of technical and commercial efficiencies in transmission and distribution were not yet taken.

This was the scenario in 2000, at that time Electricity Act, 2000 was not passed and was in discussion in the Parliament. In 2003, when this act was passed to introduce competition, to protect consumer interests, and provide power for everyone, the responsibility to discharge certain functions were provided by the act to the commission. The functions could mainly be divided into two broad categories viz. Mandatory Functions and Advisory Functions.

Mandatory Functions

• Its most important function is to regulate the tariff of electricity generating companies that are owned or controlled by the Central Government and of those electricity generating companies who enter into a composite scheme for sale and generation of electricity in more than one state.

• It also regulates the transmission of electricity between states and to determine the amount of tariff on them.

• Issuing permits to people operating between the states to act as transmission permit holders and electricity traders.

• To improve stakeholder’s access to information.

• To adjudicate disputes involving power generation companies or transmission licensees, and submit any disputes to arbitration.

• To charge fees for the Act.

• To specify the grid code according to the grid standard

• To specify and implement standards related to Licensee’s service quality, continuity, and reliability.

• If necessary, determine the trading margin in the inter-state power transaction.

Advisory Functions

• Formulate National Power Policies and Electricity Tariff Policies

• To promote competition, efficiency, and economy in the activities of the power industry

• To promote investment in the power industry

• Other matters referred to the Central Committee by the central government.

To perform these functions courteously, certain objectives have also been formulated by the Commission, which is as follows-

• Promote competition, efficiency, and economy in the bulk electricity market

• Improve supply quality

• Promote investment and advise the government on removing institutional barriers to bridge the gap between supply and demand, thereby promoting consumer interests.

To fulfill these objectives various missions have also been drawn up the commission-

• Improve the operations and management of the regional transmission systems through Indian Electricity Grid Code (IEGC), Availability Based Tariff (ABT), etc.

• Develop an effective tariff decentralization mechanism to ensure that tariff applications are processed quickly and on time, promote competition, economy, and efficiency in the pricing of bulk transportation and transportation services, and ensure the lowest value investment.

• Promote open access in interstate transmission

• Promote trade between the state

• Promote the development of power market

• Improve access to information for all stakeholders.

• Promote the technical and institutional changes needed to improve the competitive market for bulk electricity and transmission services.

• To recommend the elimination of capital and management barriers to entry and exit within the context of environmental, safety, and security aspects as well as the requirements of current legislation. This is the first step in establishing a competitive market.

DIFFERENCE BETWEEN CEA AND CERC

Since April 1, 1999, CEA has entrusted CERC to supervise the electricity prices of central government power companies, interstate power generation companies, and interstate transmission tariffs. Article 76 of the 2003 Electricity Law stipulates that CERC should be composed of a chairman and three other members. One of the CERC members (of course) must serve as CEA chairman. In the Indian power sector, CEA is responsible for Planning Regulation and Construction regulation whereas CERC is responsible for taking care of the third aspect of power sector regulation i.e., Tariff regulation.

The national electricity policy is usually formulated after consulting all three of the Central Electricity Regulatory Commission (CERC), the Central Electricity Administration (CEA), and the state government.

In March 2004, the Indian Institute of Management Ahmedabad (IIM-A) requested the Central Electricity Authority (CEA) and the Central Electricity Regulatory Commission (CERC) to merge because they must perform technical and economic regulatory functions in close cooperation. Although the Electricity Act, 2003 envisages that CERC and CEA have different identities. However, the Ministry of Power rejected the IIM-A’s recommendations by saying that, the duty of fixing electricity price belongs to the exclusive field of the Electricity Regulatory Commission (CERC), and no other entity or government can play any role in this regard.

IMPACT ON ENVIRONMENT

The environment has been affected highly by all the forms of electricity generation either it is air, water, or land. The production of electricity mainly involves production through coal and other minerals consequently, thermal power plants are required and from water for which hydropower plants. The emission of harmful greenhouse gases and other pollutants affects the atmosphere surrounding it. The set-up of these plants also requires huge masses of lands and mainly results in deforestation. The high amount of use of minerals could result in depletion of natural resources and nothing will be left for our future generations.

PROVISIONS

1. The Electricity Regulatory Commissions Act, 1998

This act establishes a Central Electricity Regulation Commission and National Electricity Regulatory Commission, rationalizes electricity prices, bring out transparent policies on subsidies, promotion of efficient and environmentally friendly policies and related matters.

2. The Electricity Act, 2003

The act provides provisions relating to power generation, transmission, distribution, trade and use of electricity, usually to develop the power industry, promote competition, protect and rationalize the interests of consumers and the supply of electricity to all regions, regulate electricity tariffs, ensuring transparent policies on subsidies, promoting efficient and environmentally friendly policies, the composition of Central Electricity Authority, Regulatory Commission and Appellate Tribunals for related or incidental matters.

MAJOR BLACKOUTS IN INDIA

1)    The 2^nd January 2001 blackout

After the failure of the Uttar Pradesh substation, the collapse of the northern power grid in the country was triggered, almost the entire north of India was blocked for approximately 12 hours on January 2. In Jammu and Kashmir, Punjab, Haryana, Himachal Pradesh, Rajasthan, the Union Territory of Chandigarh, and the capital of India New Delhi basic services, businesses, transportation, and domestic supplies are halted. This type of mega blackout due to power failure was rare in the country; it was the second failure of the eastern power grid within a few years. The fault affected about 226 million people, accounting for about a quarter of India’s population.

The blackout affected the hospitals as some surgeries can’t be performed, railway sector as electric trains blocked the lines and an insufficient number of diesel locomotives resulted in their non-removal from the tracks, households as the water supply were not able to supply water due to ceased functioning of treatment plants and pumping stations, the failure of pumps resulted in an inability to draw water from underground wells affected millions. Major cities were blocked due to traffic as the traffic lights went out; land and mobile phone services were severely affected. The airline computers malfunctioned, and the booking process was stopped. The only backup which was available with these sectors were generators, which only to some reflowed life or electricity in this period of the blackout.

The blame game has already been started, the public was full of rage and anger towards the government and blaming it for not handling things properly. However, the main reason seems to be outdated and inadequate transmission equipment, which was neglected by the government for years. An expert told the media that the blackout emerged because some grid equipment has been used for decades which cannot withstand the dramatic fluctuations in voltage.

There was a possibility of failure of the grid of the Southern region as it was also at a serious stage. The other five states of the southern region could also be included in the list of northern regions. The demands for privatization were raised as state governments were unable to handle the generation and transmission of the electricity. Since the opening of the economy, various foreign industries entered the country but their power demand was not met adequately.

The sector was in dire need of improvement and upgrading but if the power supply will be handed to private companies then they will involve more in filling their pockets and the deteriorating general public. The situation was handled by CERC but major reforms after passing of Electricity Act, 2003 majorly helped the electricity sector in improving.

2)    The 30^th and 31^st July 2012 Blackout

In the 1990s when the first wave of electricity reforms arrived, the concept of connecting regional grids to the national grid has been conceptualized. The concept was followed and Northern, Eastern, and Western grids were combined forming NEW Grids. This new grid made a balance between surplus and deficit generation of electricity between the regions and allowed the voluminous flow of power from west thermal power stations to east and north. To manage NEW Grids (National Load Dispatch Center) NLDC, Delhi and various (Regional Load Dispatch Centers) RLDCs has been established by the government

In India major electricity production is done with the help of thermal power plants in the eastern region and hydropower plants in the northern and northeastern regions. The Indian Electricity Grid operates at a frequency of 50 Hz but due to the failure of southwest monsoon the agricultural demand for electricity increased in the northern region this demand was supplemented by the power surplus of the western region this resulted in in the high outflow of power in Northern region. Due to which the NEW grid was operating in a strained situation throughout July. The situation worsened because out of four 400 kV lines only four were operational, which exerted enormous pressure on these two lines. Since the Agra Gwalior line was already carrying too much power on 29^th July it collapsed this happened 36 hours before the major breakdown. Even after this collapse, no actions were taken by the government to control the demand and supply of power. The tremendous pressure from political parties resulted in a continuous drawing of power from the grid and the system was compromised and supply to the northern region was automatically closed as a safety measure taken by the grids due to overflow of power. The power was restored by connecting the northern region with the western and eastern region but the tremendous pressure resulted in the collapse of whole NEW grid and just after 32 hours of first outage second one also occurred and covered 20 out of 28 states causing a blackout in northern, eastern and western region simultaneously. This was the major blackout which the country has faced to date which affected Jammu and Kashmir, Uttarakhand, Uttar Pradesh, Himachal Pradesh, Punjab, Haryana, Jharkhand, Chhatisgarh, Rajasthan, Delhi, the Union Territory of Chandigarh, Orissa, West Bengal, and seven sister states of east.

The restoration work was started soon but the process was time-consuming because the load to produce electricity was only on thermal power plants as insufficient rain resulted in negligible production of hydropower and thermal plants take time to cool down and reinitiate production. As power cuts were normal in India most of the business and utilities were having their backup, which keeps the flow uninterrupted.

The situation could have been controlled but was deteriorated. The most affected section in this situation was poor section as for most of the others it was a normal day. The questions on the management were once again raised and everyone was finding a scapegoat to blame for this blackout.

CONCLUSION

The article has discussed the Electricity Regulatory Commissions in India. It has done this by defining CERC, discussing its historical background, its functions, objectives, missions, impact on the environment, and provisions under which it is covered. The difference between CERC and CEA has also been discussed to clarify the working and area covered under the umbrella of CERC and CEA. The two major blackouts have put out the real condition of electricity before everyone. From 2001’s blackout to 2012’s blackout various major changes have been made by the commission to improve the efficiency of transmission and power generation but until and unless these will be managed properly problems keep occurring. The commission will have to come up with better administration as the lifeline of the nation is being handled by them. The main motive of commission should be to serve the nation and not state governments because to fill their own pockets private sector has already purchased its share and if both public and private sector will get involved in increasing benefit then who will promote the social welfare, the basic concept of socialism laid down in Preamble of the Constitution will be dissuaded. The electricity commissions should build up trust for them among the general public by promoting social welfare because the increased share of private sectors in electricity regulation could deteriorate the poor section of the society by redundantly. The commission should focus and promote more on the generation of electricity through renewable resources such as solar, geothermal and wind as these do not cause pollution and not even deplete natural resources.

REFERENCES

[1] S. L. Rao, “Electricity Reform and Regulation: Some Issues” Economic and Political Weekly, vol. 35, no. 26, 2000, pp. 2231–2234. JSTOR, http://www.jstor.org/stable/4409440.

[2] The official website of Central Electricity Regulatory Commission http://www.cercind.gov.in/index.html.

[3] Sarath Kumara, “World Socialist Web Site” India’s entire northern electricity grid collapses for 12 hours, (9^th January 2001) https://www.wsws.org/en/articles/2001/01/ind-j09.html.

[4] Anubhav Ratha, (2013). India’s Blackouts of July 2012: What Happened and Why? https://www.researchgate.net/publication/337171201_India’s_Blackouts_of_July_2012_What_Happened_and_Why.