Recommendations of the "FOIR GROUP" on intra-state ABT

Minutes of the 9th Annual General Body Meeting

Minutes of the 8th Annual General Body Meeting

Minutes of the 7th Annual General Body Meeting

Minutes of the 6th Annual General Body Meeting

Minutes of the 22nd General Body Meeting

Minutes of the 21st General Body Meeting

Minutes of the 20th General Body Meeting

Minutes of the 19th General Body Meeting

Minutes of the 18th General Body Meeting

Minutes of the 17th General Body Meeting

Minutes of the 16th General Body Meeting

Minutes of the 14th General Body Meeting

Minutes of the 5th Annual General Body Meeting

The First Meeting of the Forum was inaugurated by Shri P. Kumarmangalam, Hon’ble Minister of Power, Government of India. The Hon’ble Minister and other delegates were warmly welcomed by Prof. S.L. Rao, Hon. Chairman who outlined the objectives with which the Forum was established and emphasised that the Forum would also fill the much felt gap in research and development and thus enable a multi-disciplinary approach to the problems facing the electric power sector. Shri S.C. Mahalik, Hon. Sr. Vice Chairman, in his introductory speech, emphasised the necessity for standardisation of terms and conditions of appointment of regulators and the regulatory staff as also the need for a common approach to the regulatory process.

In his inaugural address the Hon'ble Minister emphasised that independent regulation in the electricity power sector had been established to deal with the problems of less than adequate governance and specialist supervision in the sector, which had become endemic over time. He assured regulators the full support of the Government, but cautioned the regulatory community that in the final analysis, they would have to draw support from the popular mandate and approval of the people of India. The Hon’ble Minister also emphasised that though the regulation of tariff was one of the primary tasks of regulators in view of the existing tariff distortions, adequate care had to be taken to ensure coterminous improvements in the quality of supply. Regulation, by its very definition is a comprehensive concept he felt and regulators had to be aware of, the interests of all stakeholders while safeguarding them. This was essential if they were to succeed in their objective of equitable, efficient and sustainable development of the electric power industry in India.

The vote of thanks was delivered by Shri V.S. Ailawadi, Hon. Vice Chairman, who assured the Hon’ble Minister that the regulatory community would make all efforts to discharge the responsibilities given to them by the Government and thanked the Hon’ble Minister for his support and encouragement to the process of independent regulation in India.

The meeting also reviewed the developments in various SERCs regarding the recruitment of staff, sanction of budget, formulation and approval of process based regulations and the experiences of different Commissions in establishing the infrastructure required for efficient functioning. The Members were briefed in this regard by Justice Shacheendra Dwivedi, Chairman, MPERC, Shri G.P. Rao, Chairman, APERC, Justice D.G. Karia, Chairman, GERC, Shri J.L. Bajaj, Chairman, UPERC, Justice N.N. Bhattacharjee, Chairman, WBSERC, Shri E.C. Arunachalam, Member TNERC as well as Shri V.S. Ailawadi, Chairman, HERC and Prof. S.L. Rao, Chairman, CERC. The meeting was also attended by the Secretary, Energy from the Governments of Goa and Karnataka who briefed members on the steps taken by their respective Governments to introduce the Reform Bills and related measures.

The meeting also considered and adopted the draft Memorandum of Association and the proposed Rules and Regulations for constituting a society called the "National Forum of Regulators". It was accordingly resolved that steps be taken to register the National Forum of Regulators under the Societies Registration Act in the NCT of Delhi.

The meeting approved the induction of Infrastructure Development Finance Corporation (IFDC) as an Institutional Member of the Forum. The meeting also included a presentation by Dr. Bernie Tennenbaum, Associate Director, Office of Economic Policy, Federal Energy Regulatory Commission of the U.S. who spoke on "Centre-State Relations : The Regulatory Process in U.S.". It was of great interest for members that there was considerable similarity, not only in the legislative and administrative arrangements for regulation of the power sector between the United States of America and India, but in the nature of cross jurisdictional issues which could arise in the context of Centre-State relations. In most cases in the U.S., the relationship has been settled through judicial interpretation, while in select cases judicious compromise and adjustment, based on economic rationale, has found the most optimum solution to the problem of overlapping jurisdiction and divergent objectives.

The Policy Advisory Group of the IDFC also presented "A Vision for the Indian Power Sector" which traced the genesis of the problems facing the power sector in India and outlined the various options available for reform.

The General Body approved the change in name of the Society from the "National Forum of Regulators" to the "Forum of Indian Regulators", as advised by the Registrar of Societies. General Body approved the logo of the Society and also decided on the rates of subscription for different categories of members. Members also identified the following key areas for future discussions and research;

• The relationship of regulators with Governments and the judiciary.

• The optimum scope of regulatory jurisdiction for SERCs, particularly those which have been constituted under the ERC Act, 1998 under which the jurisdiction is much more limited than envisaged for Commissions constituted through State Acts.

• Redressal of consumer-complaints, improvements in customer servicing, minimum service standards, quality of service linked incentives and universal service conditions.

The Forum would also make efforts to network with the Policy Group of Carnegie Mellon University, United States, where Dr. V.S. Arunachalam is leading the research efforts on policy reforms in the Indian electricity sector.

The Forum resolved to set up a Sub-Group on Legal Affairs consisting of Shri A.R. Ramanathan, Member, CERC, Justice S.C. Dwivedi, Chairman, MPSERC, Justice D.G. Karia, Chairman, Gujarat SERC and Shri S.C. Mahalik, Chairman, Orissa SERC.

Members were also addressed by Ms. Linda Breathitt, Commissioner, FERC, U.S.A and Mr. James Conelly, Commsioner, MDTE, U.S.A on "Regional Trading Arrangements and the Evaluation of Bulk Markets in the US – relevance to India." The session was chaired by Prof. S.L. Rao, Chairman, CERC. Many of the issues facing the United States in reshaping the arrangements for regional trading were common to those facing the Indian developers and regulators of the grid. It was also felt by the overseas visitors that the arrangements for regional system control and operation in the Inter State Transmission System in India had lessons for the new arrangements being conceived for the U.S.A.

Members also heard the views of Shri D.P. Sinha, Member, CERC, Shri E.C. Arunachalam, Member, TNERC, Shri Bhanu Bhushan, Director, PGCIL and Mr. Roger Woods, Country Director, National Grid, on relevant issues in harmonising the Indian Electricity Grid Code with State Govt. Codes. The session was chaired by Shri V.S. Ailawadi, Chairman, HERC.

In a technical session on the "Traditional Judicial Process : A Review of its applicability for regulatory commissions", chaired by Justice S.C. Dwivedi, Chairman, MPERC, members heard the views of Shri A.R. Ramanathan, Member CERC and Justice N.N. Bhattacharjee, Chairman, WBERC. It was agreed that regulatory commissions had to be flexible in process while maintaining the dignity of the courtroom.

The meeting was attended by representatives from the newly created Delhi ERC and Rajasthan ERC. This was also the first meeting after the formal registration of the Forum with the Registrar of Societies in the NCT of Delhi on February 4, 2000.

In the interim period since the 2^nd meeting, Justice N.N. Bhattacharjee, Chairman, WBERC had retired. Members accordingly resolved to fill the resultant vacancy on the Governing Body by approving the name of Shri J.L. Bajaj, Chairman, UPERC.

Members also resolved to formalise and enhance the work relating to development of position papers on various subjects of interest to the Forum. Accordingly, the following four Sub-Committees were formed :-

Committee on Legal Affairs : The Committee would be chaired by Justice S.C. Dwivedi, Chairman, MPERC and include Justices D.G. Kaira, Chairman, GERC, Shri S.C. Mahalik, Chairman, OERC, Shri J.L. Bajaj, Chairman, UPERC and Shri A.R. Ramanathan, Member CERC, as Members.

The mandate of the Committee would be:

• Identify areas of cross-jurisdictions between the centre, states and across regulatory bodies of other sectors.

• Identify contradictions and inadequacies of legal provisioning.

• Propose amendments or alternative mechanisms for making the legal provisions relating to regulation comprehensive, clear and effective.

• Consider issues relating to amendment of the existing electricity laws in the context of the work being done by the NCAER on behalf of the Govt. of India.

Committee on Tariffs : The Committee would be chaired by Shri P. Subrahmanayam, Chairman, MERC and would have Shri G.S. Rajamani, Member CERC, Shri D. Laxmi Narayana, Member APERC, Shri Ramesh Chandra, Member HERC and Shri D.K. Roy, Member OERC, as Members.

The mandate of the Committee would be:

• Review the broad principles and procedures for tariff determination as available in the ERC Act and related legislation.

• Consider alternative methodologies for tariff determination.

• Propose mechanisms and arrangements for ensuring the adoption of uniform tariff principles, which would meet the objectives of equity, competitiveness, economy and efficiency.

Committee on Competition : The Committee would be chaired by Shri J.L. Bajaj, Chairman, UPERC and would have Prof. S.L. Rao, Chairman CERC, Shri B.M. Oza, Member GERC and Shri R.P. Ganguly, Member WBERC, as Members.

This mandate of the Committee would be;

• Consider the possibility of introducing competition in the electric power industry.

• Propose an agenda for adoption within the constraints of the existing legislation as well as keeping in mind the technological and institutional structure of the power sector in India.

Committee on Communications : The Committee would be chaired by Shri S.C. Mahalik, Chairman, OERC and would have Shri Jayant Deo, Member MERC, Shri D.P. Sinha, Member CERC and Shri Shanti Prasad, Member RERC, as Members.

The mandate of the Committee would be:

• Consider alternatives for ensuring effective communication between utilities, regulators, Government, consumers and civil society groups.

• Examine the potential for adoption of the latest information technology to enable effective data sharing between regulatory commissions and utilities.

Presentations were also made on the recently issued Availability Based Tariff (ABT) order of the CERC dated January 4, 2000 by Shri Sanjeev S Ahluwalia, Secretary, CERC and on the Bulk Supply and Retail Tariff orders issued by the Orissa ERC in December 1999 by Shri S.C. Mahalik, Chairman, OERC.

Members noted that Shri S.C. Mahalik, Chairman, OERC is due to retire on March 31, 2000. The Forum expressed its gratitude and thanks for the services rendered by him to the Forum as its Senior Vice Chairman and hoped that Shri Mahalik would continue to be associated with the activities of the Forum.

Members also approved the nomination of Shri V.S. Ailawadi, Chairman, HERC as Sr. Vice-Chairman, FOIR, subsequent to the retirement of Shri S.C. Mahalik and the nomination of Shri G.P. Rao, Chairman, APERC as Vice Chairman, FOIR.

Since this meeting was the last meeting of the financial year, Members reviewed in detail the work done by the various ERCs. Chairman, MERC, Shri P. Subramaniyam briefed members about the tariff application filed by Maharahstra State Electricity Board (MSEB) with the MERC and the possible options before the MERC. He felt that a strict merit order for despatch, rationalisation of subsidies and the correct estimation of price linked demand would be essential to discharge the statutory obligations of the MERC. Chairman, MERC also briefed members on the circumstances under which the MERC had been forced to stay the waiver given by the Govt. of Mahrashtra to the outstanding bills of the Bhiwandi Powerlooms.

Chairman, KERC, Shri Philipose Matthai briefed the members about the preliminary work being done by the KERC in formulating its process regulations.

Chairman, UPERC, Shri J.L. Bajaj informed members of the need to educate the public and the utilities regarding inefficiencies in the existing system and their severe financial consequences through more vigorous surveys, data-collection and analysis. He was also of the view that strict adherence to a judicial pattern of functioning would unnecessarily restrain the regulators from discharging their developmental role.

Chairman, GERC, Justice D.G. Karia briefed members on the extensive public consultations conducted by the GERC in the tariff application submitted by GEB and detailed the extent of public dissatisfaction with the system of functioning of the GEB and the cost-plus nature of the tariff regime.

Chairman, DERC, Shri V.K. Sood briefed members about the efforts in making the DERC functional through the appointment of staff and the provision of other basic infrastructure facilities.

Chairman, MPERC described the pro-active efforts of the MPERC in holding wide ranging consultations with consumers to understand and appreciate their problems. He also briefed members about the circumstances under which MPERC had been forced to stay the tariff revision done by the Govt. of M.P. after coming into existence of the MPERC. He also informed that the Government had subsequently appealed against the stay to the Hon’ble High Court of M.P.

Thiru E.C. Arunachalam, representing the TNERC, briefed Members on the steps being taken by the Commission to organise its internal functioning in preparation for the tariff filing to be submitted by TNEB. It was noted that Government had yet to appoint the Chairman of the TNERC and that, the Commission had not been given its tariff determination powers.

Shri D.K. Roy, representing the OERC, briefed the Forum about the circumstances under which the OERC had been forced to provide for a differential bulk supply tariff so as to achieve the objectives of uniform tariff in its most recent tariff order. This order has been appealed against and the decision of the Hon’ble High Court was awaited.

A presentation was also made by Shri A.R. Ramanathan, Member CERC on the draft Electricity Bill, 2000 prepared by NCAER. It was decided that members would individually respond on this draft to the Chairman of the Committee on Legal Affairs. The Committee would take a view by April 15, 2000 for onward transmission to the Government of India.

Shri Bhanu Bhushan, Director, PGCIL briefed members on the implications of the Availability Based Tariff (ABT) for maintaining the stability of the inter-state grid and for optimising the cost of supply for beneficiaries. While disagreements were voiced about the resultant equity aspects, there was a wide agreement that given the under-developed nature of the system for measurement, communication and control, there was no alternative to implementation of the ABT. It was suggested that this would be a useful mechanism within the intra-state grids as well.

Prof. R. Narasimha, Director of National Institute of Advanced Studies (NIAS) reviewed the status of electric power sector in general and the work done by his Institute to support reforms. He stressed the need for market based solutions, aggressive development of appropriate technology keeping in mind the natural resources of the country and demand side management. He felt that the inadequate application of science & technology to solving the problem of sustainable energy supply in India had contributed significantly to the existing inadequacies.

Prof. V. Ranganathan of the Indian Institute of Management, Bangalore spoke on the applicability of Schedule-VI of the Electricity Supply Act, 1948 as also the options for performance based rate making (PBR). He was of the view that Schedule-VI is a viable and useful format and could be adopted to meet the challenges of the PBR.

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