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| We have had ten years of reforms in the power sector and little to show for it in terms of the final outcome. Reforms are justified only if they bring power to people, at least cost and uninterrupted power that is of high quality with stable voltage.
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| We have been beating around the bush as we are unwilling to confront the main problem. By now it is well known that the financial sickness of state electricity boards (SEBs) has been the root cause of our troubles. This sickness has been the outcome of subsidies to some categories of consumers and large-scale pilferage.
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| No one seems to be willing to bell the cat and reforms have progressed by stealth with hope at each stage that someone will bell the cat and catch the thieves and raise tariff for the agricultural users. We were always passing the buck.
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| The first step was to permit private power generation. Despite enormous initial enthusiasm, given the financial sickness of state electricity boards, not much success was obtained. If your only customer is bankrupt you would not want to get into that business.
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| The next step was to set up electricity regulatory commissions (ERCs) at the state and the central levels. These were to set tariffs and were to raise it for the farmers, because the unmetered supply at very low fixed cost was seen as the root cause of financial sickness.
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| However the politician appointed ERCs could hardly raise tariffs for farmers that the politicians were themselves reluctant to raise. The SEBs however did force transparency and commissioned studies concerning the actual use of electricity by the farmers.
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| These brought out the enormity of pilferage that was taking place in most SEBs as the estimates of so called T&D losses went up from around 20 per cent to nearly 40 per cent. Then followed privatisation and unbundling as also freedom to set up captive power plants.
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| The hope was that the private distribution companies would bring down pilferage and reduce tariff for those who were cross subsidising the farmers and the pilferers. This has so far not produced results and tariff for industrial consumers burdened by cross-subsidies has not come down.
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| It has however seen a rapid growth of captive power as the increasing burden of cross- subsidies made many industries go for captive power plants.
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| Today we have some 25,000 MW of captive capacity compared to about 100,000 MW of generating capacity with SEBs and central sector organisations. Yet the electricity supply continues to remain of poor quality.
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| The electricity Act has made some fundamental changes. The new Act has dismantled the monopoly power of SEBs as they are no longer the sole buyers and anyone, you and I, can buy and sell electricity to anyone.
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| Along with this has come availability based tariff. What this means is that the price at which electricity is bought and sold is determined by the availability of electricity in the system, relative to the demand at the moment.
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| When much more electricity is generated than is demanded, the frequency of supply goes up and correspondingly when the demand is more than the supply, the frequency goes down. The normal frequency is 50 cycles per second.
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| This availability-based tariff provides incentives to buyers and sellers to even out their consumption and generation across the hours. A market for electricity i.e. a market for electrons (as lawyer Hemant Sahai who also trades in electricity calls it), has evolved.
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Today, power is traded in various regional electricity grids and between regional grids, and the price is determined for every 15 minute slots, depending on the frequency of supply. The price and frequency can be seen on the ticker tape in real time on the website of the Northern Regional Grid
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