Clarity continues to dodge the power sector. With private players flooding this core sector, the governments policy decisions are in a muddle. Instead of easing the power situation in the country, loadshedding and breakdowns are bound to increase. Not to mention the higher cost of power for the consumer.
At present the installed capacity in the country is about 83,000 MWs with more than 65 per cent with the state electricity boards. Also, the country at present faces an acute shortage of peak demand (20 per cent) which is likely to increase in the future. The SEBs (along with the Central and State) unable to generate adequate resources to meet the forecasted demand, thus initiated private sector into power generation (1992).
In this process over the past few years several policy changes have been announced but nothing seems to have happened with regards to increased power availability. The present thinking is to mend the power sector by trying to put an end to the existence of the SEBs and the CEA. The move to be adopted is to horizontally split the vertically integrated SEB which handles generation, transmission, distribution and sale of power into separate entities, while transmission is to be under a separate entity. CEA is to be replaced by a regulator at the national and state level. This will end the monopoly that SEBs have over power.
The government is toying with three issues for revamping the sector. These are, assured offtake of power from the IPPs; direct supply to consumers from power stations (For instance, NTPC is to supply power to the railways), and replacing the regional electricity boards (REBs) and regional load dispatch centres (RLDCs) with a corporation to transmit power on commercial lines.
Power shortages are mostly during the peak with surplus power being available during the base period. The state governments have agreed to absorb all the power generated by the IPPs. This would mean that cheaper power sources like hydel stations would have to back down. The regulator of the grid would be forced to meet the load (demand) in an uneconomical way and this would be passed on to the consumers.
The other point is allowing direct supply of power, like the NTPC supplying to the railways. There are many facets to this issue. NTPC by all means has suffered because of the large outstanding due from the SEBs. However, SEBs themselves are not be blamed, as tariffs (the only source of revenue for the Boards) have historically been set low for social reasons and since then have not been revised adequately. Direct supply by NTPC to the railways would spark off a trend among other power generators, thus leaving the non-paying customers (agriculture) with the government. However, this could be resolved by the implementation of the proposed Electricity Bill which would put an end to subsidised sale of power.
Is the government prepared to take such a bold step keeping in mind its past record, and, what is going to become of the heavy outstandings of the State Electricity Boards? Even if NTPC supplies to the railways, who is going to backup in case of a trip in one of the NTPC stations. Past experience has shown that states like Maharashtra have not allowed Goas share from Korba (NTPC power station) to reach them as the transmission line is owned by the state. Despite repeated assurances of backup from the state of Maharashtra
if Korba trips they have not been enough and Goa was the eventual sufferer.
Replacing REBs and RLDCs with corporations with a commercial outlook goes completely against the concept and responsibilities of the grid operator. For instance, the role of a grid regulator in Europe is to ensure the smooth functioning of the grid in the most efficient manner (economically and technically). This is possible because the regulator has no stake in any of the grid players. In contrast, a commercial outlook towards power transmission would mean power goes to areas where returns are maximum. But under our present condition of shortages, power would eventually have to be diverted to these areas.
The regulator is like a conductor of an orchestra who decides when and what notes to play. He should have complete knowledge of what the demand would be the following day and thus give appropriate instructions to the various players in the grid for generation, transmission and distribution. The crux of the concept is cooperation. This is followed both in the US and Europe.
One must remember two points for the efficient operation of the power sector as electric power cannot be stored the whole industry must cooperate when it comes to operation. This is the cornerstone for efficiency in the power sector. The importance of cooperation increases in a shortage situation.
Under the present shortage situation, the regulator is under tremendous pressure to meet the demand, whereby he has to sacrifice the optimal utilisation of stations and the grid. Moreover, players do not tend to co-operate and draw power beyond their entitlement. This causes the frequency to dip which results in wear and tear of machines, and increases the chances of system collapses.
Another important issue is investment in T & D systems. Investment for every MW calls for an equal investment in T & D as a rule of thumb. Our present network itself is highly overloaded as investment in T & D on an average has been 33 per cent with 33 and 132 Kv lines virtually remaining stagnant. The investment that is required by the end of the Ninth Plan for transmission alone works out to be Rs 220,000 crore (as a per target of 55,000 MWs at Rs 4 crore/ MW).
The actual investment figures for a strengthened T & D network would be much higher because of the under-investment in the past. The crucial question is, where is the money going to come from? The ministry seems to be preoccupied with investment in generation alone unless adequate investment is brought forward in transmission, generation levels (PLF) cannot be increased as power cannot be evacuated.
Then there is the question of scrapping CEA clearances. The clearances, which ensure the techno-economic feasibility, environmental clearances and fuel linkages for projects, have been projected as stumbling blocks. But these should not be undermined.
Scrapping of CEA clearances would remove the focus of power development at state, regional as well national levels. This would also mean that regional optimisation of power would not be possible. If projects are to be cleared at the state level, the present advantages of pit-head generation and inter-state sale of power would be sub-optimal and uneconomical for the consumer.
States with resources are bound to be at a more advantageous position than states without resources. Plants have to import fuel either from other states or from other countries. With increased reliance on petroleum-based fuels and no adequate hydel backup, the cost of power is bound to increase rapidly. Further, with subsidies being ruled out, these costs would have to be borne by the consumers. This would be more pronounced under a shortage situation as the consumer would have no option but to buy power at the price offered.
With no major addition to installed capacity coming for the next ten years, direct supply of power to consumers
is only going to be a retrograde step for the integrated power sector. System collapses are bound to become a common occurrence and we would have more areas under darkness for longer periods of time.
The present thinking is to mend the power sector by trying to put an end to the existence of the SEBs
