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Regulatory process and TAP for public interest – case studies. Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates November 16-18, 2010, Pune, India Prayas Energy Group www.prayaspune.org/peg , [email protected]. Agenda. Case Studies - PowerPoint PPT Presentation
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Prayas - EGI Workshop, Pune Nov. 2010
Prayas EGI Workshop1
Regulatory process and TAP for public interest – case studies
Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates
November 16-18, 2010, Pune, India
Prayas Energy Groupwww.prayaspune.org/peg, energy@
prayaspune.org
Prayas - EGI Workshop, Pune Nov. 2010 2
Agenda
Case Studies Transmission and distribution losses Making government accountable Capital expenditure Load shedding Autonomy grievance redressal
mechanism Capacity Addition and Joint declaration
process
2
Prayas - EGI Workshop, Pune Nov. 2010 3
Exposing hidden Transmission and Distribution Losses (T&D loss)…1
Context Agricultural consumption – un-metered
supply Utilities estimate T & D lossGeneration – Metered Sales – Estimated
agricultural consumption = T&D loss Understatement of T&D loss
No transparency about commercial losses, theft etc.
Prayas - EGI Workshop, Pune Nov. 2010 4
Exposing hidden Transmission and Distribution Losses (T&D loss)…2 1999 – Utility filed application for tariff revision –
claimed T&D loss ~ 18% Prayas filed petition seeking data including
Region-wise sales, basis for estimation of agricultural consumption
During preliminary hearing Established importance of these data – Uncertainty of
costs - ~ Rs. 1900 Cr. v/s/ Tariff increase sought - ~ Rs. 1219 Cr.
Demonstrated that these data were available with utility
RC ordered utility to make public all data
Prayas - EGI Workshop, Pune Nov. 2010 5
Exposing hidden Transmission and Distribution Losses (T&D loss)…3
During public hearing Established that utility claims of
agricultural consumption were overstated
Claims not justified based on sample metering data compiled by utility
Claims not justified based on cropping pattern and production
Prayas - EGI Workshop, Pune Nov. 2010 6
Exposing hidden Transmission and Distribution Losses (T&D loss)…4 Simultaneous advocacy efforts
Media Awareness amongst CSOs
Procedural aspects Substantive issues in the proposal, tariff impact, flaws
in the proposal etc. Need to focus on ‘sectoral’ issues rather than
fight for reducing consumer category wise tariff
Utility forced to accept high level of T&D loss
Prayas - EGI Workshop, Pune Nov. 2010 7
Exposing hidden Transmission and Distribution Losses (T&D loss)…5
0%
10%
20%
30%
40%
50%
60%
1975 1980 1985 1990 1995 2000
% o
f E
nerg
y A
vaila
ble
T&D loss Agri. Unmetered Share
Maharashtra Utility: Estimated Theft of US $ 500 Mn p.a.
Prayas - EGI Workshop, Pune Nov. 2010 8
Exposing hidden Transmission and Distribution Losses (T&D loss)… 6Impacts and Lessons
Forced regulator and utility to initiate remedial measures RC established norms for ‘allowable’ T&D loss Stringent metering and energy audit
processes and administrative drives Increased attention and disclosure of more
information during subsequent tariff processes
T&D losses reduced from ~ 39 % to 25%
Prayas - EGI Workshop, Pune Nov. 2010 9
Exposing hidden Transmission and Distribution Losses (T&D loss)… 7Impacts and Lessons
Lessons Seek incremental gains – access to
data Innovative analysis Understanding of utility operations,
systems and ‘friends’ Multi- level interventions – RC
intervention and public advocacy
Prayas - EGI Workshop, Pune Nov. 2010 10
Agenda
Case Studies Transmission and distribution losses Making government accountable Capital expenditure Load shedding Autonomy grievance redressal
mechanism Capacity Addition and Joint declaration
process
10
Prayas - EGI Workshop, Pune Nov. 2010 11
Mumbai Grahak Panchayat - Govt. role in tariffBackground: minister talked about likely tariff,
directed MSEB to waive arrears of some consumers without announcing corresponding reimbursement
Issue: Government / MSEB cannot announce concessions in tariff (without government giving subsidy from budget),
restrain minister, SEB & start contempt process
Order: Government and SEB warned
Result: Government became cautious - some financial discipline, RC’s authority accepted
Prayas - EGI Workshop, Pune Nov. 2010 12
Government - Seeking permission for subsidyBackground: Government announced subsidy -
but was not disbursing it. Advisory Committee discussed the matter -> suggested RC to start action against Govt.
Issue: Govt. approached RC seeking permission for subsidy disbursement (and made provision in budget)
Order: Proposed disbursement schedule allowed
Result: Govt. financial accountability increased, timely payment being monitored by RC, public
Prayas - EGI Workshop, Pune Nov. 2010 13
Initial interventions are crucial After public hearings RC announced ‘in
camera’ technical validation sessions Prayas along with others opposed this and
forced RC to make these sessions open Several benefits
Opportunity to directly question utility and expose inefficiencies
Increased interactions with RC Opportunity for earlier intervention
Important precedence: All proceedings, hearings open for public and no ‘in camera’ hearings.
Prayas - EGI Workshop, Pune Nov. 2010 14
Agenda
Case Studies Transmission and distribution losses Making government accountable Capital expenditure Load shedding Autonomy grievance redressal
mechanism Capacity Addition and Joint declaration
process
14
Prayas - EGI Workshop, Pune Nov. 2010 15
Accountability for capital expenditure …1 Large impact of ‘prudent’ capital expenditure
on consumers – Service and tariff Was not addresses in earlier Regulatory
processes In response to 2003 Act, RC required to re-
formulate tariff regulations Forced RC to form multi-stakeholder
committee to prepare draft regulations Utility and consumer representatives Opportunity to interact with utilities in ‘non-
adversial’ setting
Prayas - EGI Workshop, Pune Nov. 2010 16
Accountability for capital expenditure …2 Tariff regulations
RC to give in-principle clearance for all capital expenditure schemes above Rs. 10 Cr.
Required RC to prepare ‘Guidelines for in-principle’ clearance for capital expenditure Utilities have to submit detailed project reports,
expected benefits, funding plan etc. Cost allowed in tariff if
‘in-principle’ clearance is granted Achievement of expected benefits – ‘prudence’ check
Prayas - EGI Workshop, Pune Nov. 2010 17
Accountability for capital expenditure …3 Recent Tariff Order - Consumer Submissions -
“TBIA submitted that a critical review of capital investment to the tune of Rs. 31,000 Crore provided to MSEB Utilities (MSPGCL, MSETCL and MSEDCL) and its impact on the consumers should be conducted.”
“If the projected benefits due to these capital expenditure schemes would have been realised then the tariff would also have been reduced in future years. … They requested the Commission to obtain data on benefits achieved due to each capital expenditure scheme vis-a-vis the benefits projected”
Prayas - EGI Workshop, Pune Nov. 2010 18
Accountability for capital expenditure …4 Commission decision –
“In the previous APR Order, directed MSEDCL to submit detailed report with established benefits vis-a-vis the benefits projected. Since, MSEDCL has not submitted the detailed report, the Commission has not considered any revision in capitalisation for FY 2007-08.”
“The Commission shall consider the disallowed capitalisation against such DPR schemes, once the benefits of such schemes are established by MSEDCL.”
Prayas - EGI Workshop, Pune Nov. 2010 19
Accountability for capital expenditure …5
Streamlined procedure for undertaking capital expenditure Certainty for utility Utility required to improve planning
and implementation of capital expenditure schemes
Enhanced accountability for effective capital expenditure
Prayas - EGI Workshop, Pune Nov. 2010 20
Agenda
Case Studies Transmission and distribution losses Making government accountable Capital expenditure Load shedding Autonomy grievance redressal
mechanism Capacity Addition and Joint declaration
process
20
Prayas - EGI Workshop, Pune Nov. 2010 21
Brief introduction MERC has formulated load shedding protocol
which defines number of load shedding hours for a region based on its distribution losses and collection efficiency
Protocol is defined through public process Utility in 2008 changed the protocol without prior
approval or notice and later filed petition claiming seeking revision of protocol
Separate petition claiming it is not possible to estimate load relief and hence protocol is not implementable was also filed simultaneously
Prayas - EGI Workshop, Pune Nov. 2010 22
Prayas intervention and commission’s ruling Detail presentation based on analysis
challenging the notion of inability to estimate load relief
Strongly attacked utility’s unwillingness towards being accountable in its load shedding practices
Commission supported views expressed and did not entertain the claims of inability to estimate load relief
Commission through public process issued modified protocol which covered wider option and gave higher flexibility to utility
Prayas - EGI Workshop, Pune Nov. 2010 23
Appellate Tribunal and load shedding committee
Utility challenged commission’s order before the Appellate tribunal for electricity (ATE) inter-alia questioning commission’s jurisdiction to define such a protocol
Prayas requested to be a party to the proceedings before ATE and made similar analysis based representation supporting the commission’s order
ATE upheld commission’s order as well as jurisdiction in defining such protocol and suggested more consultative process for arriving at the protocol by way of forming a load shedding committee that would comprise of representatives from utility, commission, load dispatch centre and consumer representatives
Prayas is a member of the committee formed in accordance with ATE judgment
Prayas - EGI Workshop, Pune Nov. 2010 24
Impacts and lessons Ensured commission’s jurisdiction in matters such
as load shedding protocol which are directly related to utility’s accountability
Lot of data was demanded for analysing utility claims. This made the process robust and rational and ensure that any further change in protocol will be based on such data and facts
Lessons: Intervention at all forums (in this case
commission and ATE) is necessary to ensure sanctity of a given judgment/verdict
Prayas - EGI Workshop, Pune Nov. 2010 25
Agenda
Case Studies Transmission and distribution losses Making government accountable Capital expenditure Load shedding Autonomy grievance redressal
mechanism Capacity Addition and Joint declaration
process
25
Prayas - EGI Workshop, Pune Nov. 2010 26
Introduction to the issue As per act forum(s) should be established by each
utility for addressing consumer grievances CGRF comprises of 2 members and chairperson PEG intervened in the process of defining rules for
CGRF demanding autonomy and independence of forum from utility’s influence. not more that one member to be utility
representative and chairperson should not be utility representative
PEG suggestion was accepted and implemented
Prayas - EGI Workshop, Pune Nov. 2010 27
Impacts and lessons Recently utility filed petition seeking amendment
in regulations allowing ex-utility officers to be appointed as CGRF chairperson
PEG again intervened and opposed such amendment demanding autonomy of the forum
Commission did not make any amendments Lessons:
Need for long term sustained effort Constant vigilance for changes that may erode
effectiveness of consumer interest related provisions
Prayas - EGI Workshop, Pune Nov. 2010 28
Agenda
Case Studies Transmission and distribution losses Making government accountable Capital expenditure Load shedding Autonomy grievance redressal
mechanism Capacity Addition and Joint
declaration process
28
Prayas - EGI Workshop, Pune Nov. 2010 29
Issue and context Background:
Rising load shedding and pressure for cross-subsidy reduction
Discussion at State advisory committee meeting PEG suggested discussion on capacity addition
planning to understands hurdles that utility’s face and collectively find solutions
Utilities extremely reluctant of discussion Tendency to avoid planning accountability
Issue of capacity addition planning again raised through tariff revision process based on regulatory requirements as per regulations
Prayas - EGI Workshop, Pune Nov. 2010 30
Tariff revision process Utility was forced to respond as demand was
based on regulations Preliminary capacity addition plan was
shared Meanwhile contradictory statements about
load shedding were made. Lack of clarity and or credible data
Tariff was revised several times the same year on account of various reasons
Consumers dissatisfied and agitated
Prayas - EGI Workshop, Pune Nov. 2010 31
Intervention Several consumer organizations came
together and formulated a joint statement of demands
Conferences based on joint demand agenda held at all major cities where public hearings were scheduled
Signature campaign undertaken through which around thirty thousand signed applications endorsing joint demands were sent to commission and government
Prayas - EGI Workshop, Pune Nov. 2010 32
Impacts and lessons RC directed utility to submit
comprehensive details Enhanced accountability while
approving long term agreements Focus on rational capacity addition need Lessons
Sustained public campaign is important Accountability and rational actions on
capacity addition – a long term agenda, sustained efforts needed