Power Distribution Reforms in India – a Journey from Monopoly Towards Competition.

2027 words 9 pages
Power Distribution Reforms in India – A journey from Monopoly towards Competition.
Case Objective:
Power a basic human need is the critical infrastructure on which modern economic activity is fully dependent. Only 55% households in India have access to Electricity. Most of those who have access do not get uninterrupted reliable supply. In this era of globalization, it is essential that electricity of good qualities is provided at reasonable rates for economic activity so that competitiveness increases, which is essential for higher GDP growth per annum, employment generation and poverty alleviation.
Legacy scenario prior to enactment of Electricity Act 2003:

Electricity distribution in India had been primarily a Regulated Monopolistic
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• The National Development Council was set up in 1993 to steer reform process and made following recommendations:

1. Re-orientation of Power Industry to be accountable to consumers.

2. Reform in state power sector to restore the autonomy of State Power utilities distancing the Goverment from the management of the SEB’s to enable them to function as corporate bodies.

3. Minimum tariff gradually to be increased so that it is not less than 50% of the Average cost of Generation and Distribution of electricity during the year.

4. Scheme of private sector participation in the power sector to attract domestic and foreign investment in a competitive environment so that the consumer of the retail may get power at the least cost.

5. Stringent measures for unauthorized use and theft.

• Reforms at the central level initiated in 1998, through enactment of Electricity Regulatory Commissions Act, which resulted in setting up Central Electricity Regulatory Commission (CERC) and state level (SERC). This Act was primarily enacted to distance the government and also to introduce professionalism in tariff determination through an independent agency.

• Finally came The Electricity Act, 2003.

Reformative points related to Power distribution are:

1. Open access in distribution to be introduced in phases. – Power Distributors and bulk consumers to have choice of selecting Power Generators resulting