Power Reforms : Danger of Bureaucratisation

The power sector is undergoing a round of reforms with its centrepiece being the establishment of the electricity regulatory commissions (ERCs). This follows the passing by parliament of the Electricity Regulatory Commission Act in 1998 which was duly followed by several state Acts on more or less similar lines. In essence, these legislations call upon the central and state governments to set up multi-member commissions for regulation of the electricity supply industry (ESI). The centre and 12 states have already appointed regulatory commissions and states such as Kerala, committed to power sector restructuring, may soon be appointing these commissions.

The responsibilities of the commissions include fixation of tariffs for sale of power at different levels; fixation of transmission charges for wheeling of power; licensing of power plants; and overseeing of grid operations and grid discipline. All these are onerous responsibilities. The failure of grid discipline, for instance, not only results in breakdown and power tripping but can also cause damage to expensive assets. Incorrect tariff fixation can result in either erosion of long run financial viability of the ESI at one end or expensive industrial and agricultural power resulting in reduced competitiveness.