et_hr_fin_civil 2008 batch 20 nov08
TRANSCRIPT
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Commercialand
RegulatoryMechanism
Sandeep Naik, Sr Manager (Commercial), NTPCLtd
20th November
2008
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NTPC Limited
CORPORATE VISION:
A WORLD CLASS INTEGRATED POWER MAJOR, POWERING
INDIAS GROWTH, WITH INCREASING GLOBAL PRESENCE
CORE VALUES:
B - BUSINESS ETHICS
C - CUSTOMER FOCUS
O - ORGANIZATIONAL & PROFESSIONAL PRIDE
M - MUTUAL RESPECT AND TRUST
I -INNOVATION & SPEED
T - TOTAL QUALITY FOR EXCELLENCE
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In this Presentation
Indian Power Sector
Electricity Regulation in India Electricity Act 2003 and its provisions
Regulatory Framework in Indian PowerSectorRole of Electricity Regulatory Authorities
NTPCRole of Commercial functions
Challenges ahead
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Indian Power Sector
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Indian Power Sector
Installed Capacity: 1,45,555MW
(As on 30.09.2008)
Central Sector
48,470 MW
State Sector
75,838 MW
Private Sector
21,247 MW
GENERATION
DISTRIBUTION
TRANSMISSION
100% with Government owned utilities.
> 95% with State Discoms , rest with Privateutilities.
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Indian Power Sector
PEAK DEMAN
108886
152786
218209
298252
2007-08 2011-12 2016-17 2021-22
Base Bemand (BU)
737
968.6
1392
1915
2007-08 2011-12 2016-17 2021-22
Year BaseDemand (BU)
AnnualPeak
Demand(MW)
2007-08
737 108886
2011-12
968.6 152786
2016-17
1392 218209
2021-22
1915 298252
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Indian Power Sector
In the year 2007-08, the total electricity
generation was about 704.4 billion units of
energy with a growth of 6.3% over the previous
year.India faces Energy shortage of 26407 MU,
(10.4 %) and Peak shortages of 15560 MW
(14.6%) in the year 2008-09 (till Oct08).
The per capita electricity consumption in the country was 704
KWhr in 2007-08, Ministry of Power projected per capita electricity consumption
is 1000 KWh by the year 2012.
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Electricity Industry Structure
State
Joint
Private
SEBs
DVC,
Under MOP: NTPC, NEEPCO
Other Ministries: NLC,Central
State
CTU-Power GridCentral
STUs- SEBs
State STUs- SEBs
Private Licensees
Power Trading: PTC, NVVVNL Financing: PFC, REC
IPPs
/State GenCos
, Pvt DisComs
/State DisComs
/State TransCosTransmission
Distribution
Generation
Distribution
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Power Utilities
Following 8 states still operating with SEB structure: Punjab, Himachal Pradesh, Chhattisgarh, Kerala, Tamil
Nadu, Bihar, Jharkhand, & Meghalaya. Restructured status of other states is as given below :-
State Generation Transmission Distribution Sale & Purchase
Haryana 2 Discoms Discoms
Rajasthan 3 Discoms Discoms
Delhi 5 Discoms Discoms
UP 5 Discoms Trading Co.
Uttaranchal Trading Co.
Gujarat 4 Discoms Trading Co.
Maharashtra 1 Discom Discom
MP 4 Discoms Trading Co.
AP 4 Discoms Discoms
Karnataka 5 Discoms Discoms
Orissa (2) 4 Discoms Trading Co.
West Bengal 1 Discom Discom
Assam 3 Discoms ASEB
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Power Sector development
PRINCIPLES
Availability 24/7 Power to all consumers.
Accessibility
Universal service obligation
Reliability No load shedding, adequate peakingcapacity & spinning reserve.
Quality Stable Voltage & Frequency.
Efficiency Delivered power to the consumer to reflectmost efficient Kw hr consumed by user toK-Cal fed as fuel.
Incentive for efficiency improvement &increase in competition
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Electricity Regulation in India
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The Electricity supply industry wasearlier governed by three Acts, namely
Indian Electricity Act, 1910
Electricity (Supply) Act, 1948Electricity Regulatory CommissionsAct, 1998
The above three Acts now repealed in
Electricity Act, 2003.
History of ElectricityRegulation In India
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Electricity Regulation in India
Regulatory Milestones
1910 1948 1975 1998 2003
IE Act ES Act EACentral Utilities ERC ACT
British India-
agglomeration of provincesIndian Union
Isolated Private LicenseesIsolated
SEBs
Regional
SystemCentral Utilities Central Utilities, IPPs,
CTU, SEBs
Early British Model State Govt Central Govt Regulator
Country
Status
Sectoral
Makeup
Institutional
Structure
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Growth of the sector through licensees. Licence by
State Govt. Provision for licence for supply of electricity in aspecified area. Legal framework for laying down of wires and otherworks.
Provisions laying down relationship betweenlicensee and consumer.
Indian Electricity Act, 1910
The supply of electricity was limited to urban areasand most of the country was deprived of electricity.
The situation was so grim that after independence nota single private organization was competent toadminister the power supply in the country, thereby,
making way for state participation in the power sector.
Indian Electricity Act 1910 laid down the basicframework for the power sector in the countryalong with all the policies governing the electricity
supply in India.
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The Act concentrated on increasing statemonopoly over the sector by
Mandated creation of SEBs.
Need for the State to step in (throughSEBs) to extend electrification (so farlimited to cities) across the country
As a result of this, 19 SEBs (StateElectricity Boards) were formed underthe Act which enjoyed monopoly overgeneration, transmission and distributionat the intra-state level.
However the power situation lacked inquality, security and reliability.
Electricity (Supply) Act, 1948
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Electricity (Supply) Act, 1948
In 1975, the Electricity (Supply) Act 1948
was amended to improve the financial
position of the state controlled power
sector by allowing central government toparticipate in generation and transmission
of electricity.
As an outcome of these amendments, the
GoI set up National Thermal PowerCorporation Ltd. (NTPC) and National
Hydroelectric Power Corporation Ltd.
(NHPC) to supplement the effort of states in
generation and strive for greater capacityeneration.
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In order to strictly implement reforms andrestructure of the tariff structure, secondgeneration reforms were introduced.
In 1998 the GoI implementedThe ElectricityRegulatory Commission Act, 1998 .
It emphasized on the establishment of state andcentral level electricity regulatorycommissions( ERCs) for rationalizing the tariffstructure, creating transparency in the system andto frame and promote environmentally benign
policies.
Electricity Regulatory CommissionsAct, 1998
The SEBs incurred heavy loses and failed to make thenecessary payments to the CPSUs. Owing to their bulkydesign these utilities were inevitably becomingcumbersome to manage. Therefore, the administrationdecided to unbundle the utilities into more 'manageable'
size which paved the way for the Electricity Act 2003
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The Electricity Act, 2003
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The Electricity Act, 2003
This Act seeks to consolidate The laws relating to generation, transmission,
distribution, trading and use of electricity Taking measures conducive to development of
electricity industry, promoting competition, Protecting interest of consumers and supply of
electricity to all areas, Rationalization of electricity tariff ensuring
transparent policies regarding subsidies, Promotion ofefficient and environmentally benign
policies,
Constitution of Electricity Regulatory Commissionsand establishment of A ellate Tribunal and for
Electricity Act, 2003 - enacted June 10th 2003,envisages developmentin an open, nondiscriminatory, competitive, market drivenenvironment in the interest of the consumers/ suppliers of power.
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Scheme of Electricity Act 2003
I : Introduction (# 1 & 2)
II : National Electricity Policy & Plan (# 3-6)
III : Generation (# 7-11)
IV : Licensing (# 12-24)
V : Transmission (# 25-41)
VI : Distribution (# 42-60)VII : Tariff(# 61-66)
VIII : Works (# 67-69)
IX : CEA (# 70-75)
X : CERC & SERCs (# 76-109)
XI : Appellate Tribunal (# 110-125)
XII : Investigation & Enforcement (# 126-130)XIII : Reorganization of SEBs (# 131-134)
XIV : Offence & Penalties (# 135-152)
XV : Special Courts (# 153-157)
XVI : Dispute Resolution/Arbitration (#158)
XVII : Other Provisions (#159-165)
XVIII : Miscellaneous(#166-185)
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Government only to formulate policies.
Regulatory Commissions to regulate tariffand issue of licenses.
SEBs will no longer exist in the existingform, they will be restructured intoseparate generation, transmission anddistribution licensees. Regulatory function
has been taken away.
Power trading recognised as a distinct legalactivity.
Generation free from licensing. Capacity
Salient features of theElectricity Act, 2003
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Hydro requires concurrence of theAuthority and Government for optimumutilisation of water resources.
Captive generation has been liberalisedand no permission required.
Captive plants can sell extra power to grid.
Tariff will be subject to regulatorycommission.
Transmission utilities not to engage in thebusiness of generation/trading/distribution
of power and to provide open access to
Salient features of theElectricity Act, 2003
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Tariff for sale of power to be regulated onlyfor sale by generating company todistribution licensee.
Direct power supply to consumers permittedas and when open access is allowed by stateregulator.
Initially open access will be with surchargein lieu of cross subsidies. Surcharge to begradually reduced in phased manner.
The act has enabling provisions.Government policies will have to spell outthe requirement of the sector and guiding
Salient features of theElectricity Act, 2003
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Anti-theft legislation made stringent withpenalties for each offence clearly spelt out.
Provision for more than one licensee in same
area of supplyNo requirements for license in generation anddistribution for rural areas, and forcooperatives, Panchayat etc.
No tariff fixation by ERC if competitive biddingfollowed, or where consumers allowed openaccess enter into agreement withgenerators/traders
Consumer tariffs to reduce and move towards
Salient features of theElectricity Act, 2003
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Role of Government Generation Transmission
Distribution Open Access Trading / Market Development Regulatory Commission / Appellate
Tribunal Tariff Principles Consumer Protection Measures against Theft of
electricity Restructurin of SEBs
Salient features of theElectricity Act, 2003
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National Electricity Policy and Plan
Central Govt. to prepare National Electricity Policy and Tariff
Policy in consultation with State Govt. and Central ElectricityAuthority. (Clause 3(1)).
National Electricity Plan for a period of 5 years to be issued by
Authority in accordance with National Electricity Policy (Clause
3(4)).
National Policy on rural electrification including stand alone
systems to be issued by Central Government in consultation with
State Government (Clause 4 & 5).
Role of GovernmentRole ofGovernment
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Electricity Act, 2003
Provisions to Promote PowerGeneration
1. Generation Delicensed
2. Liberal captive generation
provisions3. Open access for supply to direct
consumers
4. Trading
5. Tariff based competitive bidding
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1. Generation Delicensed
Earlier TEC from CEA was a pre-
condition for setting up generatingcapacity
CEA used to take considerable time in many cases, 1-1 years for
giving TEC. Before TEC, even the beneficiaries
were required to be identified. All these requirements have been
dis ensed with.
Electricity Act, 2003Provisions to Promote PowerGeneration
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1. Generation Delicensed (contd) Generating company can set up a power
plant without any TEC from CEA providedthey have availability of
Land Fuel linkage Water linkage Environmental clearance
There is no pre-condition for identifyingcustomers.
Even the financial institutions areprepared now to finance the project based
on its cost of power, without having a pre-condition of lon term PPAs with
Electricity Act, 2003Provisions to Promote PowerGeneration
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2. Liberal Captive Generation Provisions
Clause 2(8)
Captive generating plant means a power plant
set up by any person to generate electricityprimarily for his own use and includes a powerplant set up by any co-operative society orassociation of persons for generating electricity
primarily for use of members of such co-operative society or association.
No clearance required from CEA or StateGovernment for setting up of captive generatingplant (Clause9(1)).
Captive generating plants are permitted to
Electricity Act, 2003Provisions to Promote PowerGeneration
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Clause 9(2)
Every person, who has constructed a captivegenerating plant and maintains and operatessuch plant, shall have the right to open accessfor the purposes of carrying electricity from hiscaptive generating plant to the destination ofhis use.
Clause 38 (provision)
Provided also that such surcharge shall not beleviable in case open access is provided to a
person who has established a captivegenerating plant for carrying the electricity to
the destination of his own use.
Electricity Act, 2003Provisions to Promote PowerGeneration
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Govt. of India vide the Rules issued in May05have further clarified that
Generating stations will quality as a captive
plant provided it has a captive consumption ofmore than 51%.
In case of SPU for setting up captive project acaptive consumer can have equity only upto
26%.
In case of group of members, association ofpersons, all persons together can fulfill abovecriteria.
Electricity Act, 2003Provisions to Promote PowerGeneration
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3.Open Access for Supply to Direct Consumers
Electricity Act 2003 envisages open access to bulkconsumers in a phased manner to ensure openaccess to consumers having connected load of more
than 1MW by January, 2009.
Open access in transmission and distribution willprovide opportunities for the generating companiesto supply power directly to bulk consumers.
These provisions will provide flexibility to theconsumer in selection of consumers.
Generator will no more be a captive supplier of State
Power Utilities.
Electricity Act, 2003Provisions to Promote PowerGeneration
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4. Trading
Trading has been recognised as alegal/licensed activity.
After enactment of the Act, almost about 9-10different inter-state trading companies havegot registered.
Trading activities have improved utilisation of
the existing generation capacities.
Operating PLF have now improved to almost74%.
Further, now many of the IPPs are entering intoa reement with tradin com anies for sale of
Electricity Act, 2003Provisions to Promote PowerGeneration
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There would be Transmission Utility at the Centre and in the States to
undertake planning & development of transmission system. (Sections 38 &
39)
Load despatch to be in the hands of a govt company/organisation. Flexibility
regarding keeping Transmission Utility and load despatch together orseparating them. Load Despatch function critical for grid stability and
neutrality vis a vis generators and distributors. Instructions to be binding on
both. (Sections 26, 27,31, 38, 39)
Private transmission companies to be licensed by the Appropriate
Commission after giving due consideration to the views of the Transmission
Utility. (Sections 15 (5) (b))
The Load Despatch Centre/Transmission Utility / Transmission Licensee not
to trade in power. Facilitating genuine competition between generators.
(Sections 27, 31, 38, 39,41)
Transmission
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Requires licensing (Clause 12).
Commission can issue two or more licenses for distribution
of electricity through their own distribution system in the
same area (Clause(14)).
Distribution licensee can engage a franchisee to undertake
distribution in his area of supply (Clause(14)).
All supply would need to be metered within 2 years.However, State Commission may extend this period for
completing the task of metering (Clause 55(1)).
Distribution
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Every distribution licensee shall establish a forum for redressal
of grievances of the consumers within six months as per
guidelines of the commission (Clause42(5)).
Distribution licensee to provide supply within the period asspecified by the commission or else a penalty upto Rs. 1000 per
day to be paid (Clause 43(3)).
Disconnection of supply in case of default of payment after
giving 15 days notice (Clause 56(1)).
Provision for suspension/revocation of licence by Regulatory
Commission as it is an essential service which can not be
allowed to collapse. (Sections 19, 24)
Distribution
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Open Access
Open access to the transmission lines to beprovided to distribution licensees, generatingcompanies. (Sections 38-40)
This would generate competitive pressures and
lead to gradual cost reduction.Open access in distribution to be allowed by
SERC in phases and to provide open access to allconsumers having requirement of 1 MW or morewithin 5 year(Sections 42)
In addition to the wheeling charges provision forsurcharge if open access is allowed beforeelimination of cross subsidies, to take care of
a)Current level of cross subsidy
b)Licensees obligation to supply. (Section
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Surcharge & cross subsidy to be progressively eliminated
(Clause 42).
In case of captive generating plant carrying the electricity to
the destination of his own use, no surcharge shall be leviable
(Clause 42).
Open Access
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Trading distinct activity permitted with licencing. (Section
12)
Regulatory Commission may fix ceiling on trading margin
to avoid artificial price volatility. (Sections 79 (2) (b) & 86(2) (b))
The Regulatory Commission to promote development of
market including trading. (Section 66)
Trading/ Market development
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Regulatory Commissions/Appellate
Tribunal
State Electricity Regulatory Commission to beconstituted within six months. (Section 82)
Provision for Joint Commission by more than oneState/UT. (Section 83)
Provision for constitution of Appellate Tribunalconsisting of Chairman and three Members. (Section110, 112)
Appellate Tribunal to hear appeals against the orders ofCERC/SERC, and also to exercise general supervisionand control over the Central/State Commissions.(Section 111)
Appeal against the orders of Appellate Tribunal to liebefore the Supreme Court. (Section 125)
Appellate Tribunal considered necessary to-
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Tariff Principles
Regulatory Commission to determine tariff for supply of electricity bygenerating co. on long/medium term contracts. (Section 62)
No tariff fixation by regulatory commission if tariff is determinedthrough competitive bidding or where consumers, on being allowedopen access enter into agreement with generators/traders.
Consumer tariff should progressively reduce cross subsidies andmove towards actual cost of supply. (Section 61 (g))
State Government may provide subsidy in advance through thebudget for specified target groups if it requires the tariff to be lowerthan that determined by the Regulatory Commission. (Section 65)
Regulatory Commissions may undertake regulation includingdetermination of multi-year tariff principles, which rewards efficiencyand is based on commercial principles. (Section 61 (e), (f))
Regulatory Commission to look at the costs of generation,
transmission and distribution separately. (Section 62 (2))
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Consumer ProtectionConsumer Protection
Consumer to be given connection within stipulated time.
(Section 43(1))
Penalty in the event of failure to give connection (Section
43(3)) Payment of interest on security deposit. (Section 47(4))
Regulatory commission to specify Electricity supply code to
be followed by licensees. (Section 50)
No sum due from consumers recoverable after a period of
two years unless the same was shown recoverable
continuously. (Section 56(2))
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Consumers (contd..)Consumers (contd..)
Redressal forum for redressal of grievances of consumers, to be appointed by
every distribution licensee within six months. Ombudsman scheme (Section
42 )
Standards of performance Licensees required to meet standards of performance specified by
Regulatory Commission. Failure to meet standards makes them liable to
pay compensation to affected person within ninety days.
Licensee to furnish to the Commission periodical information on
standards of performance (Section 57)
District level committee - (a) to coordinate and review extension of
electrification in each district; (b) to review quality of power supply and
consumer satisfaction, etc. (Section 166 (5))
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Measures against Theft of electricityMeasures against Theft of electricity
Focus on revenue realisation rather than criminal proceedings.
(Sections 126, 135)
Penalties linked to the connected load and quantum of energy
and financial gain involved in theft. (Section 135) Provisions for compounding of offences. (Section 152)
On the spot assessment of electricity charges for unauthorised
use of electricity by the assessing officer designated by the
State Government. (Section 126)
Theft punishable with imprisonment. (Section 135)
Punishment provision for abetment of theft. (Section 150)
Special Courts (Sections 153-158)
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Restructuring of SEBs
Provision for transfer scheme to create
one or more companies from SEB.
(Section 131) Provision for continuance of SEBs (Section
172)
States given flexibility to adopt reform
model/path.
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Electricity Act, 2003
Stimulus to the sector !DisciplineTransparencyIndependent regulation
distancing Government from Utility &Regulation!
Environment for PSP Market structure !
Power Trading Open Access
Captive
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FUTURE MARKET STRUCTUREFUTURE MARKET STRUCTURE
DISCOsDISCOs
CTU AND
STUsDISCOsDISCOs
CONSUMERSCONSUMERS
GENCOSGENCOS
HOLDING OR
TRADING COHOLDING OR
TRADING CO
TRADERSTRADERS CGS
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Regulatory Framework in Indian
Power Sector
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Regulatory framework
Responsibility for the development of the Power sector
is shared between the Central and State Governments.
The Ministry of Power (MoP) oversees the operation of
all Central Sector Power Utilities. The Central Electricity Authority (CEA) advises the
MoP on electricity policy and technical matters.
Central Electricity Regulatory Commission (CERC)
regulates the tariff for central power utilities and other
entities with inter state generation or transmission
operations.
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CERC(Central Electricity Regulatory Commission)
Functions of CERC To regulate the tariff of generating companies owned
or controlled by the Central Government. To regulate the tariff of generating companies other
than those owned or controlled by the Centralgovernment if such generating companies enter into orotherwise have a composite scheme of generation andsale of electricity in more than one State.
To regulate the inter-State transmission of electricity. To determine tariff for inter-State transmission of
electricity. To issue licenses to persons to function as transmission
licensee and electricity trader with respect to theirinter State operations.
To levy fees for the purpose of this Act.
To specify Grid code having regard to Grid standards To Fix trading margin in the Inter-State trading of
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CERC(Central Electricity Regulatory Commission)
Evolution of Tariff and otherRegulations
Central Commission by Notification makeRegulations.
While notifying the Commission presently follows thefollowing procedure:
Prepare concept paper /draft regulationand post in Web site.
Comments/Suggestion invited from allStakeholders and others
Organize open house hearings.
Finalise Regulations and issue detailed
orders giving reasons.
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Important Regulations of CentralCommission
Business Regulations in 1999.
Tariff Regulations, 2001 fordetermination of tariff for the period2001-04.
Tariff Regulations, 2004 fordetermination of tariff for the period
2004-09. Open Access Regulations
Trading Licence
Transmission Licence
CERC(Central Electricity Regulatory Commission)
TARIFF REGULATIONS FOR THE PERIOD 2009-14 ARE
UNDER PROCESS OF FINALIZATION
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State Electricity Regulatory Commission
(SERC)
Functions of SERCo Determine the tariff for generation, supply,
transmission and wheeling of electricity wholesale,bulk or retail as the case may be within the State.
o Regulate electricity purchase and procurementprocess of distribution licensees for distribution andsupply within the State.
o Facilitate intra State transmission and wheeling ofelectricity.
o Issue license to persons seeking to act as
transmission licensees, distribution licensees andelectricity traders with respect to their operationswithin the State.
o Levy fees for the purpose of the Electricity Act.o Specify State Grid Code consistent with the Central
Grid Code.o Fix the trading margin in the Intra State trading of
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Appellate Tribunal for Electricity (ATE)
oThis Tribunal has been established by the
Ministry of Power, Govt. of India w.e.f. 7th
April, 2004 . This Tribunal shall ordinary sit
at Delhi, came into effect from July 21,2005.
Functions of ATE Appellate Tribunal for Electricity has jurisdiction
through out India to hear appeals or originalpetitions against the orders of the Adjudicating
officer or The Central Regulatory Commission or
State Regulatory Commission or Joint Commission
constituted respectively under the Act of 2003.
The appeal, before the Appellate Tribunal would
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Central Government
Central Government shall prepare
National Electricity Policy
Tariff policy Policy for permitting stand alone system
for rural areas.
National policy for rural electrification
Issue guidelines for tariff basedcompetitive bidding process.
Role of Central Government
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CEA to continue as the main technical Advisor of the
Govt. of India/ State Government with the responsibility
of overall planning. (Section 70)
CEA to specify the technical standards for electricalplants and electrical lines. (Section 73)
CEA to be technical adviser to CERC as well as SERCs.
(Section 73) CEA tospecify the safety standards. (Section 53)
Central Electricity Authority
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NTPC COMMERCIALFUNCTIONS
NTPCs Growth Plan
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NTPCs Growth Plan
PRESENT INSTALLED
CAPACITY
Multi pronged
Growth Strategy Greenfield projects Brownfield expansion Joint ventures /
Acquisitions
(MW)
O B i
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Our Business
Expenses for
Generation
Generation andSales
Energy
Accounting
Realization Billing
O C t
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Our Customers
NTPC sells electricity to BULK
CONSUMERS comprising mainly electricity
utilities owned by state governments.
Sale of electricity is made through long term
Power Purchase Agreements entered into for
25 years in case of coal based power plants
and 15 years for Gas based power plants inline with expected life of the plants.
NTPC C t B
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SEBs
Very Large Customer Base will be formed with the Unbundling of Utilities into
Discoms, Bulk customers, Trading companies and Merchant Plant customers.
Andhra (4)
Karnataka (5)
Delhi (5)
Rajasthan (3)
WBSEDCL(1)
DISCOMsPowercorp/Nigam/
Tradco.
UPPCL
GUVNL
MPPTCL
MSEDCL
UPCL
HVPN
Gridco
DVC
State PowerDeptt
J&K
Sikkim
ChandigarhGoa
DD/DNH
Puducherry
Nagaland
Bulkcustomers/
Others
Railways
Indore-SEZ
Powergrid
NTPC Customer Base
TNEB
KSEB
CSEB
PSEB
ASEB
HPSEB
MeSEB
JSEB
BSEB
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1. PRICE FOR SALE OF ELECTRICITY
Tariff Policy
Interaction with price fixation agencies onprinciples and parameters
Determination of Tariffs
NTPC COMMERCIAL FUNCTIONSNTPC COMMERCIAL FUNCTIONS
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2. ARRANGEMENTS FOR SALE OF ELECTRICITY
Power Purchase Agreements
Allocation of Power Metering Arrangements
Regional Energy Accounts
NTPC COMMERCIAL FUNCTIONSNTPC COMMERCIAL FUNCTIONS
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3. REALISATION AGAINST SALE OF ELECTRICITY
Receivables Management
LC / Escrow / State Govt. Guarantee/ CentralAppropriation
Bonds / Securitisation / Special Schemes
NTPC COMMERCIAL FUNCTIONSNTPC COMMERCIAL FUNCTIONS
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4. MANAGING THE COMMERCIAL ENVIRONMENT
Electricity Legislation
Policy initiatives with Government andRegulatory Agencies
Sectoral Reforms
Regional Power Committees
NTPC COMMERCIAL FUNCTIONSNTPC COMMERCIAL FUNCTIONS
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Corporate Office - Policy
- Tariffs
- PPAs
Regional Headquarters - Billing
- Realisation
- Regional Power Committees
SEB Headquarters - Customers Interface
- Day to Day Follow-up
THREE TIER COMMERCIAL ORGANISATION
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Billing for 2007-08- Rs. 34255 Crores
Average Monthly Billing - Rs. 2855 Crores
LC coverage as on date - Rs. 3198.1Crores
Realisation for the year 07-08- 100%
All states are making full payments within 30 days ofbilling except UP. UP is making payments within 60
days.
NTPC BILLING AND REALISATION
NTPC T iff
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NTPC Tariff
Least Fixed Charge Coal (Singrauli) : 22.92 Paisa/Unit
Highest Fixed Charge Coal
(Unchahar-III)
: 71.5Paisa/Unit
Least Coal Energy Charge (Korba) : 57.90 Paisa/Unit
Highest Coal Energy Charge(Bardarpur) : 220.53 Paisa/Unit
LNG Energy Charge : 1000.47Paisa/Unit
Naptha Energy Charge : 1378 Paisa/Unit
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1999-2000 - 145.47p/kwh
2000-01 - 157.20p/kwh
2001-02 - 142.84p/kwh
2002-03 - 147.12p/kwh
2003-04 - 146.51p/kwh
2004-05 - 152.06p/kwh
2005-06 - 164.00p/kwh2006-07 - 184.00p/kwh
2007-08 - 197.00p/kwh
Average Tariff Of NTPC Stations
Payment ArrangementPayment Arrangement
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Earlier there was defaults in payments by SEBs and NTPC
realization was around 75-80%.
Outstanding amount including Surcharge had increased in
2001 to almost Rs.25,000 Crs. In 2002, GOI came out with a Scheme called One Time
Settlement Scheme, under which outstanding dues of
NTPC as on 30.09.2001 were securitized by issuance of
RBI Bonds by State Govt. For ensuring future payments from 01.10.2001 onwards,
Tripartite Agreement was signed between State Govt.,
Central Govt. & RBI.
Payment ArrangementPayment Arrangement
Payment ArrangementPayment Arrangement
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Under Tripartite Agreement, in case of default inpayment, NTPC can recover the amount from
States RBI Account by referring the case to Ministry
of Finance.
Present NTPC billing is about Rs.36,000 Cr peryear.
For ensuring timely payments, we have LC
arrangement with each customer.
Tripartite Agreement for payment security is
applicable upto 2016.
Beyond 2016, we will have Escrow arrangement.
Payment ArrangementPayment Arrangement
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Initiation of Proceedings
Suo-moto or on a petition filed by any affected orinterested person.
CERC has issued detailed procedure for filing of
petitions The Commission issues notices for hearing and
reply and rejoinder by the affected parties. The Petition, thereafter, come up before the
Commission for hearing (which may continue for
one or more number of hearings). Services of legal practitioners are availed onspecific legal issues only, otherwise casepresented by the technical person of thePetitioner.
The Commission, sometime directs various parties
during the hearing for furnishing some additional
NTPCs Current Regulatory
Interface
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Review of Commissions orders
The Commission has the power to
review its decision, direction andorders.
Aggrieved party has to file petitionfor review by the Commission
within 60 days of the making of theorder.
The Commission, generally, allowreview if there is any apparent
error on the face of records.
NTPCs Current Regulatory
Interface
NTPC C R l
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AppealCentral Government establishedAppellate Tribunal for electricity
to hear appeals against order ofthe Commission.Aggrieved Party may prefer anappeal to the Appellate Tribunal
within 45 days from the date ofthe order.Second Appeal against the Orderof the Appellate Tribunal can befiled in Supreme Court.
NTPCs Current Regulatory
Interface
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N C i lN C i l
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New CommercialNew Commercial
Initiatives (CRM)Initiatives (CRM) Commercial Initiatives for Customers
Setting up of CRM cells in the regional offices
Customer Roster- A systems to strengthen interface with
customers and position Regional ED as the single windowCustomer Relationship Manager.
Customer Support Group - To Strengthen the relationshipbuilding program by providing support services to customers
Customer Dashboard - A system to capture, analyse anddisseminate market intelligence about the state (including
information on customers, competitors etc) within NTPC
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Changes in tariff normsChanges in tariff norms
Stringent normsStringent norms
Prudence check of capital costs, O&MPrudence check of capital costs, O&M
etc.etc.
Construction risks associated withConstruction risks associated with
delay - IDCdelay - IDC
Threat of splitting NTPC MarketThreat of splitting NTPC Market
domination.domination.
RegulatoryRegulatory
EnvironmentEnvironment
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Realisation after TPA IncentivesRealisation after TPA Incentives
Customers healthCustomers health
Supply to multiple Discoms and privateSupply to multiple Discoms and privateDiscomsDiscoms
Direct supply to Bulk ConsumersDirect supply to Bulk Consumers
Fuel SecurityFuel Security
Operating in the competitiveOperating in the competitive
environmentenvironment
COMMERCIALCOMMERCIAL
CHALLENGES AHEADCHALLENGES AHEAD
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THANK YOU
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GENCO GENCO GENCOGENCOGENCOGENCO
TRANSCO TRANSCO
DISCOM DISCOMDISCOMDISCOM
Customer CustomerCustomerCustomer
D
R
EG
U
L
A
T
E
D
G
T
RESTRUCTURED ELECTRICITY MARKET
Power Pool
System Operator
Indian Power Sector is today faced by a
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Indian Power Sector is today faced by a
host of issues .
Capacity
Crunch
Energy CarbonConflict
Energy
Conservation Capacity
Utilization
Fuel Prices Capacity Mix
Rationalization
High T&D losses
Reduction in cost
of supply High Industrial
tariff
Key Sectoral Issues