Government set up Expert Group to Suggest Restructuring of Power Utilities of Seven States

The UPA-II Government set up an expert group to suggest restructuring of power utilities of seven major States, including Tamil Nadu and Uttar Pradesh with an objective to push through power reforms and unlock the power sector. The government is to initiate a major reform in the shape of open access allowing consumers of above 1 MW to choose their preferred electricity supplier.

The plan for reforms follows a recent government report that revealed that the accumulated losses of the power utilities across the country ran into Rs.1.50-lakh crore and annual losses were around Rs.55.000 crore.

Task of the Expert Group

The expert group headed by Planning Commission member (Energy) B. K. Chaturvedi is expected to submit its report by March 2012. The group was entrusted with the responsibility to make an assessment of the cumulative losses of distribution utilities of seven major States, including Uttar Pradesh, Tamil Nadu and Rajasthan. It was asked to suggest a strategy for capital restructuring of these power discoms (distribution companies), including commitment by other stakeholders like State governments. It will also have to suggest a road map and monitoring mechanism for implementing the above.

Open Access

Some of the interim recommendations on the issue of open access have already been submitted.
Under the recommendations on Open Access, it was suggested that distribution licences should inform all consumers of 1MW and above that they could choose their electricity supplier.

Other suggestions includes: State power utilities should provide power to open access consumers at negotiated rates and not regulated rates, the State Electricity Regulatory Commissions should specify reasonable tariffs to be charged by distribution companies for providing standby supply, State load despatch centres should be upgraded in a time-bound manner to enable open access and 25 per cent of discretionary allocation of 15 per cent of central public sector undertakings generation must be made available for direct sale to open access consumers.