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ShareThe incessant use of the unscheduled interchange (UI) route by the state governments for overdrawing power has the power ministry worried. The ministry fears if the practice continues unabated, then even the power grid's safety may come under threat. It has issued several warnings to the states and also threatened to amend the Electricity Act, but all its efforts have been in vain.
DNA's Neeraj Thakur spoke with Pramod Deo, chairman, Central Electricity Regulatory Commission, on the issue and how the government plans to deal with it. Excerpts:
States overdrawing power from the grid has become a major problem for the
security of the grid. How do you plan to stop states from taking more than their share?
States use the unscheduled interchange (UI) to overdraw power. We have proposed 100% surcharge on power drawn under the UI when the grid frequency is 45 Hz. This means the errant state will have to pay as high as Rs 18 per unit for overdrawing power. The states would not like to use the UI route to get power because it would be very costly.
But states that overdraw power do it at desperate times, especially during the elections and extreme summers. These states are then ready to pay any amount for the power as they fear the public ire...
We have taken this into account and that is why we want to shut the route of UI and open another door of trading power at the exchanges. When the states find that buying power through UI route is more expensive then buying power from the power exchanges, they will change their strategy. The states need to understand that they need to be proactive in arranging power for their utilities. They need to enter into contracts - short-term and long-term.
Can't you bring criminal charges against the higher authorities of the state
electricity boards that break rules?
We can take legal action against the functionaries. In fact, we were earlier taking action under the Section 149. But the appellate tribunal told us that we can't bring criminal charges and we need to use Section 142 against the functionaries. Also, functionaries claim they face violent protests from the public if they resort to power-saving methods like load-shedding during a power shortage.
So if you allow inter-state trading of power during desperate times, then how will you make the power trading market stronger? Out of the 44 licences issued since 2004, only 4-5 licence holders trade in the market...
Well, we have modified our trading licence regulation and all the new as well as existing licence holders have to increase their net worth. This way, only serious players would be left in the market. We are also planning to issue show-cause notices to those who have not traded in the market for a long time. In the past few months, a lot of companies have either surrendered their licences or have asked for a downgrade of their licences.
The abuse of Section 11 of the Electricity Act is a major issue these days. As a regulator, are you in favour of modifying Section 11?
It is up to the government whether it wants to modify Section 11 or repeal it. My view is that the state governments should not stop open access of markets as nobody is self-sufficient today. If a state government today does not allow the power being produced in its territory to move out, then tomorrow when it needs power, another state may also not agree to give it.
How would you ensure healthy competition in the trading market?
Healthy competition would be possible only when we have enough power to be traded in the power exchanges. Currently, only 4-5% of the total power generated is available for trading in the private market. Out of this, 40% is traded though the UI route. So, once the UI route gets closed, we see more power being transacted in the private market.
The government is pushing power utilities and the states to come up with renewable energy projects. But how practical is it to look at energy from renewable resources, especially when its technology is so expensive?
The action plan for climate change envisages 5% of the total energy produced by the states has to come from renewable resources by 2010 and 15% by 2020. I think the state governments will be able to achieve it.
But a lot of states have not even started looking at renewable energy, forget meeting the ambitious target of 15% by 2020...
We are aware that some states like Delhi don't produce even 1% of renewable energy due to various constraints. But we have states like Tamil Nadu that are producing 10% energy from renewable resources. So we have come out with a scheme of issuing certificates, which will ensure the states that are running behind the scheduled target can buy the certificates from those that are ahead of the target. This way, there would be an incentive for both.
As a regulator, do you see yourself becoming as powerful and important as the telecom regulator Trai in future?
Let me tell you, telecom regulator does not have any power. It is only an observer. It is the technology that has made calls cheaper, hence so much importance for Trai. In the power sector, unfortunately the technology is different and it is not as easy.
