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The new government needs to push energy reforms

Saturday, 10 May 2014 - 6:00am IST | Agency: DNA

There's an old saying – you can import coal, fertiliser and gas over long distances. But not electricity. That is why, if one has to look at energy security, power generation becomes critically important. Bijlee has become synonymous with modern living. Electricity now touches every life and is critical for our growth and sustainability. Thus, the new government should look at the following:

First and foremost tackle the primary fuel crisis as top priority. The urgent need to step up domestic production of coal and gas needs no repetition. Enhancing production will take time but a rationalisation of coal linkages, which can be done immediately can help ease the primary fuel availability in the short term. There is no sense in hauling coal from Maharashtra to Haryana and then sourcing coal from Odisha for power plants in Maharashtra. The present allocations and linkages to power stations need to be redone on scientific lines. An integrated approach is needed keeping in view coal production centres, power station locations, railway routes, imported coal and ports to put in place an optimum coal allocation and transport policy. Together with this, use of washed coal has to be emphasised to reduce ash, and in turn freightloads, by nearly 30 to 40 per cent.

The present location of generation capacities and inadequate transmission linkages to consumption centers have created a piquant situation where many power stations are stranded or backed down due to lack of demand. At the same time, large areas especially South Indian states have huge demand supply gaps.

Even within states, transmission corridor constraints are causing outages in some areas while power stations idle away. Transmission planning needs to be bottom up with state electricity utilities playing a much greater role in the transmission corridor planning process. While the North-South Grid linkage needs to be made fully operational quickly, even small interventions in terms of completing short-distance interstate lines would help ease the situation in large parts of the country.

In distribution, there is an urgent need to rationalise tariffs. The present, completely-perverse, tariff structure is not sustainable, constricts the growth of manufacturing and service sectors. This is because industry and commercial consumers are charged way above the cost of supply to heavily subsidised agriculture.

Highly subsidised agriculture power is not only killing the manufacturing and service industry but is also causing long-term damage to both groundwater table and soil quality. Moreover, there is no incentive to economise water usage through modern techniques like drip irrigation. Metering of agriculture usage needs to be prioritised and a subsidy regime based on water-use-efficiency implemented. Farmers using water efficiently need to be subsidised better while those using inefficient
irrigation techniques should be penalised with higher power tariffs.

The customer-distribution utility paradigm needs to change. While distribution utilities label losses as thefts, in most cases it is lack of proper billing, bill distribution and collection mechanism that has prompted people to use power without paying for it. The customer has to be put at the centre of the loss-reduction efforts.
Every family in an area served by electricity faces a minimum of three transactions with the distribution utility every month. The meter is first read by a person entering your premises, then a bill is delivered, then the bill gets paid. With 2.5 crore customers in a state like Maharashtra, this amounts to 7.5 crore transactions every month. These transactions need a hard look.

In most places, meters are either non-functional or faulty. Distribution utilities have no control over meter readers who have become a law unto themselves. Bill delivery is at best patchy, except for highly urbanised areas. Many customers do not receive their bills. A robust bill collection mechanism which is customer-friendly is non-existent. In such a situation, the helpless customer prefers to use power without paying, while utilities conveniently label it as theft.

Policy initiatives will need to infuse technology at the customer-utility inter-phase. Concessional financing to utilities is needed to provide meters with wireless communication devises to insulate metering from human intervention. Infrared and radio-frequency meters have made such meters inexpensive. Hence a massive meter replacement programme would more than pay for itself in
terms of accurate energy consumption recording. Delivering bills to the consumer needs to achieve the professionalism displayed by couriers and e-shopping portals. Convenience in bill payment could be achieved by rolling out credit/debit card facilities together with automated payment machines and e-banking.

Getting a new connection, whether for domestic, industrial or agriculture is a herculean task fraught with corruption and harassment at each step. It is simpler to illegally hook up and use power than to take a legal connection. Electricity connection has to be a simple, time-bound and routine process accomplished online in a transparent manner. Complicated forms and multiple documentation need to be done away with.

The role of renewable energy (RE) needs to shift from just being important to being more relevant. For this to happen, RE generation must integrate with the scheduling requirements of distribution utilities. The infirm nature of RE makes it a grid-operator's nightmare. While consumers demand continuous power, RE can make this an impossibility. Thus, most utilities look at renewables as vendor-driven, expensive and infirm; it is power that has to be absorbed for obvious unholy reasons. With weather prediction models becoming more and more accurate, policy intervention must shift the premium from just adding solar and wind capacity to bringing about predictability and scheduling of RE and simultaneously facilitating its trading over shorter time slots. This would not only bring predictability, leading to better acceptance by distribution companies, but also create a new and niche market for RE.

It is time that the right to energy also becomes a reality. The Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) has to be recast to meet this need. This programme has the laudable target to provide electricity to the homes of the rural poor. But with electricity comes a bill, which even though very small, needs to be paid within a time limit. A family which has not seen electricity for 65 years since Independence suddenly gets connected to the grid followed by a bill. But the new user has no economic activity to generate the required cash. Disconnection follows and over time, the distribution system is stolen or wasted. The RGGVY must provide for payment of a minimum bill for first-time BPL (below the poverty line) electricity users.

Power sector reforms must now be driven by simple straight forward thinking based on ground realities with customer at the centre and full involvement of states rather than complicated, central driven initiatives.

(The writer is managing director of MSEDCL, Maharashtra's state electricity distribution utility, and has been on almost every committee dealing with power reforms)

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