Section 14 of the Act provides for the establishment of the Central Advisory Committee to represent the interest of Commerce, Industry, Transport, Agriculture, Labour, Consumers, Non-Governmental Organisations and Academic and Research Bodies in the energy sector. The Chairperson and Members of the Central Commission are Chairperson and Members Ex-officio of the Central Advisory Committee (CAC). The CAC is expected to advise the Central Commission on policy formulation, quality, continuity and extent of service provided by licensees, compliance by the licensees with the license conditions and requirements, protection of consumer interest and energy supply and overall standards of performance by utilities.

The Commission notified the formation of the CAC on the December 18, 1998. To view the composition of the Committee, click here.

First Meeting of the Central Advisory Committe

The first meeting of the Committee was held on December 21, 1998. Welcoming the members, Prof. S.L.Rao, Chairperson, CERC said the process of independent regulation is in the formative stages. It would receive legitimacy only if it is supported by the best research effort and only if it can quickly introduce efficiency and economy in the functioning of the electric power sector. The primary challenge is to manage the transition, from the existing system of distorted price signals and inefficient allocation of resources to a more rational system of prices and vastly superior quality of supply. The evolution of an efficient transition mechanism would be possible only if the best talent available within the country along with international consultancy support is mobilised for this effort. Appropriate Government policies would also be needed to create a facilitating macro environment for reform. Members were invited to comment on the draft regulations and grid code and to chart out a road map for the Commission for the coming months.

Members congratulated the Commission on the steps taken by it in a very short while, since its inception in July, 1998, to lay the basis for transparent regulation. In particular, the members were appreciative of the speed with which the Conduct of Business Regulations have been framed and circulated to the public for comments. Similarly, the ongoing effort for formulation of Draft Grid Code through a process of consultation with the major constituents of grid also received appreciation.

Members urged the Central Electricity Regulatory Commission to be an independent umpire over the electric power system. Despite the extensive steps, taken by the Government since 1991, to increase the involvement of the private sector and create a level playing field for all players, this goal has not been achieved. The level and character of risks faced by the private power producers were vastly greater than those faced by government generators thereby increasing the costs of such projects. The Central Electricity Regulatory Commission was urged to look into such distortions which reduced the overall efficiency of the system.

The formulation of cost effective environmental regulations was another area of concern. Central Electricity Regulatory Commission was urged to lead the effort in quantifying the costs of environmental degradation from polluting generators and to evolve cost effective regulations.

Grid management was another area of inefficiency. Without the correct set of financial incentives and disincentives some constituents of the regional grid would continue to "free ride" and impose additional burden on others. A comprehensive grid code, rigorously implemented, could prevent such situations from occurring and this should be a priority area for the CERC.

Increasing consumer awareness of rights and obligations and formulating easily accessible channels of grievance redressal was another area of priority. The rationalisation of energy prices must be done only at internationally acceptable norms of efficiency and must be accompanied by similar standards of supply. Cost plus regulation would only increase the burden on the consumers and CERC was urged to adopt the performance based rate system.

The advice and suggestions received from members of the CAC proved invaluable in revising the draft Conduct of Business regulations as well as in formulating the strategy for preparation of a Grid Code for the regional grids. Members have been extremely generous in making available to the Commission and its staff valuable time outside the meetings of the CAC also and have thereby assisted the Commission in ensuring that the work of the Commission is in line with the general expectations of stakeholders in the Indian Electricity System.

Formulation of Conduct of Business Regulations

As indicated earlier the Commission formulated the draft Conduct of Business Regulations, prescribing the procedures to be followed in functioning of the Commission. In keeping with the objective of transparent and participated functioning, the draft was put out for public comment on December 7, 1998. More than 26 responses were received from a cross section of stakeholders which included professional associations, research institutions, civil society groups, utilities, foreign investors, financial institutions and interested individuals. The Commission, after due consideration of the responses received as well as the suggestions given by members of the CAC, notified its Conduct of Business Regulations on April 26, 1999, subsequently amended on May 31, 1999. To view  the full text of these regulations, click here.

Formulation of Service Regulations

Under the provisions of The Act the service regulations governing the terms and conditions of employees of the Commission have to be approved by the Government of India. Draft service regulations were formulated covering the eligibility and criteria for appointment to different posts, terms and conditions of service, leave rules, disciplinary rules etc. were forwarded to the government for approval. These were subsequently amended and resubmitted as directed by the Ministry of Power in February 1999. Approval of these regulations is awaited.

Partnership Program with US Regulatory Agencies

The Commission is in discussion with the United States Energy Association (USEA) for the finalisation of partnership programmes with the Federal Energy Regulatory Commission, Wahington D.C. and the Public Utilities Commission, Department of Telecommunication and Energy, Commonwealth of Massachusetts, Boston. The partnership programme will provide for the exchange of members and staff between the partner agencies as well as other mechanisms for the sharing of experiences on issues of common interest.

Development of Human Resources

Shri A.R. Ramanathan, Member CERC was deputed to attend the Fifth International Training Programme on Utility Regulation and Strategy conducted by the Public Utility Research Center at the University of Florida under USAID sponsorship.

The Commission sponsored a National Conference on "Transition to a Liberalised Environment : Experiences and Issues in Regulation" in February, 1999 which was organised by Tata Energy Research Institute, New Delhi and was attended by a wide range of stakeholders including participants from Regulatory Agencies in the US, Israel and Australia.

Technical Assistance from CIDA

The Canadian International Development Agency, representing the Government of Canada, supported the Commission by responding to the immediate requirements of the Commission in the areas of tariff modeling, determination of tariff filing requirements, review of data requirements and establishment of data management systems. The technical assistance is proposed to be included under the ongoing Energy Infrastructure Services Project 1 and will be funded by a grant of Canadian $ 4,15,000.

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