Demand is in excess of supply in the Indian electricity market. The market is dominated by central and state government owned undertakings. The wholesale market is distinguished by "take or pay" contracts between central and private generating stations and the buyers, mostly State Electricity Boards and their successor corporations. There is neither competition, nor the effects of competition. Competition stimulates production and distribution efficiencies with resultant benefits to the final consumers on availability, quality, and price. I visualize the primary function of the CERC at this time as being the simulation of the effects of competition by appropriate tariff regulation.

It is also a sector which has not benefited from inter-disciplinary work between engineers, economists, accountants, managers and lawyers. The Commission has missed the presence of experts in these different subjects. Except for engineers, there appear to be few other subject specialists working on electricity. They are urgently needed in this sector.

The Central Electricity Regulatory Commission is the second independent regulatory commission in the infrastructure sectors to be formed by a statute of Parliament. At the time of the current report, the Commission had been in existence for 8 months. At the outset, the Commission decided that it would follow the procedures of government, however frustrating they might be, as far as administration is concerned.

The Commission had set itself the following objectives for achievement in its first year:

  • Develop harmonious working relationships between Members
  • Identify staff requirements and evolve organisation structure, prescribe job qualifications, salaries and other details for clearance by government
  • Recruit, induct and train staff.
  • Prepare and notify the Conduct of Business Regulations for the Commission
  • Draft papers on concepts in setting Bulk Power tariffs for whole-sale power
  • Issue directions to CTU for preparation of the Indian Electricity Grid Code
  • Institutionalise communications with State Regulatory Commissions.

As will be seen from the Report, the Commission has succeeded in its self -imposed tasks (except on staff recruitment). It has been able to do so despite irritations caused by not being provided proper office space or staff, long delays in approval of recruitment rules for employees even on deputation, and government actions that make the Commission apparently subservient to the Ministry in the exercise of its financial powers.

The Commission would not have made the progress that it has but for its Members Mr. D.P. Sinha, freely shared his intimate knowledge of the inter-state transmission system. Mr. G.S. Rajamani with his wide experience in Government and of the commercial aspects of electricity; and Mr. A.R. Ramanathan with his expertise as a reputed cost accountant with vast experience of legal matters, Mr. Jiji Thomson, the Commission's part time Secretary concurrently continued his work at the Ministry of Power for the first 4 months, and the Commission expresses its gratitude to him. Mr. Sanjeev S. Ahluwalia joined as full time Secretary in December, '98 and has put in substantial efforts to get the Commission functioning effectively. In its early months the Commission benefited from the attachment of task forces made available by the Government. The Minister of Power, Government of India and his senior officials have been very helpful. We are thankful to the Canadian International Development Agency who provided consultants and equipment at short notice. The State Commissions of Orissa and Haryana and CERC, agreed that we should form a National Forum of Regulators to provide a means for regular interaction in view of overlapping responsibilities and similarity of work spectrum.

The Commission enters the New Year with the determination to bring improvement in the inter-state transmission of power, announce its approach to tariff determination, and move the industry towards the effects of competition.


Yours sincerely


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