This is in reference to Ministry of Power letter No. 15/1/2021 – Trans dated 01.9.2021. AIPEF submits its comments as under:
1. The Report of the Committee referred to in Para-5 of the Ministry of Power letter dated 1.9.2021 should be made public by putting it on the website. The first requirement is to ensure transparency and participation of all stakeholders, which has not been ensured. From the letter dated 01.9.2021, it is seen that there is no transparency. Neither the Committee report has been put on the website, nor have the State Governments and State Discoms and State Transcos been given a copy of the report.
1.1 The procedure adopted in Ministry of Power is objected to
(a) Only 3 State Transcos have participated as members of the Committee. State Governments and State Discoms have been totally excluded.
(b) Electricity Engineers and workers have also been excluded.
(c) State regulators have been excluded.
2. Since PGCIL does not deal with 33 kV, the constitution of the Committee headed by CMD PGCIL is anomalous. Instead, the Chairman CEA and/ or Member Grid Operation and Distribution should have been preferred.
3. Including only three STUs in the Committee totally excludes South India and North-East as participants.
4. Since the basic issue, as claimed, is higher losses in the 33 kv system, obviously the State Discoms should have been included as major stakeholders, since losses are dealt with in State Discoms primarily. By excluding State Discoms from the Committee, the entire deliberations and discussion get crippled and the most important channel of feedback has been closed by the Ministry of Power itself.
5. Issues relating to Electricity Act 2003 have not been considered at all by the Committee. With the enactment of Electricity Act 2003, one main objective was to unbundle the State Electricity Boards, while the modalities of unbundling were to be decided/ implemented by the concerned State Governments. The most important feature of the Electricity Act 2003 was that it gave complete liberty to each State to decide the structure of Generation, Transmission, Distribution companies. This is a freedom incorporated in the Electricity Act 2003 which was exercised by each State at time of re-structuring/ unbundling.
While some States preferred to keep generation, transmission and distribution as one company (in Kerala & Himachal Pradesh), some States preferred to keep generation and distribution in one company and transmission separated out.
While some States preferred to keep one Discom for the entire State, other States kept multiple Discoms such as Maharashtra, UP, Rajasthan etc.
The fact remains undisputed that States had the freedom to choose/ select the structure of the new set up.
6. Under Section 131 of Electricity Act 2003 the State Government has the liberty to decide and prepare the transfer scheme while Central govt or MOP has no role
6.1 Therefore, at time of restructuring/ unbundling, the State Government is at liberty to choose the model to be adopted.
6.2 In particular, a key issue/ parameter to be decided is to determine what would be the interface between transmission and distribution.
a) In States such as Himachal Transmission assets up to 220 KV which are intra-State in nature remain with Discom while only inter-state 220 KV lines are under Transco.
b) In States such as Punjab, the Transco-Discom interface is at 220 KV or 132 KV. Thus, with a 220 KV substation having 220/ 66 KV transformer, the substation assets remain with Transco while the outgoing 66 KV lines are of Discom. The first gantry of outgoing 66 KV lines is the interface. Similarly, if there is a 220/33 kv or 132/33 KV transformer, the first gantry of outgoing 33 KV line becomes the interface between Transmission and Distribution.
c) At the time of unbundling of PSEB into PSPCL and PSTCL in 2010, the issue regarding 66 KV lines and 66 KV substations was a major parameter to be decided by the State Government. While the transmission Co view was that 66 KV lines should be included in Transco the distribution view was that 66 KV lines should be with discom as 66 kv system is most important component of sub transmission system, it would be impossible to meet the consumer load requirements without the ownership of 66 KV system also. It was argued that if 66 KV system is given to Transco, the consumer loads and supply would be impossible to maintain by discom.
The State Government also referred this matter to PSERC, the State Regulator, which gave a clear opinion that the 66 KV system must be retained by the distribution company.
6.3 In the case of Union Territory, Chandigarh, the electricity distribution system is in the process of being privatized under directions of the Ministry of Power. The Ministry of Power directed that bids be invited for sale of 100% equity, through competitive bidding. The RFP (Request for proposal) document issued by the Bid Process Authority, included the list of assets, proceedings and liabilities transferred to the company in “Schedule-B” as under:
1. Distribution Assets
a) All existing and under construction 220 KV, 66 KV, 33 KV, 11 KV, LT (Single Ø 2 wire and 3 Ø 5 wire) lines….
This RFP document as approved by the Ministry of Power, Govt. of India was issued in Nov-2020 and was the basis for bidding.
The Chandigarh RFP document of Nov-2020 includes 33 KV assets as a part and parcel of distribution system along with 66 kv and 220 kv
The RFP document for Chandigarh gives the following trajectory for AT&C Losses as one of the bid parameters.
|
|
2021-22 |
2022-23 |
2023-24 |
2024-25 |
2025-26 |
|
%AT&C Losses |
12.0 |
11.0 |
10.0 |
9.25 |
8.5 |
7. As already explained, under Section 131, the State Government is empowered to finalise the transfer scheme at the time of unbundling, and there is no provision to make fundamental changes at later stage, because the transfer scheme, once finalized, is used to work out and finalize the opening balance sheet of the newly formed companies.
The proposal of Govt. of India/ Ministry of Power to transfer 33 KV assets (with high losses) from Distribution Company to Transmission Company is not feasible/ permissible under Section 131 of Electricity Act 2003.
7.1 Under Section 131, it is the State Government that has the authority and jurisdiction to finalize the transfer scheme. The Central Government has no authorization or jurisdiction to issue directions to amend the transfer scheme or allocation of assets between transmission and distribution companies created after unbundling of the State Electricity Board.
7.2 The proposal of the Ministry of Power for transferring 33 KV assets from Distribution to Transmission company is not permissible under Electricity Act 2003 as it runs afoul of Section 131.
8. The Electricity Act 2003 already has a provision for SERC and Tariff Regulations. When the SERC has to determine the annual ARR and tariff, the SERC has to carry out the exercise on a cost plus basis. One of the key parameters in cost plus determination of tariff is the %T&D Loss, because a high T&D loss figure would increase the cost of power purchase and therefore reflect or increase consumer tariff. Therefore, if there is a concern regarding high AT&C Loss, then surely, this parameter is already being watched and monitored by the SERC during annual ARR and Tariff exercise. The SERCs very often give clear cut directions on reduction of T&D losses, and give the year wise trajectory for reduction of T&D Losses. So, the statutory mechanism for dealing with high T&D losses already exists within the framework of Electricity Act 2003, and no SERC can afford to overlook or ignore high T&D losses. SERCs are known to penalize Discoms which fail to achieve T&D loss reduction targets by disallowing higher power purchase resulting from under achievement of T&D loss reduction targets.
9. Every Discom has detailed knowledge of the assets that are operating overloaded and incurring higher losses. The Discom, in any case, has to take corrective action to address overloading, not only for reduction of losses but also to ensure the reliable supply to consumers. The solution proposed of transferring the asset to STU or PGCIL is not acceptable since every Discom knows which is the least cost and most effective method to control the problem of overloading. The solutions are decided on the basis of actual system configuration, and the solutions which can be adopted are
a) Augmenting of power transformer capacity.
b) Construction of new substation in vicinity and thereby de-loading the existing substation.
c) Shifting of 11 KV feeders to adjoining grid substation.
d) Upgrading an overloaded 33 KV substation by change-over to 66 KV and upgrading incoming line from 33 KV to 66 KV.
10. The proposal of the Power Ministry that 33 KV assets with high losses should be transferred to STU will not succeed because a mere change in ownership will not solve the problem of high losses. The losses will remain high unless corrective steps/ measures are taken such as augmenting of transformer capacity or de-loading by shifting some feeders to another substation etc.
A STU which deals with 132 KV and above system would not be able to take the practical corrective steps to de-load on overloaded 33 KV assets. These measures can be taken only by Discom and not by STU.
11. If we examine the two most significant measures to reduce 33 KV system losses – these measures are (a) augmenting power transformer capacity thereby de-loading substation (b) augmenting incoming 33 KV line conductor by higher capacity conductor on the same towers. These measures can be taken up by Discom while for STU it would be extremely difficult with no spares inventory.
12. Shifting/ transferring ownership of assets (33 KV asset) from Discom to STU is possible only if the State Government agrees and orders. However, the State Government would not have the expertise to make the take decision and this issue already stands decided and implemented at time of unbundling under sec 131 of Act.
12.1 Under Section 86(2)(iii),(iv), of Electricity Act 2003, it is one of the functions of State Commission to advise the State Government on “re-organising and restructuring of electricity industry in the State”…..(iv)” matters concerning generation, transmission, distribution and trading of electricity or any other matter referred to State Commission by that Government.”
12.2 In case of unbundling of Punjab State Electricity Board, the controversy regarding ownership of 66 KV lines and assets was referred by Government of Punjab to PSERC which opined that 66 KV lines and assets must be retained by Discom as 66 KV is an essential part of maintaining power supply to distribution system. 66 kv as well as 33 kv is regarded and accepted as a sub transmission voltage with primary function to meet the MW demand of distribution system
13. State Advisory Committee vide Section 88 (ii) and (ii), the objects of State Advisory Committee shall be to advise the Commission on
(i) Major question of Policy
(ii) Matters regarding quality, continuity and extent of service provided by licensees.
The subject of higher losses in 33 KV systems and of transferring to STU or Powergrid are clearly covered under section 88(i) and 88(ii) of the Act.
The decision therefore has to be first referred to State Advisory Committee and then to SERC (i.e. Commission).
14. National Electricity Policy
The para 5.4.6 of National Electricity Policy is quoted as under:
5.4.6 A time-bound programme should be drawn up by the State Electricity Regulatory Commissions (SERC) for segregation of technical and commercial losses through energy audits. Energy accounting and declaration of its results in each defined unit, as determined by SERCs, should be mandatory no later than March 2007. An action plan for reduction of the losses with adequate investments and suitable improvements in governance should be drawn up. Standards for reliability and quality of supply as well as for loss levels shall also be specified,from time to time, so as to bring these in line with international practices by year 2012.
As per this policy, it is the SERC i.e. Commission which is to decide the line of action for reduction of T&D losses, so that it is implemented under supervision and monitoring of the Commission.
Further, because electricity is a concurrent subject under the constitution of India, decisions regarding loss reduction, role of Discom and role of Transco/ STU must be decided under purview of STATE as it is not in the purview of CENTRE.
Hence , the proposal of the Ministry of Power, therefore regarding handing over assets from Discom to STU or to CTU/ Powergrid is therefore repugnant to the Constitution of India and it further encroaches upon jurisdiction of SERC / Commission which is not permissible under Electricity Act 2003.
15. Financial/ ARR Aspects
In the majority of States, there is one (or more) Discoms under State Govt. and one Transco, also under State Government.
For simplicity, we analyse the case when there is one Discom and one Transco. The expenditure incurred on O&M augmentation etc of its transmission system is ultimately used to supply power to only one beneficiary, which is State Discom. Hence, the SERC/ Regulator will decide/ approve the ARR of Transco, and the same quantum of ARR of Transco will be recovered back to back from Discom. In other words the ARR of Transco becomes one of the items of expenditure in the ARR of Discom.
In this way , the expenditure allowed by the Commission for Transco is paid for by Discom since Discom is the one and only beneficiary.
Now, suppose some part of transmission assets are transferred from Discom to Transco. The impact would be (a) that the expenditure of Discom on O&M etc. of these assets would be reduced from ARR of Discom.
(b) The O&M expenses of the assets transferred to Transco would be now incurred by Transco (which was earlier incurred by Division).
It is seen that the net effect/ impact would be neutralized or cancelled out. The ARR of Discom would be reduced by an amount say delta ‘X’ and the ARR of Transco would be increased by the same amount delta ‘X’ which would be recovered from Discom, the net impact being nil.
It is further seen that the shortage of funds or crunch of finances equally impacts the State Discom as well as the State Transco. Thus, if there is a shortage of funds in Discom, there would be a similar position of shortage in the STU/ Transco also and shifting of ownership from discom to transco will not solve the problem.
16. In the case of the 66 KV system, the same is being looked after by Discom, and Discom is aware that any expenditure on O&M of 66 KV system would directly benefit the Discom itself no other no other party is involved.
So, it is logically expedient to allocate the 66 KV system to Discom and let the Discom do the O&M also.
Expenditure on O&M of the 66 KV system would include spares also. A stock of spares has to be maintained by Discom to ensure that any breakdown or failure of equipment is immediately attended/ restored with the help of spares.
The same argument which applies for 66 KV assets also applies equally to 33 KV assets.
In particular, high-cost spares such as power transformers, circuit breakers, CTs, PTs, have to be maintained for 66 KV systems and similarly, for 33 KV systems.
It is not logical or justified to apply a different policy or approach to 66 KV assets and different to 33 KV assets. Functionally, they are on equal footing and have to be treated similarly.
17. In case some 33 KV assets are transferred from Discom to STU/ Transco, the STU/ Transco would have to build up its own stock of spares at additional expenditure whereas in case the 33 KV assets are with Discom, the pooling and economy of spares would be ensured.
18. Repercussion on Energy Accounting
Under the present scheme, the Discom has to develop and install a “boundary value metering” system at all inter-state metering points.
In case 33 KV assets are shifted from Discom to PGCIL system then every point interconnecting 33 KV asset of Discom with PGCIL system would become an inter-State energy accounting point, and it would enormously complicate “boundary metering” function, and also result in increased expenditure for Discom. It would also complicate the SCADA function of SLDC.
19. SUMMARY OF OBJECTIONS
a) The proceedings and report of the Committee do not include key stakeholders such as State Discoms, State Governments and State Regulators. The recommendations/ conclusions of the Ministry of Power Committee are therefore not acceptable to AIPEF.
b) Committee Report be made public on the website of the Ministry of Power.
c) Intervention / Interference of the Ministry of Power of the Central Government on issues internal to State Discom is not agreed to. As per National Electricity Policy the issue of loss reduction is to be addressed at the State level under the guidance of SERC/ Commission.
d) Approaches of the Ministry of Power to dictate policy matters on issues internal to Discom working are against the federal structure / Constitutional provision of concurrent subjects and the approach of the Ministry of Power must be to give the autonomy to the State Discom for solving their issues such as losses. Section 131 of Act confers autonomy to State govt to decide on structure of new companies after unbundling and this choice has already been exercised.
e) Issue of loss reduction is a critically important subject already being addressed by the SERC/ State Regulatory Commissions as per Electricity Act 2003 and as per National Electricity Policy of 2005.
f) The Ministry of Power letter of 01.9.2021 is not sustainable under the Electricity Act 2003 and section 131, and must therefore be withdrawn.
In view of above facts it is requested that the proposal to bring 33 KV System under State Transmission Utility be withdrawn.
Thank you with regards.
Sincerely Yours
Shailendra Dubey
Chairman