But the undeniable fact remains that the country’s power sector reform ever since the advent of unbundling of generation, transmission and distribution of power decades ago remains a continual work in progress with wily politicians of various hues not throwing their full weight to ensure that the roadblocks in the smooth path for power sector reform are removed.

Perhaps, power and politics blend so nicely to get glued to each other in an inseparable concoction with almost all the politicians seeing in the nexus a rather silken way to go and grow! Whether it is pampering the farmers with free electricity or protecting their protégées from enjoying the unmetered power supply drawn out from the main feeder routes, the political dispensation remains impervious to reason in checking its ardor and avidity for misplaced welfare policies that bleed the utilities. So much so that they are not even to cover, leave aside, recover their enormous sunk cost in generation, transmission and distribution of electricity.

Although power tariff is determined under Section 61 to 64 of the Electricity Act, 2003 by the appropriate State Regulatory Commission in line with the provisions of the Act, there is no provision for direct regulation of the electricity tariff by the Government. But the generation of power is mostly vested with the State government- run electricity boards with no robust competitors in the arena and with most of the States not willing to unbundle other operations like transmission and distribution, the leeway for manipulation remains large with no proper checks and balances in the system.

Naturally, rationalizing tariffs poses the daunting challenge with political masters reluctant to undertake any such unglamorous and potentially dangerous exercise for their very existence. As there is a complete mismatch between the cost of buying power and the tariff charged from the consumers, the generation and distribution power companies owned by most of the State governments continue to bleed and make a permanent draft on the state exchequer for the power subsidy they so peremptorily purvey.

In a written response to a query in the in the Lok Sabha on March 12, 2015, the Minister of State for Power, Coal and New & Renewable Energy Mr. Piyush Goyal said Section 131 of Electricity Act 2003, required the State governments to reorganize their State Electricity Boards (SEBs) to make the power sector efficient and financially viable. According to the Minister, as on date, 22 States in which matters pertaining to generation, transmission and distribution of electricity were managed by respective SEBs have corporatized their Boards.

It is interesting that out of the 29 States and 7 union territories in the country, only 22 states had corporatized their SEBs! How far these corporatized SEBs had unbundled generation, transmission and distribution business and run them independently on commercial and prudential lines to recover the cost of generation and delivery to the last-mile consumer can at best be a conjecture in the absence of authentic data to decipher? This is particularly so when the State satraps continue to exercise a vice-like grip on these state-owned entities for distribution of personal favours to constituencies that they deem indispensable to their electoral triumphalism for poll after poll!

It is equally interesting that since the distribution of electricity at retail levels falls within the domain of State governments, the Central government does not carry out any audit of distribution companies (discoms)! But as discoms come under the Companies Act 1956, they have to get their accounts audited through statutory auditors with the State Electricity Regulatory Commissions (SERC) ensuring independent audit of discoms. So, much really depends upon how the SERC is constituted and how competently it runs its remit without being seen as a docile extension of the government of the day!

As a quasi-judicial body SERCs perform their due chore with impartiality and is not cheer-led by the State Chief Minister endorsing their routine activity. Where they do not advocate any imminent hike as they had done in the case of Delhi recently after four years of persistent hike, the least the Chief Minister was able to do was to take credit for the action of SERC as a triumph of honest politics when the same Chief Minister elected twice could not do anything to help the discoms recover their feet! It is time political leadership of the country learnt the hard art of not passing value judgment on dispassionate industry (stakeholder and shareholder) bodies that have a bigger mandate to ensure the survival of all in the business of running utilities for the public. Regulatory commissions are no charity institutions as they have clarity of purpose and well-defined mission to see that the industry they regulate does not come to any harm or is hamstrung by their partisan decision!

That the public utilities like electricity suppliers once part-privatized or corporatized would not get guided by norms of cosseting any sections from the harsh necessity of user charges is obvious. The privatization of electricity supply has not supervened on any larger scale in India so far despite the tall talks of unbundling of services with State entities and Central power sector undertakings continue to be the principal purveyors. Still one gets struck by observations of the House Panel Committee on Energy headed by BJP MP Kirit Somaiya.

In its report on the Ministry of Power analyzing the Electricity (Amendment) Bill 2014, presented to Parliament in May 2015, the panel noted that during the course of interaction, it was made aware that “some States/Distributors/Suppliers levy commercial rate on educational institutions, i.e, schools and colleges”. It said that in a State like Maharashtra for the past several years Rs 10 to Rs 12 per unit commercial rates are being charged even on government aided/charitable schools. It further lamented that “such heavy commercial electricity charges are also collected even from schools which are in slums” and sought clarification from the line Ministry “either in the tariff policy or in the Act, that residential electricity rate must be levied on all schools and colleges”.

How could one expect the investors in the power sector be happy to provide such soft pricing for one section or another and expect them to deliver without blackout as ever and forever remains a question that boggles one’s mind? Power sector reform will remain deformed as long as the political masters remain hostage to subsidy culture and hobbled by its dead weight with manufacturing industry and ordinary consumers finding it difficult to light their darker days ahead! (IPA Service)