Financial Daily from THE HINDU group of publications
Wednesday, Aug 14, 2002
Industry & Economy
`More teeth for power regulator vital'
CHENNAI, Aug. 13
IN the process of liberalisation of the power sector in the country, it is necessary to ensure that the regulator is truly independent, that there is no regulatory overlap and that a proper process to review appeals against orders of the regulator are put in place, according to an expert from the US Federal Energy Regulatory Commission.
There are a lot of similarities between the way the regulatory commissions in the two countries the Federal Energy Regulatory Commission (FERC) in the US and the Central Electricity Regulatory Commission (CERC) in India function. However, the principal difference is that the FERC's ambit covers the entire energy sector not only regulating the electricity markets, but also the transmission and sale of natural gas for resale in inter-State commerce and the transmission of oil by pipeline in inter-State commerce whereas in India the CERC covers just the power sector.
The FERC, according to the expert, derives its powers from the Federal Power Act. Likewise, the CERC gets its powers from Electricity Regulatory Commissions Act, 1998. While about 16 States have set up State-level regulatory commissions here, in the US all the States have what are called public service commissions, according to him.
Mr Pradeep Kumar Agarwal, Electrical Engineer, FERC, told Business Line here that some of the orders passed by the CERC got into problems mainly because the utility concerned thought it was regulated by another agency like the Central Electricity Authority. "We do not have that kind of regulatory overlap," he says.
The various measures taken by the Government of India as well as the governments in some States suggest that the country is embarking on a model for the power sector that is closer to what the US has towards a culture of privatisation, efficiency improvement, demand side management, and corporate unbundling.
For this to succeed, there should be independence in the regulatory regime and there should not be constant interference from outside (in the commission's functioning). There should also not be any overlap from different Government departments. Also, there should be a process of review, according to Mr Agarwal.
He points out that the US had a clear process of reviewing an order of the FERC. Anybody affected by an FERC order can go on appeal to a court of appeals, but the appeal has to be made within 30 days of the order being passed. The appeal could be to any court of appeal (of which there are twelve) in the court under whose jurisdiction the utility concerned is located or to the court in Washington, DC, where the FERC is headquartered.
According to Mr Agarwal, the judge gives about 30 minutes to each of the two parties during the hearing to argue their case. The whole process is normally over in about six months, but at times could take up to 12 months. In case the FERC feels aggrieved by the order of the court of appeals, it has to convince the Solicitor General of the US about its case, who will then take the case to the Supreme Court.
Mr Agarwal, who has been with the FERC since 1994, is involved with market design issues of electricity markets and policy matters. During his visit to India, he will be interacting with chambers of commerce, State electricity boards, State electricity regulatory commissions, academics and will also meet the Chhattisgarh Chief Minister.
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