Power regulator comes under fire

By Our Special Correspondent

NEW DELHI, APRIL 19. Yet another independent regulatory has come under fire, this time from a Parliamentary Standing Committee. In its report to Parliament on the demands for grants of the Ministry of Power, the Standing Committee on Energy has called for a review of the whole gamut of the Central Electricity Regulatory Commission (CERC) ``so that the objective for which it was set up does not become counter productive.''

The CERC acts as an independent regulator of the power sector at the Central level while similar functions are carried out by State Electricity Regulatory Commissions (SERC) at the State level. There have been instances when the recommendations of the SERCs have created problems for Governments.

The focus on the role of the CERC in the Committee's report is in connection with the introduction of `availability based tariff' (ABT) norms stipulated by the CERC which is likely to affect the public sector company, National Thermal Power Corporation's (NTPC) internal revenue generation by about Rs. 18,000 crores over the next 11 years. The result is that the NTPC expects that it would be able to create additional power generating capacity of 6,000 MW only over the next 11 years, against the original target of 20,000 MW. The NTPC had also approached the courts for a judicial remedy, but could not get adequate relief.

Consequently, the Standing Committee on Energy has commented in its report that it would like to know why the draft notification on tariff finalised by the National Task Force and issued in April 1999 was not accepted by the CERC.

Besides, the Committee had pointed out that under Section 38 of the Electricity Regulatory Commission Act, the Government had the powers to issue policy directives to the CERC which was not done and instead the matter had to be taken to court.

The Committee has recommended that the Government should intervene and issue necessary policy directions to the CERC to ensure that the orders issued by the CERC do not in any way adversely affect the investment in future power projects and the financial condition of any Central public sector undertakings.

The Committee has also added that in view of the spate of litigations over the orders of the CERC in the recent past, the Government should review the whole gamut of the CERC so that the objective for which it was set up does not become counter productive.

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