Framework for separation of carriage and content business in distribution segment to introduce competitive retail in Indian power sector

Abstract

Reforms in Indian Power Sector were introduced with the expectation to make sector profitable. In the first phase of reforms The SEBs were unbundled into GENCO, TRANSCO and DISCOMS. In this phase the Power Exchanges were also established for power trading. The outcomes were not as promising. The onus of the end of reform euphoria was mainly placed on few shortcomings. These highlighted inadequacies includes- inconsistent policies, procedural complications internal to the sector and dire financial state of power utilities. The various concerns plaguing the Indian Power Sector also highlights inefficiencies due to - increasing financial losses, increasing debt burden on State DISCOMs, negative impact of losses and debt on GDP, increasing AT&C losses, increasing power purchase cost, increment in per unit cost of power, increasing gap between average cost and average revenue. The review of literature shows that financial losses of Power Sector were increased by ₹ 29,773 Crores from 2011 to 2013, debt burden on DISCOMs increased by 27% from 2003 to 2011, the AT&C losses reduced by 1.75% from 2011 to 2013 (this achieved rate of reduction in AT&C Losses is comparatively low to predicted reduction in AT &C losses), gap between Average Revenue and Average Cost increased by ₹ 33,109 crores from 2010 – 2013, average cost of per unit power increased by 70% from 2003 – 2011 and average tariff of per unit power increased from ₹ 1.74 from 2007 – 2014. These points signify the Business Problem as ‘Non-Bifurcation of Content and Carriage in Indian Power Distribution Sector is leading to opportunity Cost’. As per the best practices adopted globally, separation of carriage and content for introducing the retail competition in Indian Power Sector may yield into efficient sector. The present work is organized into eight chapters for the purpose of presentation and exploration. The first chapter, ‘Introduction and Background’ justifies following as the business problem, ‘Non-Bifurcation of Content and Carriage in Indian Power Distribution Sector is leading to opportunity Cost’. The second chapter describes the reforms scenario in India. It further specifies the policy documents and relevant studies to be considered for the conceptualisation.