The document summarizes the deregulation scenarios of developing and developed countries' power systems. For developing countries, governments traditionally controlled vertically integrated power utilities, leading to inefficiencies like irrational pricing, production inefficiencies, high transmission/distribution losses, overstaffing, and reliability issues. India introduced reforms in the 1990s including unbundling utilities and establishing independent regulators. Developed countries that deregulated include the UK, Nordic countries, and others since the 1980s/90s, featuring separation of generation, transmission and distribution and market-based pricing through power pools. Deregulation generally aimed to increase competition and improve efficiency/prices.

1. 1
Presented by;
Kalyan Gogoi (16/11)
Manab Boro (16/14)
Present de-regulation scenario of developed and
developing countries

2. DEREGULATION
• Deregulation is the
reduction or elimination
of government power in a
particular industry,
usually enacted to create
more competition within
the industry.
2

3. Present de-regulation scenario of developing countries
• In most of the developing countries, the growth of the power systems are usually under
direct supervision of their respective governments and operate as a vertical monopoly.
• They held the responsibility in all ways such as making investment decisions for new
power projects, providing budgetary support in the annual plan outlays, setting the
operating guidelines for generators and transmission lines and finally setting the
consumer price.
So, in such a state-controlled system management led to various inefficiencies both in
technical and managerial aspects. Some of them are discussed here

4. 1. Irrational pricing policy
Existence of irrational tariff policies are
an important source of inefficiency.
 The government often implement
social subsidy policies through the
utilities thereby compromising the
financial viability of others.
 It is seen that agricultural and domestic
consumers are heavily subsidize who
are not even charged the marginal cost
of generation.
 But the tariff rates for industrial
customers are far more then them.

5. 2. Inefficiency in production
This include in efficiency within the generating stations in terms of high auxiliary
(sometimes to the order of 14% of the generation), specific oil consumption and
specific coal consumption.
Various factors that are responsible for this-
• External factors such as poor coal quality, with specific factor such as poor plant load
factor operation and high reactive power generation.
• Plant specific factor such as operational constraints.
• Managerial factors relating to the overall plant practices observed.

6. 3. Inefficiency due to transmission ,distribution and use
• The high technical loss in transporting the electricity from generating
station to the consumer end occurs due to increased transformer loss
from overloads and low maintenance.
• High losses occurs due to low load factors, low transmission voltages,
uneven demand, low power factor loads, long feeder lengths etc.
• Commercial or non technical losses comprise the loss arising from
pilferage of energy, inaccurate meter readings, defective meters etc.

7. 4. Over-stuffing in the utilities:
Another consequence of state control over electric utilities was the enormous level of
over-staffing.
An electric utility with geographically widespread distribution system provide an ideal
opportunity offer jobs either to fulfill election promise or to dispense favor.
Apart form heavy financial costs overstaffing result in inefficiency, lack of
unaccountability and mismanagement of resources.
5. Reliability:
Traditionally, electric generating utilities operated with high reserve margins. In a
restructured environment, safety margins tend to be lower and (keeping other influencing
factors constant) the probability of power outages is higher, although costs are lower.

8. Indian Scenario of Deregulation
• In India, the power sector was mainly under the government ownership
(>95% distribution & ~98% generation) under various states and central
government utilities, till 1991.
• The installed capacity of publically owned generation is 1 Lakh MW as of
January 2001, in spite of this Indian power sector faces energy shortage of
8%.
• With a GDP of 6% per year, the country will require an additional
70,000MW during period 2000-7.
• Till 1991 around 90% of investments came from public sectors, afterwards it
is realized that the public sector will not be able to finance the additional
power needed. So, the government decided to encourage private
investment both domestic and foreign to meet the demand.

9. Change in power industry of India
In mid 1990s, Orissa began a process of fundamental restructuring of the
state power sector. Under the World Bank (WB) loan, the state decided to
adopt a new restructuring model, what is known as World Bank-Orissa model
of reform.
This consisted of a three pronged strategy of:
• Unbundling the integrated utility in three separate sectors of generation,
transmission and distribution.
• Privatization of generation and distribution companies.
• Establishment of independent regulatory commissions to regulate these
utilities.

10. Current Scenario of Deregulation in developed countries
 Deregulation and current scenario around the World:
Milestones of Deregulation:
- l982 Chile
- l990 UK
- l992 Argentina, Sweden & Norway
- l993 Bolivia & Colombia
- l994 Australia
- l996 New Zeeland
- l997 Panama, El Salvador, Guatemala, Nicaragua, Costa Rica and Honduras
- l998 California, USA and several others.

11. Latin America:
Major transformation took place from 1980 onwards
throughout the electric power industry in South
America. In Argentina, the government separated
generation, transmission and distribution in 1991.
Main Features:
• Disaggregation of generation, transmission and
distribution into separate business sectors.
• All generating companies bid into ‘Poolco’ like
structure.
Results:
• Considerable consumption growth (40%
increase in last five years)
• Reduction of prices since beginning of the
process around 50 %

12. The UK:
The process of privatization in the UK began in
February l988, and in some ways the UK led the
world in electric industry deregulation. Great
Britain was privatized in three stages, with England
and Wales first, followed by Scotland, then
Northern Ireland.
Main Features:
• National Grid became National Grid Company
(NGC), initially owned by l2 RECs
• Pool maintained by NGC
The market are trade based on New Electricity
Trading Arrangements (NETA):July l998
Results:
• Staffing at generation plants fell by 60%, while
productivity increased almost 75%
• Prices have fallen for majority of customers with
increased reliability.

13. The Nordic Pool (Norway, Sweden):
The Swedish electricity sector was never completely centralized or nationalized. The
Norwegian electricity sector was dominated by small/ medium sized municipality owned
power companies, each vertically integrated.
Main features:
• Deregulation was created in by the Energy Act of June l990 and market operation
started in May l992
Results:
• Prices have declined about 2% for residential & 7% for commercial consumers

14. Canada:
The sector is organized along provincial and
territorial lines.
Main Features:
• The hourly pool price will be the same for
buyers and sellers.
• An advisory group, the Electric
Transmission Council, will represent the
interests of consumers and transmission
users.
Canada’s Energy Future 2016

15. California (US):
In the United States, the Federal Energy
regulatory Commission (FERC) deregulated
the wholesale generation and bulk transmission
parts. Electricity costs in California were
claimed to be about 50% higher than the
national average.
Main Features:
• A ‘power exchange’ (PX) - a spot market,
runs much like a stock market for power.
• The ISO provides settlement, billing the
users and passing revenues on to the
transmission owners.

16. World Electricity Consumption Region by 2030

17. Conclusion
The electricity industry is to become completely deregulated in the presence
of significant market competition. One of principal characteristics of a
competitive structure is the identification and separation of the various tasks
which are normally carried out within the traditional organization so that
these tasks can be open to competition whenever practical and profitable.

18. 18
20
Thank you
For Listening