This was presentation made before Myanmar Power Sector Delegation during their visit to India and cover Indian Power Sector Regulatory Aspects

1. Indian Regulatory
framework of Power
sector
Vijay Menghani
Chief Engineer
B.E,MBA
vmenghani@nic.in
menghaniv@gmail.com
Good judgment comes from
experience;
experience comes from bad
judgment.
-- Mark Twain

2. Success Story of India Power
sector
2
2%
20.5%
11.5 %
0.7%

3. Need of Regulations

4. Unmanaged / Manage
Congestion/Accident
Smooth Flow, Efficient and
economic and most import
Secure
4/23/2020
4
Like Traffic Rule
there is Grid
Standards and
Grid Code

5. Philosophy
 Regulations are ‘Subordinate Legislation” i.e rules
framed to implement Act or Law.
 Regulation is "controlling human or societal behavior
by rules or restrictions.“
 Regulation can take many forms: legal restrictions
promulgated by a government authority, self-
regulation by an industry such as through a trade
association, social regulation (e.g. norms), co-
regulation and market regulation.
 Regulations can be seen as implementation artifacts
of policy statements.

6. Structure of Indian Electricity Sector
& RPCs

7. 7
POWER SYSTEM OPERATION HIERARCHY
Regional Power Committee
(RPC)
RPC
Secretariat
NLDC/RLDC
MEGA POWER
PROJECTS
SUPPLYING
POWER TO MORE
THAN ONE STATE
C.S. POWER
STATIONS
POWERGRID’S
SUB-STATIONS
SLDCs (STUs)
IPPs OF STATE STATE’S POWER STATIONS STATE’S GRID
SUB-STATIONS
DIRECTIONS
FEEDBACK
Technical Co-rdination
Committee
Operation Co-rdination
Committee
Commercial Committee Protection Committee Load Generation Balance
Report Committee
Sub-Committee on
Regional Energy Accounts
System Studies
Sub-Committee
Regulations of CERC
on Tariffs and inter-
state transmission of
energy
CEA Central Electricity Authority
RLDC - Regional Load Despatch Centre
CTU - Central Transmission Utility
C.S. - Central Sector
SLDC - State Load Despatch Centre
STU - State Transmission Utility
Abbreviations
4/23/2020
CEA.MOP
Cooperate &
Collabrate in place of
command and control

8. Evolving Industry Structure
8
8
Vijay Menghani, Joint Chief, CERC

9. Business NOT as usual
DISCOM
/TSO
Regulator
Public
Industry
Governme
nt

10. Regulatory Framework10
Electricity
Act,2003
CEA Regulations
Under Section 73
CERC
Regulations
Under Section 79
SERC Regulation
Under Section 86
National
Electricity Policy
Tariff Policy

11.  Act Definition: The result of public deliberation; the
decision or determination of a legislative body,
council,court of justice, etc.; a decree, edit, law,
judgment, resolve, award; as, an act of Parliament,
or of Congress.
•Three erstwhile Acts that governed the
electricity sector:
• The Indian Electricity Act, 1910
• The Electricity (Supply) Act, 1948
• The Electricity Regulatory Commissions Act, 1998
11
Before This Act
Vijay Menghani, CEA

12. • The Indian Electricity Act, 1910
• Provided basic framework for
electric supply industry in India.
• Growth of the sector through
private licensees. Licence by
State Govt.
• Provision for licence for supply of
electricity in a specified area.
• Legal framework for laying down of
wires and other works.
12 Before This Act Contd.
Vijay Menghani, CEA

13. The Electricity (Supply) Act, 1948
• Mandated creation of SEBs.
• SEB had the responsibility of
arranging the supply of electricity
in the State
• Need for the State to step in
(through SEBs) to extend
electrification rapidly, which was
limited to cities.
13 Before This Act Contd.
Vijay Menghani, Joint Chief, CERC

14. The Electricity (Supply) Act, 1948
• Over a period performance of SEBs deteriorated
substantially.
• Amendments made in 1975 to enable generation in
Central sector
• Amendment to bring in commercial viability in the
functioning of SEBs –
 Section 59 amended to make the earning of
a minimum return of 3% on fixed assets a
statutory requirement (w.e.f 1.4.1985)
• Amendment in 1991 to open generation to private
sector and establishment of RLDCs
• Amendment in 1998 to provide for private sector
participation in transmission, and also provision relating
to Transmission Utilities.
14 Before This Act Contd.
Vijay Menghani, Joint Chief, CERC

15. • Under Indian electricity (supply) Act,1948
the SEBs had to determine tariff, but
practically state Govt. determined tariff .
The Electricity Regulatory Commissions Act,
1998
• Provision for setting up of Central / State Electricity Regulatory
Commission with powers to determine tariffs.
• Constitution of SERC optional for States. .
• Distancing of Govt. from tariff determination.
15 Before This Act Contd.

16. • Requirement of harmonizing and rationalizing the
provisions in the existing laws to
 - Create competitive environment by
encouraging private sector participation which will
result in enhancing quality and reliability of service
to consumer.
 - distancing of Govt. from regulatory
responsibilities
• Obviating need for individual States to enact their
own reform laws.
• Requirement of introducing newer concepts like
power trading, open access, etc.
16
Why this Act

17. Electricity Act 2003 - Key Features
 This Act is divided in XVIII Parts-Total sections 185
 Open Access to Transmission /Distribution Systems
 De-licensing of power generation
 Trading in electricity permitted
 Liberal provisions for captive power generation
 Rural generation and distribution freed from licensing
 Expanded role for the Regulatory Commissions
 Envisages unbundling of transmission and distribution.
 Regulatory Commissions to develop electricity
markets.
17
17

18. Preamble (stating its purpose, aims,
and justification) of Electricity
Act,2003
 An Act to consolidate the laws relating to generation,
transmission, distribution, trading and use of electricity
and generally for taking measures conducive to
development of electricity industry, promoting
competition therein, protecting interest of consumers
and supply of electricity to all areas, rationalization of
electricity tariff, ensuring transparent policies regarding
subsidies, promotion of efficient and environmentally
benign policies, constitution of Central Electricity
Authority, Regulatory Commissions and establishment of
Appellate Tribunal and for matters connected therewith
or incidental thereto.

19. Section 3 of Electricity Act
 Section 3. (National Electricity Policy and Plan) ---
(1) The Central Government shall, from time to time,
prepare the National Electricity Policy and tariff policy, in
consultation with the State Governments and the
Authority for development of the power system based on
optimal utilisation of resources such as coal, natural gas,
nuclear substances or materials, hydro and renewable
sources of energy.
(2) The Central Government shall publish National
Electricity Policy and tariff policy from time to time.
(3) The Central Government may, from time to time, in
consultation with the State Governments and the
Authority, review or revise, the National Electricity
Policy and tariff policy referred to in sub-section (1) .
19

20.  In Compliance with section 3 of the Act, Tariff Policy was
notified by Central Govt. on 6th January,2006.
 Objectives:
(a) Ensure availability of electricity to consumers at
reasonable and competitive rates;
(b) Ensure financial viability of the sector and attract
investments;
(c) Promote transparency, consistency and predictability
in regulatory approaches across jurisdictions and
minimise perceptions of regulatory risks;
(d) Promote competition, efficiency in operations and
improvement in quality of supply.
20 Tariff Policy,2006

21. National tariff Policy,2016
 The objectives of this tariff policy are to:
(a) Ensure availability of electricity to consumers at reasonable and
competitive rates;
(b) Ensure financial viability of the sector and attract investments;
(c) Promote transparency, consistency and predictability in
regulatory approaches across jurisdictions and minimise perceptions
of regulatory risks;
(d) Promote competition, efficiency in operations and improvement
in quality of supply;
(e) Promote generation of electricity from Renewable sources;
(f) Promote Hydroelectric Power generation including Pumped
Storage Projects (PSP) to provide adequate peaking reserves,
reliable grid operation and integration of variable renewable
energy sources;
(g) Evolve a dynamic and robust electricity infrastructure for better
consumer services;
(h) Facilitate supply of adequate and uninterrupted power to all
categories of consumers;
(i) Ensure creation of adequate capacity including reserves in
generation, transmission and distribution in advance, for reliability of
supply of electricity to consumers
21

22. Notified by Central Govt. on 12th Feb,2005 under section 3 of the
Act with the objectives:
 Electricity to be available for all households in next five years
 Demand to be fully met by 2012. Energy and peaking
shortages to be overcome and adequate spinning reserve to
be available.
 Supply of Reliable and Quality Power of specified standards in
an efficient manner and at reasonable rates.
 Per capita availability of electricity to be increased to over
1000 units by 2012. Now it is 1075 kWh(2015-16) from 567kWh in
2002-03
 Minimum lifeline consumption of 1 unit/household/day as a
merit good by year 2012.
 Financial Turnaround and Commercial Viability of Electricity
Sector.
 Protection of consumers’ interests.
22National Electricity Policy- Objectives

23. CEA Functions : Section 7323
Major Functions:
Advise the Central Government on the matters
relating to the national electricity policy,
formulate short-term and perspective plans for
development of the electricity system and co-
ordinate the activities of the planning agencies
for the optimal utilisation of resources to
subserve the interests of the national economy
and to provide reliable and affordable
electricity for all consumers

24. CEA Functions : Section 7324
Major Functions---:
Technical standards for constructions of electrical
plants, electric lines and connectivity to the Grid
specify the safety requirements for construction,
operation and maintenance of electrical plants and
electric lines;
specify the Grid Standards for operation and
maintenance of transmission lines;
 specify the conditions for installation of meters for
transmission and supply of electricity;
advise the Appropriate Government and the
Appropriate Commission on all technical matters relating
to generation, transmission and distribution of electricity;

25. Data Collection
Concept/Approach
paper
Draft Regulation
Public Comments/
Hearing
Final Regulation and
Statement of Reason
Regulation Framing Process25

26. CEA Regulations
http://cea.nic.in/regulations.html
4/23/2020
26
Construction
Technical
Standards for
Construction of
Electrical Plants
and Electric
Lines),2010 &
Amendment
Regulations, 2015
Connection,
Operation
Grid Standards)
Regulations, 2010
Technical Standards for
Connectivity to the
Grid, 2007 amended in
2012
Technical Standards for
Connectivity of the
Distributed Generation
Resources
Safety,
Metering,
Information
Measures relating to
Safety and Electricity
Supply) Regulations,
2010 amended in 2015
Safety requirements for
construction, operation and
maintenance of electrical
plants and electric lines)
Regulations 2011
Furnishing of Statistics, Returns
and
Information) Regulations, 2007
Installation and Operation
of meters) Regulations 2006
amended in 2015

27. Central Electricity Regulatory
Commission
 Section 79. (Functions of Central Commission): ---
(1) The Central Commission shall discharge the following functions,
namely:-
(a) to regulate the tariff of generating companies owned or
controlled
by the Central Government;
(b) to regulate the tariff of generating companies other than those
owned or controlled by the Central Government specified in clause
(a), if such generating companies enter into or otherwise have a
composite scheme for generation and sale of electricity in more
than one State;
(c) to regulate the inter-State transmission of electricity ;
(d) to determine tariff for inter-State transmission of electricity;
27

28. Central Electricity Regulatory
Commission( Contd…)
(e) to issue licenses to persons to function as transmission licensee and
electricity trader with respect to their inter-State operations;
(f) to adjudicate upon disputes involving generating companies or
transmission licensee in regard to matters connected with clauses
(a) to (d) above and to refer any dispute for arbitration;
(g) to levy fees for the purposes of this Act;
(h) to specify Grid Code having regard to Grid Standards; (i) to specify
and enforce the standards with respect to quality,
continuity and reliability of service by licensees;
(j) to fix the trading margin in the inter-State trading of electricity, if
considered, necessary;
(k) to discharge such other functions as may be assigned under this
Act.
28

29. Role CERC :
Balancing Consumer Interest and Investment
promotion need
o Consumer interest served by
• Enhanced Power Supply and Transmission Availability
• Inducing Efficiency in operation of power plants – gains for Consumers
• Ensuring Reliable Power Supply
• Providing Alternatives to procure power
o Investment Promotion:
• Enabling framework for Market Access to Generators
• Development of Power Market
• Competition in Transmission
• Promoting Green Energy
o CERC is responsible for Oversight of Market and Grid Security
4/23/2020
29

30. CERC Enabling Regulations
4/23/2020
30
Generation/
Power Market
Government-
Advice To Govt
Generator- Tariff
Regulation
Trader/ Power
Exchange
Trading License
and Power
Market
Regulation
Transmission
Transmission
License
Regulation
Transmission Tariff
and Standards of
Performance
Transmission
Regulatory
Approval
Transmission Charges-
Point of Access
Charges(POC
Mechanism)
Open Access –
Connectivity, Long
Term and Short Term
System
Operation
Schedule and
Dispatch- Grid
Code
Deviation
settlement
Congestion
Management( In Real
Time and Power
market)
Ancillary
Service

31. Developed Power Market31
Sally Hunt : Making Competition
works in Electricity Market

32.  Tariff Policy 6.1.2006
 The objectives of this tariff policy are to:
 Ensure availability of electricity to consumers at
reasonable and competitive rates;
 Ensure financial viability of the sector and attract
investments;
 Promote transparency, consistency and predictability
in regulatory approaches across jurisdictions and
minimise perceptions of regulatory risks;
 Promote competition, efficiency in operations and
improvement in quality of supply.

Guiding Principle for Tariff
Vijay Menghani, Joint Chief(Engg.) CERC
32

33. Interest on Working Capital
O& M Charges
Interest On Loan
Depreciation
ROE
Components of Tariff
Additional
ROE
Cost Plus Multi Year Tariff ( 5 years) is
adopted by CERC.Vijay Menghani, Joint Chief(Engg.) CERC
33

34. Petition Filing
Technical
Validation
Adequacy of
Information
Hearing
Record of
Proceeding
Order
Tariff Determination
Vijay Menghani, Joint Chief(Engg.) CERC
34

35. Process in Tariff Petition35

36.  Prudence (Lat. prudentia, contracted from
providentia, seeing ahead) is the ability to govern
and discipline oneself by the use of reason.
 In modern English, however, the word has become
increasingly synonymous with cautiousness. In this
sense, prudence names a reluctance to take risks,
which remains a virtue with respect to unnecessary
risks, but when unreasonably extended (i.e. over-
cautiousness), can become the vice of cowardice.
 Recently translated by such terms as "practical wisdom", "practical
judgment," or "rational choice."
Prudence Check
Vijay Menghani, Joint Chief(Engg.) CERC
36

37. Need of Grid Code
 Power System is an in integrated operation of various
assets of grid like Generation, transmission and
distribution.
 Like human body it require a great deal of
coordination among various part of the grid.
 Also in view of scare natural resource and need of
conservation require economic and efficient
operation.
 As more and more members join and grid become
larger, the need of coordinated control is required for
Safe and secure operation as a single mistake will
affect large number of people and sectors.

38. Legal Provisions in the Act,2003
Section 79 (1) (h) - CERC entrusted with the function
of specifying Grid Code having regard to Grid
Standards, specified by CEA.
Section 178 (g) – CERC empowered to specify Grid
Code under sub-section (2) of section 28.
Sub-section (2) of section 28- RLDC shall comply with
such principles, guidelines and methodologies in
respect of the wheeling and optimum scheduling
and despatch of electricity as the Central
Commission may specify in the Grid Code.
Section 86 (1) (h) - State Grid Code specified by SERC
should be consistent with IEGC
38

39. OBJECTIVE
The IEGC brings together a single set of technical and commercial
rules, encompassing all the Utilities connected to/or using the inter-
State transmission system (ISTS) and provides the following:
• Documentation of the principles and procedures which define the
relationship between the various Users of the inter-State transmission
system (ISTS), National Load Despatch Centre, as well as the Regional
and State Load Despatch Centers
• Facilitation of the optimal operation of the grid, facilitation of
coordinated and optimal maintenance planning of generation and
transmission facilities in the grid and facilitation of development and
planning of economic and reliable National / Regional Grid
• Facilitation for functioning of power markets and ancillary services by
defining a common basis of operation of the ISTS, applicable to all the
Users of the ISTS.
• Facilitation of the development of renewable energy sources by
specifying the technical and commercial aspects for integration of
these resources into the grid.

40. WHAT IS GRID CODE
Grid:An interconnected system for the transmission and distribution of electricity over a wide
area, especially a network of high-tension lines, cables and power stations.
Code: A systematic collection of regulations and rules of procedure or conduct: a traffic code
The Indian Electricity Grid Code (IEGC) lays down the
rules, guidelines and standards to be followed by the
various persons and participants in the system to
plan, develop, maintain and operate the power
system in the most secure, reliable, economic and
efficient manner, while facilitating healthy
competition in the generation and supply of
electricity.
This is published by CERC under section 79(1) h- to
specify Grid Code having regard to Grid Standards.

41. Key Features of IEGC,2010
 Focus on Renewable integration, Grid Discipline,
Coherence with other Regulations, Market
development, Multiple players with multiple Contracts,
 Forecasting, Scheduling of Wind & Solar
 Deviation Settlement -RRF Mechanism
 Tightening of frequency band ‘49.2- 50.3 Hz.’ to ‘49.5 -
50.2 Hz’.(Now it is 49.90 -50.05 Hz)
 Alignment with various Regulations
 Control Area Jurisdiction -Redefined
 Stricter provisions for Grid discipline
 Automatic Demand Management schemes and
Contingency Procedures.
41

42. 42
Introduction
To plan, develop, operate &
maintain National/Regional
Grid
Power System
• Documentation of the principles
which define relationship
between various users
•Facilitation of optimal operation
•Facilitation power
markets and ancillary services
• Facilitation
renewable energy sources
IEGC
Rules
Guidelines
Standards
Utilities
connected with / using
for
ISTS

43. Content
General
Role of various organizations and their linkages
Planning Code for Inter - State Transmission
Connection Code
Operating Code
Scheduling and Despatch Code
Miscellaneous

44. 44
Role of NLDC (2.2)
RLDC
Inter Regional Links
Supervision
• Economy and Efficiency of National Grid
• Monitoring of operations and grid security of National
Grid
• Restoration of synchronous operation of National Grid
• Trans-national exchange of power
• Feedback to CEA & CTU for national Grid Planning
• Dissemination of information
NLDC
Supervision & control
RPC for
regional outage Plan
Coordinate
Coordinate
Accounting

45. 45
Role of RLDC (2.3)
•Real time operation , control &
contingency analysis
•Generation scheduling/ re-scheduling
•Restoration
•Metering & data collection
•Compiling & furnishing of operation data
•Operation of Regional UI pool Account.
Reactive energy account and
Congestion charge account
•Operation of ancillary services
RLDC
Exclusive
functions

46. 46
Role of RLDC (2.3)
Functions
•optimum scheduling
and despatch of
electricity
•Monitor grid operatio
•Keep accounts of
electricity transmitted
• Exercise Supervision
and control over
the ISTS
• Real time operations• Licensee
• Generating company
• Generating station / Sub-
stations
• any other concerned person
SLDC
Central State
DirectionsComply
the
directions
Apex body
for
integrated
operation
For ST
Open
Access-
Nodal
Agency
RLDC

47. 47
Role of RPC (2.4 )
 Facilitate the stable and smooth operations of the system
 Functions:
 regional level operation analysis
 facilitate inter-state/inter-regional transfer of power
 facilitate planning of inter-state/intrastate transmission system
 coordinate maintenance of generating units
 coordinate maintenance of transmission system
 protection studies
 Planning for maintaining proper voltages
 Consensus on issues related to economy and efficiency
RPC
RLDC/SLDC/CTU/
STU/ Users
DecisionsMS RPC shall certify Availability
of transmission system
Prepare Regional Energy Account,
Weekly UI, Reactive & Congestion
charge account

48. 48Role of CTU (2.5)
• to undertake
transmission of
electricity through
ISTS
• to ensure development
of an efficient, co-
ordinated and
economical ISTS
CTU
RLDC
shall operate
ISTS lines
CTU/to provide non-discriminatory Open
Access
– Will not engage in trading and
generation
– For LTOA & MTOA nodal agency
Planning
STU
Central
Govt.
State2
State1
State Govt.
Generating
Companies
CEA
RPC
Licensees

49. 49
Role of CEA (2.6)
CEA
(Central Electricity Authority)
• will formulate short-term and perspective plans for transmission system
•specify technical standards for construction of electrical plants, electric lines and
connectivity to the grid
•specify safety requirements for construction, operation and maintenance of
electrical plants and electrical lines
•specify grid standards for operation and maintenance of transmission lines
•specify conditions for SEMs
•Promote and assist timely completion of schemes
•To collect and record electrical data- cost, efficiency
•To carry out investigation ( Electrical system)
• Shall Prepare National Electricity Plan (NEP)

50. 50
Role of SLDC (2.6)
SLDC – Apex body in a State
Power System
State
• Optimum scheduling and despatch
• Monitor grid operations
• Keep accounts of electricity
transmitted
• Activities of
Real-time operation
• exercise supervision and control
RLDC
Directions
Ensure
compliance
Directions and
exercise
supervision and
control
Licensee,
generating company,
generating station,
sub-station
and any other
concerned person

51. 51
Role of STU (2.8)
• to undertake
transmission of
electricity through
intra-state transmission
system
• to ensure development
of an efficient, co-
ordinated and
economical intra-state
transmission system
STU
SLDC
shall operate
Intra-state transmission system
STU/to provide non-discriminatory Open
Access
Planning
CTU
State Govt.
Generating
Companies
CEA
RPC
Licensees

52. 52Role of STU (2.8)
• Energy transfer
• Efficient
• Economical
STU
SLDC
shall operate
Provide non-discriminatory
open access
Intra-state transmission system
• CTU
•State Government
•Generartors
•RPCs
•CEA
•Licencees
• Planning
• Coordination

53. New Challenges : Increasing
Renewable Generation
53

54. Variability and uncertainty54

55. Need of amendments
 Large Scale Integration of Renewable with Grid :
 Ambitious target of 175 GW Renewable Capacity by 2022
will increase challenge of system operation in regards to
Balancing and secure operation of All India Grid.
 During day sufficient conventional capacity may not be
available to give adequate reserves.
 National Electricity Plan 2017-22 indicate that Grid
Management during morning and evening RAMP would
be a challenge.
 Renewable generation should not trip under temporary low
voltage or high voltage condition due to incident elsewhere
in the grid.
 Using Renewable generation as tool for grid security i.e. as
asset for system operator rather than liability .
55

56. Compliance Monitoring
 B(xiv) The following new Regulation 11 is proposed to be
added regarding compliance Monitoring at the end of
the principal regulations in Connectivity Regulations
 It shall be the responsibility of concerned Central/ State
Transmission utility to ensure that before connectivity to
grid is permitted, all general connectivity conditions
stipulated in the CEA Regulations are complied with.
 Normally, it shall be in the form of self-declaration in the
proforma of connection agreement which can be
sample checked/ verified by CTU/STU . Non compliance
shall be reported immediately to appropriate
commission.
56

57. Results of Enabling Regulatory
framework
4/23/2020
57
o Regulatory Intervention and GOI policies in last
10 years now showing results
• In 11th Five Year plan Private Generation Capacity
addition of 23,000 MW
• Private Generation capacity addition 41.8 % of the
total capacity addition in 11th Plan & 54.7% in 12th Plan
Five Year
Plan
Private
Generation
Addition ( MW)
Total Capacity
Addition (MW)
% of Private capacity
addition to Total
Capacity Addition
10th Plan
(2002-07)
1,930.60 21,180.24 9.1%
11th Plan
(2007-12)
23,011.50 54,963.90 41.8%
12th Plan
(2012-17)
54279.50 99209.47 54.7%

58. Thank You
Vijay Menghani,
Chief Engineer
Central Electricity Authority
menghaniv@gmail.com, vmenghani@nic.in
@175GW_IndiaRenw
+91-9999035484
in.linkedin.com/in/menghanivijay
58
“The key to realizing a dream is to focus not on
success but significance – and then even the small
steps and little victories along your path will take on
greater meaning.”
– Oprah Winfrey
“To accomplish great things, we must not only act,
but also dream; not only plan, but also believe.”
– Anatole France

59. 59