While many senior executives continue to talk about the "voice of the customer," few demonstrate their commitment to this concept by spending time with customers. Many continue to use their intuition or `golden gut' in their attempt to provide superior customer value. Unfortunately, `senior executive intuition' is rarely attuned to the needs of their customers. While the competitive environment continues to intensify, executives have cut back on the time devoted to customers just when it should be increasing. This article discusses the need for senior executives to spend time with customers and provides examples of the benefits that this approach will provide.

In February 2005, the Central Government came out with a detailed tariff policy. This is basically an extension of the Electricity Act 2003. The importance of this policy cannot be overestimated in view of the fact that this is the first concrete step towards getting micro-policies right. There is no real point in drafting a macro-policy and leaving the players to figure out the details, especially in infrastructure. This can lead to untold problems.

Balancing the requirements of getting a reasonable return for the investor (and thus attracting funds for the sector), and at the same time ensuring reasonable user charges for the consumers, is a critical issue for regulators, particularly in a country such as India, where users either cannot pay or refuse to pay. There also needs to be some sort of consistency as power is being drawn from grids across the country. Indeed, the final aim is to create an integrated grid network across the country, with private players having an equal access to the same. The return on equity has been looked at, subject to certain debt-equity ratios, so that the base of equity is neither too low nor high. Without commenting on the appropriateness of the same, the very fact that such a ratio has been firmed up, would imply that some thought has gone into the issue of balancing debt with equity. Too much debt raises the interest costs and insistence on too much equity means that the risk capital issue becomes a matter of concern for the investor. Anything between 1.5:1 to 2:1 for a reasonable level of tariffs could be considered as something that the country could live with.

The encouragement of captive power plants is a positive factor and would keep the state units on their toes. It has, however, been the constant complaint of the state units that they have to provide power at subsidized rates to domestic and rural consumers whilst the IPPs and captive power units target the large industrial units. A lot of thought seems to have been given to transmission loss allocation, and certain benchmarks and standards have been laid down. Everyone is aware that this is where the maximum controllable losses take place, and not in generation. There is plenty of collusion between the various electricity boards and influential consumers regarding theft of power, mainly for industrial and agricultural purposes. The implementation of certain financial incentives and disincentives should at least put a check on these activities as various payouts and fines bring these matters sharply to the notice of the higher authorities in a manner that mere formal reporting does not.

Tariff Policy of the Electricity Act, 2003: A Commentary, Central Government, tariff policy, regulators, private players, debt-equity ratios, power plants, domestic and rural consumers, financial incentives and disincentives, industrial and agricultural purposes.