The advent of Regulatory Commissions in the power sector
is relatively new in India and the theory and practice of
regulation by these Commissions is yet to evolve into a
set of standard norms and procedures. Reforms in the power
sector stemmed from an understanding that competition is
possible and that the prevailing inefficiencies in the sector
can be traced to the dominance of a single monolith public
sector utility. Unbundling and facilitating the `division
of carriage from the product' resulted in considerable efficiencies
and benefits to the consumers all over the world. Independent
regulatory agencies are critical players in such a reform
process and India followed the same route. The legal framework
for the reforms in the country is the Electricity Act, 2003.
There is need to distance the sector from the government
because its role as the owner tends to be in conflict with
its role as the regulator, whereas, market orientation and
private sector involvement in the sector, require clarity
of role of regulatory agencies.
It is in this context that the present book titled Regulation
in Practice is an important contribution to the growing
field of governance by regulatory commissions. The book,
an outcome of a study undertaken by TERI (The Energy and
Resources Institute) has three authors, one of whom is an
ex-Chairman of an Electricity Regulatory Commission. There
are certain features of the power sector in India which
tend to define the role of regulatory commissions: (i) electricity
is in the concurrent list and is constituent of the privileges
of State Governments and (ii) electricity is a necessity.
These two factors have shaped the structure of the industry
especially with regard to tariff policies and pricing. Pricing
policies are invariably influenced more by social commitments
and political compulsions, which means that the sector was
sustained largely through subsidies and subventions from
the government. Against this background, the Electricity
Act, 2003 was passed, which mandates a uniform approach
to the sector be it the model of unbundling, or the methodology
for fixing of tariffs or of open access which often is at
variance with the prevailing practice. The new Act, the
historical evolution of the sector and the concurrent status
of the sector make for interesting analysis of the different
forms of governance adopted by various regulatory commissions
in the country in order to implement reforms as mandated
by the Act.
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