The outgoing chairperson moots different regional distribution companies

The outgoing chairperson of the Tamil Nadu Electricity Regulatory Commission (TNERC) S. Kabilan has strongly called for pursuing the next course of reforms in the State power sector.

“The separation of the function of generation from the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) needs to be pursued vigorously. This cannot brook any further delay,” says Mr. Kabilan, who will be demitting office on Monday after a five-year-long tenure.

Subsequent to the bifurcation, the entity has to be split into different regional distribution companies, on the lines of what has been done in Andhra Pradesh and Karnataka. All the entities can be government-owned and they can function within the broad parameters of policies set by the State Government.

[Effective November 1, 2010, the monolithic Tamil Nadu Electricity Board (TNEB) was divided into the TANGEDCO and the Tamil Nadu Transmission Corporation (TANTRANSCO) with TNEB Limited as the holding company].

Improvement in operational efficiency and effective redress of grievances of consumers are the two major reasons cited by him to advocate further reforms in the sector.

Pointing out that there are over 2.2 crore consumers all over the State, he wonders how it is possible for one chairman to attend to the problems of all. As the basic character of the organisation such as TANGEDCO is service orientation, it should remain close to people. This is not possible unless there are regional distribution companies, which are to be managed by autonomous boards of directors.

Referring to the experiences of Andhra Pradesh and Karnataka, Mr. Kabilan, who was Assam Chief Secretary before becoming the TNERC chairperson in January 2007, says that the presence of several distribution companies in the two southern States has led to “healthy competition” among themselves, eventually resulting in cost reduction.

In the context of the present financial crisis of the TANGEDCO, the next course of reforms has assumed greater relevance as the two principal reasons - improvement in operational efficiency and effective redress of grievances of consumers – will bring about solutions to the basic problem.

It is not that the TANGEDCO alone is in crisis. There are many other States where the government-run power utilities are in the red. Already, the Union Planning Commission has constituted a task force comprising State Power Secretaries to recommend measures for making the financial condition of the State power utilities viable.

The Appellate Tribunal for Electricity has held that in the event of delay in filing annual revenue requirement by the State power utilities, the State Electricity Regulatory Commissions can suo motu initiate proceedings for tariff determinations. Besides, financial institutions are insisting on annual revision of tariff. So, the current environment is conducive for financial strengthening of the TANGEDCO, Mr. Kabilan adds.

He recalls that the Commission, in October 2010, conveyed to the State Government a statutory advice of forming a separate utility for generation and creating regional distribution companies.

On the contentious issue of metering and pricing of agricultural supply, Mr. Kabilan says that it requires broad political consensus. “There are hard realities on the ground. What has been enjoyed over the years cannot be withdrawn suddenly,” he points out, referring to the scheme of free power supply.

All along, the Commission had never quantified the cost of agricultural supply. To correct this, an attempt was made in the Commission's tariff order of July 2010. The next tariff order will see a significant improvement. “We will eventually move towards full neutralisation of the cost of agricultural supply,” he hopes.

Terming his tenure as satisfying, he says that the activities of the Commission had increased in the last five years. The TNERC has issued over 360 orders on a range of issues.

“Since the introduction of regulation and control measures on power supply in November 2008, there is a surge of petitions filed with the Commission. This only shows that people have faith in the impartiality of orders of the TNERC.” he says.