In a bid to push through power reforms and unlock the power sector, UPA-II Government has set up an expert group to suggest restructuring of power utilities of seven major States, including Tamil Nadu and Uttar Pradesh.

The government is also in the process of drawing up a road map to unlock the clogged power sector by initiating a major reform in the shape of open access allowing consumers of above 1 MW to choose their preferred electricity supplier.

This comes in the backdrop of a recent government report that revealed that the accumulated losses of the power utilities across the country ran into Rs.1.50-lakh crore and annual losses were around Rs.55,000 crore putting a severe strain on the financial health of the distribution utilities.

The expert group headed by Planning Commission member (Energy) B. K. Chaturvedi is already looking into the issue and is expected to submit its report by March 2012. The group has been entrusted with the task to make an assessment of the cumulative losses of distribution utilities of seven major States, including Uttar Pradesh, Tamil Nadu and Rajasthan. It has been asked to suggest a strategy for capital restructuring of these power discoms (distribution companies), including commitment by other stakeholders like State governments. It would also suggest a road map and monitoring mechanism for implementing the above.

Some of the interim recommendations on the issue of open access have already been submitted and are presently being vetted by the Deputy Chairman Planning Commission, Montek Singh Ahuwalia, in consultation with the Law Ministry.

Under the recommendations on Open Access, the committee feels that distribution licences should inform all consumers of 1 MW and above that they could chose their electricity supplier. Similarly, State power utilities should provide power to open access consumers at negotiated rates and not regulated rates. State Electricity Regulatory Commissions (SERCs) should specify reasonable tariffs to be charged by distribution companies for providing standby supply; state load despatch centres (SLDCs) to be upgraded in a time-bound manner to enable open access and 25 per cent for discretionary allocation of 15 per cent of Central public sector undertakings' (CPSUs) generation be made available for direct sale to open access consumers.