14 Aug 2012 Hindustan Times (Chandigarh)
PRAVIN BHASIN
Beyond the grid failures
The Northern Grid failure on July 30 was big news. It became bigger the next day when almost half of India faced a blackout for over two hours with the failure of the Northern, Eastern and North Eastern Grids. Grid failures are rare, but a serious matter requiring a thorough introspection and firm decisions to avoid recurrence. It was easy to describe reasons for these two grid failures, simply because there are a whole lot of factors which, due to lacklustre performance of the power sector, were being neglected and forced analysts to classify these as “tragedies waiting to happen”.

Overdrawal of power by a few states, supply- demand mismatch, installed generating capacity, poor health of state electricity boards (SEBs), outdated regulatory mechanisms, technical and commercial losses, poor fuel supply and a deficient transmission system are some of the reasons being attributed for these failures by power sector experts. They have literally blamed the entire chain in the power system for these failures. The power sector is a victim of poor policies and lack of will to take decisions.

Traditionally, power generation in our country had been with SEBs barring about 40,000 MW with a highly efficient National Thermal Power Corporation (NTPC). The private sector started taking interest only recently and boosted capacity addition in the 11th plan. They will be adding almost 40% of the proposed 76,000MW in the 12th plan.

India has an installed capacity of 2,00,000 MW compared to China’s 8,00,000 MW. We have a track record of poor project implementation, overprotection of domestic vendors with stringent import regulations, misplaced environment policies, ever-changing regulations for land acquisition and a public sector undertaking not competent to supply guaranteed fuel. Adding to these woes, banks and financial institutions have started viewing power generation as a risky investment. With all these factors, it may take decades before we are able to fill the demand-supply gap.
In a recent study, international rating agency Moody has cited higher than usual losses in transmission and distribution due to poor infrastructure and losses relating to fraud by consumers who do not pay for the electricity they consume. It is estimated that 30% power is lost to theft and inefficiency in state distribution networks. It amounts to about 60,000 MW, the load the three affected grids were carrying when the second failure happened. Post-privatisation, power theft has been dealt by BSES Ltd and Tatas in Delhi effectively by using cables to transmit power right up to consumers’ doorsteps.

Our SEBs can’t take these costly but effective initiatives for want of funds. Their financial health is in dire straits owing to low tariffs, increased fuel prices and non-receipt or delayed receipts from consumers. Electricity is being sold at heavily subsidised rates to the agriculture sector which, in most northern states, is the biggest consumer. It is because of paucity of funds that SEBs are unable to spend on maintenance of the distribution system.

A large number of power plants in India are old, inefficient and generating belowaverage electricity, but are still being counted in the 200,000MW installed capacity. This is also one reason for shortfall in generation. With planned renovation and modernisation, a new life can be infused in them, providing a quick and low-cost solution to bridge the demandsupply gap.

Overdrawal is turning out to be an easy way out for SEBs to meet their power requirements. Each board has been allocated a quota and ideally shouldn’t exceed the limit prescribed. But it is being regularly violated with impunity as boards find it cheaper to pay overdrawl fines, which are far below the prevailing market rate of power sourced from private developers. Moreover, penalty is a deferred payment unlike purchases from power exchange, where immediate payments are required. Unless the overdrawal fine is hiked to make it comparable with power purchase, boards will keep violating the limits assigned, resulting in eventuality of grid failures during low frequency.

The Central Electricity Regulatory Commission has to be made more powerful. Their orders should have the same authority as that of a court decree. They should raise the penalty for overdrawal manifold and impose compounded fines for repeated violations. Keeping a watch on erring states should not be arduous as it is known that Haryana, UP, Rajasthan, Punjab and J&K are the inveterate defaulters.