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History of Electricity in Kerala – Dr D Shina

HISTORY OF ELECTRICITY IN KERALA – Dr D Shina S N COLLEGE, Kollam, Kerala, India email – [email protected] com ORIGIN AND GROWTH OF ELECTRICITY The history of electricity can be traced back to the eighteenth century. The first instance of sensing the phenomenon of electricity was the accidental observation of what was later found out to be neon glow by Framas Bauksbw in 1709 at the Royal Society in London. Luigi Galvani observed moving of the legs of a dead frog when touched with a metal scalpel. This also was later found to have happened due to production of electricity by chemical process.

Almost at the same time, Alessandro Volta made the first form of battery. Thus a new phenomenon, the Electric current, was produced which paved the way for the historic and swift growth of Electricity Science. Andre Marie Ampere (1775 to1836) and George Simon Ohm (1787 to 1854) made notable forward leaps in this new sector of science. Later, the invention of electric bulbs, electric motors, etc, initiated the astonishing growth of Electrical Engineering. 1 The industrial revolution and the consequent industrial growth were virtually the growth of electricity also. Electric drives actually drove the whole industrial world.

The modern age saw the emergence of Electricity as a household helper also. Many consider the invention of Electricity and Electricity industry to be the major breakthrough after the discovery of fire. The history of Electrical Engineering in India can be traced to as far back as 1886, when unorganized schemes for electric supply were established in various parts of the country. The first power station in India was at Darjeeling, established in 1897. Pioneers in power generation in India were the Mysore Government. A 450 kW hydroelectric project was set up in Kaveri River at Sivasamudram in 1902. This was for power supply to the gold fields t Kolar. However, commissioning of the hydroelectric project Simshapur in Karnataka can be considered the starting of the Electricity Era in India. The Simshapur Power Station was set up to feed power to Bharat Gold Mines and the Mysore Maharaja’s Palace. 2 A 3000 kW Power Station was commissioned in Madras City in 1906 by the Madras Electric Supply Corporation Ltd. The Jhulum Hydroelectric Station at Mahora with an installed capacity of 4227 kW was inaugurated in 1909 under the Government of Kashmir. In 1912, the Calcutta Electric Supply Corporation installed a 15, 000 kW thermal power station at Kossipur.

The Tata Hydroelectric Power Company commissioned the first large power station in India with 50,000 kW capacity at Khopoli near Bombay in 19142. Electricity was used only for lighting purpose up to 1920. In the period of 1921 to 1940, there was better progress in power development. During this period, the aggregate installed capacity increased from about 1, 30, 000 kW to 12, 00, 000k W. It was only after 1930 that the Provincial Governments began to think of a policy of development of power projects, particularly hydroelectric projects under public ownership.

During the decade 1941 to 1951, the growth of power development was largely affected by the Second World War and the abnormal post-war conditions. Features of power development in this period especially during the latter half of the decade included increased participation of various state Governments in the Electric supply industry. Mysore, Punjab, Madras, the erstwhile Travancore State and Uttar Pradesh were already in the field. Certain other states like West Bengal, Madhya Pradesh and Orissa also entered the Electricity generation and distribution field during the post-war period.

From 1951 onwards, the power supply industry came under the plan economy of the five-year plans. At the beginning of first five-year plan, the total installed capacity of power generating plants in the country was 2. 3 million kW. During a period of 20 years from the beginning of the first five-year plan, i. e. , from1951 to 1971 the total power generating capacity increased to a sevenfold value of 16. 4 million kW. The decade plan for power development put forward by the Government of India in 1971 envisaged an increase in peak demand of 36. 5 million kW as against the then figure of 16. 4 million kW. 3

The emergence of more Power Stations and Transmission lines throughout the country didn’t take much time. Till 1948, Electricity generation, transmission and distribution were governed by Electricity Act 1910. The Government used to give licences for generation, transmission and distribution of power. But this type of approach was not conducive to a balanced and sufficient growth in this key sector. There was absence of co-ordination and a meaningful orientation for fast development of the power sector. The importance of electricity industry was duly recognized by that time and an active role in the field was taken by the government.

State Electricity Boards When India got independence, the installed capacity of the country was a meagre 1940 MW. The enacting of the Electricity Supply Act 1948 paved the way for establishing the State Electricity Boards. It was a major keystone in the history of Electricity in India, which brought this prime industry under the public sector. There were major steps in the legal framework for the power sector. The whole picture of enactments in the sector will be dealt with in detail, later in this chapter. The State Electricity Boards presented a commendable picture in the growing independent India.

Till now, the State Electricity Boards ran the show, but now a new era seems to be opened in the electricity sector. Of late, reform process and new legislations are attaining momentum. The establishment of the Central Electricity Authority in August 1975 was the next important landmark. The objective was central monitoring of the electricity sector, aiming at integrated development of the electricity system of the country, with a national vision. Then, the installed capacity of the country was 18,317 MW. The next 25 years witnessed phenomenal growth in the electricity sector. Now, the installed capacity has crossed 1, 10,000 mW.

This capacity consists of 72,000 mW of thermal power, 24700 mW of hydropower, 2900 mW of nuclear power and 1,200 mW of wind power. National Electricity Grids came into being and the Central Electricity Authority undertook the role of the controlling agency monitoring inter-state dealings in the power sector, import- export, matters regarding grid discipline, quality of power, etc. The establishment of the national and regional load dispatching centres to exercise round-the-clock real-time control over the inter-state dealings was an extension of the operation of the Central Electricity Authority.

This central agency has been given statutory powers to exercise effective control over the State Electricity Boards Though the growth has been commendable, it was glaringly inadequate to meet the growing demand in the country. What is of more serious concern now is that the growth rate achieved in the past through the public sector seems to be no longer sustainable in the future mainly because of the scarcity of resources in the public sector. This has caused rethinking among the policy formers, and now the country is passing through major changes in the electricity sector.

At present, the energy deficiency is approximately 11% and peaking shortages 18%. Domestic industrial and irrigation consumers utilize over 85% of India’s electrical energy. The per capita consumption has grown from 15. 6 kWh in 1950 to 389 kWh currently. But this is much lower than the consumption standards prevailing in developed economies. Table 2. 1 presents a comparison of Electricity data of major world countries. Electricity consumption per capita of Canada is 19586 and that of US is 12308. Most of the countries have four-figure values. 4 Future projections and plans

In the Ninth five-year plan, the Government of India proposed to add 40245MW of power but it was reduced to 28000MW because of paucity of funds. The Central Electricity Authority has projected that by 2012 the installed capacity should be 2, 40,000 MW. It means that, in the next six years, we have to add 1,40,000 MW. Experts are not optimistic about achieving this target. Er. K C Naikwadi, Chairman, All India Power Engineers’ Federation, has stated that in the light of the current progress, much shortfall in achieving this objective has to be feared. 5

The Government of India has already opened the doors of the power sector to private companies, hoping that at least 10% of the addition shall be from the private operators. However, our experience in the Ninth plan is that the private sector has contributed only a meagre1%. In an all Chief Ministers meeting on 3/5/2001 it was decided that The Union would allow each state to choose its own model of reforms and that the union would not insist on unbundling / privatization of State Electricity Boards. However, the enactment of The Indian Electricity Act 2003 has made all the grounds for privatisation of the power sector in India.

The Act identifies the main reason for the shortfall in the development in the power sector in the country to be the inefficiencies of the public sector that was mainly managing the power sector in the country. The Act encourages the private sector to actively engage in generation, transmission and distribution of electrical energy in the country. The Indian Electricity Act 2003 will be dealt with in detail later in this chapter. Table 2. 1 Comparisons of Electricity Data in World Countries |Sl No |Country | Consumption in10000 MU |Per capita consumption | |1 |Taiwan |0. 96 |4414 | |2 |Japan |8. 953 |7267 | |3 |Belgium |0. 71 |7100 | |4 |Netherlands |0. 775 |5201 | |5 |South Africa |1. 678 |4794 | |6 |Germany |5. 37 |6791 | |7 |South Korea |1. 478 |3453 | |8 |U. K. |3. 6 |5699 | |9 |France |4. 62 |8221 | |10 |Italy |2. 21 |3837 | |11 |Poland |1. 328 |3504 | |12 |U. s. a. |30. 72 |12308 | |13 |Portugal |0. 03 |2913 | |14 |Spain |1. 585 |4013 | |15 |North Korea |0. 8 |1696 | |16 |Greece |0. 37 |3649 | |17 |Romania |0. 542 |2336 | |18 |Thailand |0. 597 |1068 | |19 |India |3. 28 |389 | |20 |Malaysia |0. 321 |1802 | |21 |Turkey |0. 73 |1224 | |22 |China |7. 54 |677 | |23 |Philippines |0. 218 |360 | |24 |Bangladesh |0. 095 |84 | |25 |Pakistan |0. 504 |459 | |26 |Sri Lanka |0. 035 |208 | |27 |Canada |5. 1 |19586 | |28 |Egypt |0. 45 |882 | |29 |Brazil |2. 412 |1550 | |30 |Ghana |0. 061 |409 | |31 |Australia |1. 59 |9298 | |32 |Argentina |0. 563 |1722 | |33 |Nigeria |0. 19 |105 | |34 |Nepal |0. 00901 |49 | |AVERAGE. |2. 58 |3517. 28 | Source: Indian Power Sector Reforms- Retrospect and Prospects, -R. Sreeram, Proceedings of the Indian Power Engineers Congress, 2003, Bangalore. The efficiency of operation of the utilities is given paramount importance in the new policy. A special development programme called ‘Accelerated Power Development and Reforms Programme’ (APDRP) has been started by the Union Government for development sufficient to meet the projected growth in demand.

Electricity legislation in India Efforts for development of Electricity and for Government control over the field had been started even before the dawn of the 19th century. During the British – rule itself, considerable work had been done in this regard. Very serious efforts are seen to have been made for very comprehensive enactments in this sector. The process of evolution of law regulating the Electric Supply Industry in the country is of much significance in this context. The earliest legislation attempting to regulate the use of electrical energy on an all-India basis was in 1887, when the Electricity Act was passed.

A detailed discussion on legislation made in the Electricity Sector is attempted in the following paragraphs. 6 The Act of 1887 was intended to be a temporary expedient aimed at protecting the public by means of rules dealing with the use of electrical energy. It was also intended to watch the development and progress in the electricity supply industry before a comprehensive measure dealing with various aspects of general safety precautions and protection of consumers could be initiated. Subsequently, the Calcutta Electric Lighting Act and the Howrah Bridge Electrical Lighting Act were passed.

These enactments were of a purely local nature. The Calcutta Electric Lighting Act became necessary when a large scheme for supply of electrical energy was initiated in India for the first time through a public company. Though the legal measure was designed for the city of Calcutta, the Government had the powers to extend the legislation to other municipalities. The Act was accordingly applied in a modified form in Dacca and Darjeeling. These earlier legislative measures on Electricity Supply served the then requirements satisfactorily and paved the way for the more comprehensive legislations, which followed.

They were the forerunners of the later highly developed and comprehensive legislation It soon became evident that the 1887 Act had to be revised thoroughly6 The result of the above situation was The Electricity Act 1903. Though the 1903 Act was elaborate, several vital questions were left unattended, which became prominent with the progress in the electricity supply industry. The question of bulk supply to authorized distributors was not covered by the Act and it was found that bulk licensees could not be dealt with under the Act.

The practical working and administration of the Act disclosed numerous defects, and a committee was appointed in 1907 to revise the Act to overcome the difficulties and to provide a more comprehensive Act. 10. Thus the Electricity Act 1910 came into being. This Act created the basic framework for Electricity industry in India. It was largely instrumental in regulating the procedure for the grant of licences to Electricity undertakings, prescribing their obligations in the execution of works and supply of electrical energy to the ultimate consumers and also regulating the relationship between the licensees and the consumers.

This Act was enforced with effect from 1/1/1911. For production of electricity, licence was necessary but it contained provisions for the supply of electricity, transmission of electricity and its use by non- licensees. The Act was not a comprehensive one; it didn’t purport to be a code, and was silent on any procedures. The Act of 1910 was modified by various amendments, repeals, additions, alterations, omissions and adaptations of its provisions through both State and Central Acts. 7 The 1910 Act did not, however, envisage reorganization of the electricity supply industry as a whole nor its rationalisation.

Even the requirements of a growing economy were not kept in view. In fact, the purpose of rationalisation and development, as now understood in the context of rapidly expanding industries, was aligned to the 1910 Act. However, with the passage of time, planning and development of the industry on a scientific basis have become an imperative necessity. To deal with the growing demands for power and to fit into the changing pattern of industrial revolution, which was gradually overtaking, the Act of 1910 showed its gross inadequacy.

The need for fresh legislation on the subject became increasingly apparent in course of time. In 1938, a committee was appointed by the National Congress Party to study and make a report on this aspect. But it could not make much progress because of the outbreak of the Second World War. 8 The necessary changes to meet the needs were subsequently made. The Indian Electricity Act 1910, as it now stands, was the result of the changes effected by the parliamentary amendment no. 32 of 1959.

The Electricity Amendment Act of 1959, had the objects of enlarging the scope of facilities available to consumers of Electricity, extending the same facilities to consumers served by a Government Electricity department as are enjoyed by consumers of private licensees and State Electricity Boards, exercising stricter control over licensees, acquiring powers to regulate the distribution, supply, consumption and use of energy in certain circumstances and providing for the inspection of electric works and installations of the central Government

In spite of the difficulties of the war period, considerable time was devoted for the preparation of an Electricity Supply Bill intended to place India in line with the pattern of development in other countries. About that time, the Power and Fuel Sub Committee of the National Planning Committee was set up under the chairmanship of Pandit Jawaharlal Nehru. One of the resolutions passed by the Sub Committee envisaged the constitution of Provincial Electricity Boards.

In February 1945, the Policy Committee on Electricity and Public Works also recommended that steps should be taken to eradicate any factor that retarded the healthy growth of electrical development on regional lines, whether in the Provinces, States, and Local Authorities – owned, or in commercially owned, electrical undertakings. In these circumstances, a critical examination of the trends of legislation, particularly in the UK, and the USA, was undertaken.

It was then felt that the legislation and precedence in the UK and the development of its Electricity Supply Industry would afford a good basis for reorganization of the electricity supply industry in India and for new legislation dealing with rationalisation of generation and supply on regional basis. The British Government was then approached to make available the technical assistance from experts associated with the operation with the UK Central Electricity Boards. The British experts helped the preparation of the draft of the new bill.

After Independence, it had become necessary that the appropriate Governments should be vested with the necessary legislative powers to link together under one control, electrical development in adjacent areas by establishing grid systems. It was not possible to legislate for the above purpose within the framework of the Indian Electricity Act 1910. There were two considerations, which indicated the necessity for central legislations. They were the need for uniformity in the organisation and development of the grid system, and the necessity for the constitution of semi autonomous-bodies like Electricity boards to administer the grid system 9

The result was the enactment of The Electricity (Supply Act) 1948. In the preparation of this Act, experience in the UK in the British Electricity (Supply) Act 1919 and the British Act of 1926 was taken into consideration. It was, however, recognized that because of the size of India and the probable difficulties of administration, it would not be possible to model the legislation exactly like the very centralized system of the UK. Therefore, a task of adaptation was necessary to suit the Indian condition.

The grid system was adopted and state mechanisms for administration of the grid system were envisaged. In the objects and reasons for the bill, it was stated that the coordinated development of electricity in India on a regional basis was a matter of increasingly urgent importance in the post-war situation. The new enactment was a leap forward in the rationalisation of generation and supply of electricity. Regional coordination and a control over the existing licensees were aimed at. The formation of semi-autonomous bodies for the administration of the grid systems was thought to be suitable.

In addition to the State Electricity Boards, four more authorities were envisaged in the Act10. These are the Central Electricity Authority, the State Electricity Consultative Council, the Local Advisory Committees and the Rating Committee The formation of State Electricity Boards was the main development according to this Act. Section 5 of the Act provided for the formation of State Electricity Boards. Electrification was practically limited in cities and the new Act acknowledged the necessity of the state shouldering the responsibility of rapidly expanding electricity throughout the country.

The main task of the state electricity boards was to prepare schemes for the establishment of their own generating stations and main transmission lines, and generally to coordinate generation and transmission conducive to efficiency and economy of the boards. The declared objective of the act of expanding electricity into rural areas also was being rapidly achieved by the newly formed State Electricity Boards in their earlier years. The Kerala State Electricity Board has achieved unique success in rural electrification.

The Central Electricity Authority was also formed under the Electricity (Supply) Act 1948. The functions and duties of the Central Electricity Authority have been defined in section 3. It exercises such functions and performs such duties, and in such a manner as the Central Government may prescribe or direct, and in particular to develop a sound adequate and uniform national power policy (Formulate short-term and perspective plans for power development and co-ordinate the activities of planning a and assist timely completion of schemes sanctioned under chapter V of the Act.

Making arrangements for advancing the skill of persons in the generation and distribution of electricity, Carrying out or make arrangements for any investigation for the purpose of generating or transmitting electricity, promoting research in generation, transmission and distribution of electricity and advising the Central Government on any matter of generation, transmission and distribution of electricity, were other functions envisaged. Under section 16 of the Act, the State Government is required to constitute State Electricity Consultative Council. The functions of the council include advising the Board on major questions of policies and major schemes, reviewing the Board’s progress periodically and considering such other matters as the State Government may prescribe by rules. Section 17 of the Act empowers the State Government to constitute local authority committees for certain areas. Under the Act, the Board is required to consult the committee on certain categories of business placed before it.

If the State Electricity Board is satisfied that a licensee has failed to comply with the provisions of the sixth schedule of the Act, the Board or the Government, as the case may be, can constitute a rating committee to examine the licensees’ charges for the supply of electricity and to determine correct charges. The rating committee should hear the licensee and submit a report to the Board / Government making recommendations about the charges. The Powers and duties of State Electricity Boards and generating companies, works and trading procedure of these entities, etc. were defined in this Act. The first attempt to regulate the monopolistic power utilities by defining the basis for tariff formulation was made in this Act. This was a detailed cost plus methodology where the rate of return on the capital invested was regulated and a cap was imposed on the clear profit of the licensees. The State Electricity Boards were expected to supplement efforts of private licensees. In pursuance of the liberalization policy brought about in the country from 1991 onwards, many states have started reform process in electricity sector.

Orissa, the first state to come up with a Reform Act, has already done the unbundling. These reforms mainly involved unbundling of the State Electricity Boards into separate entities, for transmission, generation and distribution. Hariana, Andhra Pradesh, Karnataka, Rajasthan and Uttar Pradesh followed suit. Delhi and M. P also enacted similar Acts. Thus a new Act to meet the present pressing needs became necessary The Indian Electricity Act 2003 – the current Act The Electricity Act 2003 enacted by Parliament of India came into being on 10th June 2003.

Thus, the existing laws including the Indian Electricity Act 1910, which regulated the electricity sector for nearly a century, were repealed in a single stroke. 12 The new Act, which mainly aims at bringing out commercialization and free competition in the electricity industry, has invoked mixed response from different sectors. While the industrial world welcomed the new Act, the workers in the sector and certain social organisations have expressed their anxieties. The Act has been a subject of discussion for the last few years and has been revised several times.

It is interesting to note that the Act was finally passed by the Parliament without anybody insisting on voting. The Act is claimed to be made ‘to consolidate the laws relating to generation, transmission, distribution, trading and use of Electricity and generally for taking measures therein, protecting the interest of consumers and supply of Electricity to all areas, rationalisation of Electricity tariff, ensuring transparent policies…’ It provides for the creation of regulatory authorities such as Regulatory Commissions, Central Electricity Authority, Appellate Tribunals, etc.

The Act again claims to have ‘progressive features and endeavours to strike the right balance given the current realities of the power sector in India. ‘ The Act has been finalized after extensive consultations with all the stakeholders. The most important feature of the Act is opening this key sector to free competition and commercial operation, distancing its functioning from government. Rationlaisation of tariff avoiding cross subsidies would be a major aim. De-licensing of generation and provision to give licence to anybody avoiding monopolisation in the areas of transmission and distribution are also envisaged.

The present State Electricity Boards will cease to exist and new public or private companies will take over. The major regulatory power will go from the Government to regulatory authorities. However, the Government has been given certain powers in policy decisions. The motive of this Act can very well be understood as eventual privatisation of the power sector in conformity with the new liberalization policy. Ample facilities have been given to the private operators also to deal with offences and defaults. The Government aims at growth of the sector through liberalization, to meet the growing demand for electricity.

The Act provides for dissolution of the State Electricity Boards, and it further states that any property, rights and liabilities of the present State Electricity Boards shall be vested with the respective State Governments. An effective date for this has to be stipulated by the State Government. A transfer scheme is to be prepared by the State Government in agreement with the State Electricity Board. Any property, rights and liabilities of the present State Electricity Boards so vested with the respective State Government shall be re-vested in a Government company or in a company or companies in accordance with the transfer scheme.

For transfer to private operators, the stipulation is that ‘fair value has to be paid to the Government by the transferee’. Thus, the law makes privatisation of the power sector as easy as that, if the State Government desires so. Here the provision that transfer can be to ‘a Government company’ suggests that if the Government desires the present state electricity board can be retained as a company. However, certain other restrictions in the Act are quoted by some legal experts to say that it is not possible. The present position is, therefore, that this part of the Act requires further explanation or clarification.

If sale to a private agency happens, the employee’s claim including pension claims has been given first charge. This can be viewed as a provision to safeguard some of the interests of the employees. A very important provision in the new Act is delicencing of Electricity generation. Anybody can start a generating station without obtaining a licence. The only stipulation is regarding technical requirements for connectivity with the grid. For hydroelectric generating stations, concurrence from the specified authority would be required.

This provision is included to ensure that the scheme would not affect the ultimate development of the river concerned. Consistent with the requirements of drinking water, irrigation, navigation, floods control, etc. , norms regarding dam design and safety will also be taken care of. The Act also provides for permitting captive generation (Generation by industries for self use) and dedicated transmission lines. Further open access by anybody who requires it to the existing transmission facility is also guaranteed in the Act subject to availability.

To transmit electricity, any intending person shall obtain a licence to do so from the appropriate commission. No person applying for a licence shall be denied license on the ground that there already exists a licence in that area, if the applicant complies with all the requirements. This provision practically puts an end to the monopoly enjoyed by the state utilities so far. A central transmission utility under the Government will have to be set up through a notification in order to provide an efficient, coordinated and economical inter-state transmission system with non discriminatory open access.

Likewise, the State Governments can set up State transmission utilities. Apart from the Central and State transmission utilities, there can be any number of transmission licensees overlapping the areas of operation of the utilities. A provision preventing transmission licensees from electricity trading is seen included, which imposes some restriction of free commercial operation purpose of which is not clear. Actually, that provision is the main constraint which prevents State Governments from keeping the existing State Electricity Boards as such in company form.

Open access to the lines is made allowable, which means that the owner of a particular line who is incidentally a licensee shall allow others also to use the line on payment of the specified wheeling charge which is determined by the appropriate commission. This makes electric lines analogous to public roads, and wheeling charge can be equated to toll. The Government companies have been given exemption from obtaining license. Since there may be a number of operators in the power grid, the necessity for a central agency for real-time coordination among them has been recognized in the Act.

The Act provides for functioning of Central and Regional Load dispatch centre for the purpose. The Central load dispatch centre functioning at the national level will look into optimum scheduling and dispatching of electricity among the regional load dispatch centre. The national as well as regional load dispatch centre shall not engage in trading of electricity. The national load dispatch centre shall be owned by a Government company or any Government-owned mechanisms notified by the Government of India.

The Government shall also establish regional load dispatch centres for various regions. Likewise, the State Governments shall establish State load dispatch centre to look after the area within the State. The load dispatch centres can collect such fees and charges from the generating companies and licensees under their respective areas. The load dispatch centres have been given ample power to issue directions to the constituent load dispatch centres, the generation companies and transmission companies for the smooth operation of the grid and maintaining grid discipline.

For distribution also, any intending person shall obtain a licence to do so from the appropriate commission. No person applying for a licence shall be denied licence on the ground that there already exists a licence in that area, if the applicant complies with all the formalities and requirements. Thus, there can be any number of distribution licensees in one area operating on free commercial competition with the only restriction of the appropriate commission with regard to tariff. There is provision to examine other requirements such as capital adequacy, creditworthiness, etc. of the applicants for licences. Open access to the distribution lines shall be permitted, for which wheeling charges determined by the appropriate commission have to be paid. A consumer or a class of consumers can purchase power from a licensee other than those who operate in that particular area, by paying wheeling charge for using the lines of the licensee in that area. The open access provision is a strong step towards avoiding duplication of facilities by different licensees, unlike the present system in the case of the different mobile phone companies.

There is provision for mechanisms for redressal of grievances of consumers and appointment of ombudsman. A very strong positive step in the Act is the provision that it is the licensee’s duty to give any applicant within his licence area electricity within 30 days of application. The Act even imposes a heavy fine of Rs. 1000 per day for failure to do so. However, a provision was newly added to the Act after its first formulation, which absolves the licensee from the above uty on certain grounds. There are many important provisions of protection to consumers. Consumers should be given connection within one month of application and six months if establishment of new substation is involved. Penalty in the event of failure to give connection, payment of interest on security deposit, Regulatory Commission to specify Electricity Supply Code to be followed by licensees, Redressal Forum for handling grievances of consumers etc are other important provisions.

No sum due from consumers shall be recovered after a period of 2 years unless the same was shown recoverable continuously. Licensees are required to meet standards of performance specified by the regulatory commission. Failure to meet standards makes them liable to pay compensation to affected persons. Licensee should furnish to the commission periodical information on standards of performance. there is provision for District level committee to coordinate and review extension and electrification in each district and to review quality of power supply,

The Act aims at complete elimination of all cross subsidies ‘through progressive reduction’, as the existing utilities balance the shortfall of revenue in certain sectors of consumers because of subsidies through cross subsidies in tariff for other categories of consumers. When existing utilities are compelled to share their facilities to new operators for wheeling charges, they may lose a section of consumers who were providing them additional revenue. To offset the loss, a provision is given in the Act for payment of a surcharge also in addition to the wheeling charge.

All these charges are to be decided by the appropriate regulatory commission. The Electricity Bill was introduced in the Lok Sabha in August 2001 and subsequently referred to the Standing Committee on Energy for examination and report. The committee submitted its report on 19/12/2002. The Standing Committee examined various provisions of the bill in consultation with the stakeholders and made some valuable suggestions for improvement. The Government considered the recommendations of the Standing Committee and accepted most of them.

Some of the recommendations are meant for consideration at the stage of formulating the policies, rules and regulations. The important milestones in the enactment of The Indian Electricity Act 2003 mentioned below. ? Electricity bill introduced in Lok Sabha on 30/08/2001 ? Referred to the Parliamentary Standing Committee on Energy for examination and report on 31/08/2001 ? Standing Committee submitted its report on 19/12/2002 ? Lok Sabha passed the bill along with amendments moved by the Government, based on the recommendations of the Standing Committee, on 09/04/2003 The RajyaSabha passed the bill on 05/05/2003 ? President gave his assent on 26/05/2003 ? The Indian Electricity Act 2003 was notified in the Gazette of India on 02/06/2003 ? Government of India vide Notification No S. O. No669 (E) Dated 10th June 2003 brought into force the provisions of this Act Central Organizations of Electricity Considering the importance of electricity as the major infrastructure for the development of the country, the Union Government has taken many steps to ensure comprehensive development of the power sector.

Many agencies, to act as apex agencies in electricity industry, have been formed by the Union Government. The important ones among them are National Thermal Power Corporation Ltd, National Hydroelectric Power Corporation Ltd, Power Grid Corporation of India Ltd, Power Finance Corporation Ltd, Rural Electrification Corporation, North Eastern Electric Power Corporation Ltd, Water and Power Consultancy Ltd, Central Board of Irrigation and Power and Central Power Research Institute The National Thermal Power Corporation Ltd is the backbone of the country’s thermal power.

It has a generating capacity of 19294 MW. It aims to be a 30000 MW plus giant by the year 2007. The National Thermal Power Corporation Ltd has got thermal stations all over India. The Kayamkulam Super Thermal Power Station is the one situated in our State and has served an important role in solving the power deficiency in the State. The National Thermal Power Corporation has proved to be an efficient public sector organisation completing the projects undertaken in record time. The National Hydroelectric Power Corporation Ltd is an organization for harnessing the renewable hydro resources of the country.

It has currently a hydro generating capacity of 2193 MW. Its ambitious plans are to add another 1570 MW hydro capacity during the 10th plan. The comparatively lower operating cost and thereby cheaper energy make hydro power more attractive and thus make the National Hydroelectric Power Corporation Ltd more important. The impact of hydroelectric stations in the ecological and environmental picture of the location calls for a comprehensive outlook in the matter of hydroelectric projects and that explains the relevance of a central agency for Hydel projects.

With the steep increase of the global oil prices, the whole world is looking forward to full utilization of the hydroelectric potential and thus the role of the National Hydroelectric Power Corporation Ltd in the power scenario of the country is important. Established in 1989, the Power Grid Corporation of India Ltd operates more than 39000 circuit kilometers of HV and EHV transmission network and 65 substations. It provides the national network of power transmission. Therefore, it can be considered as constituting the blood vessels of the country.

In Kerala also, it has taken up a number of projects including the 400kv Sub station at Madakkathara, the 400kv inter-state line to Kerala, and some new works to cover almost the whole of the State. The organization levies from the respective Electricity Boards wheeling charge for the energy transmitted. One of the latest ambitious plans of the Power Grid Corporation is a power super highway as the power backbone for the State. It is currently diversifying into telecom business by installing long distance Optic Fiber Network.

The Power Finance Corporation Ltd is the prime government financial institution for the development and modernization of the power sector in the country. It finances not only the governmental agencies but also any agency involved in electricity generation, transmission and distribution. Because it maintains better credit rating, it can mobilise funds easier and give funds to the power utilities on safer terms so as not to be affected by the instability of the utilities. It also offers soft loans and grants to modernization works by the State Electricity Boards.

Normally, for financing State Electricity Boards it insists guarantee for repayment from the State Governments. Set up in 1969, the Rural Electrification Corporation has the unique role of electrification of villages, Dalit bastis, pump sets and rural industries. Unlike other agencies, it finances only Rural Electrification projects. It finances projects sanctioned by it and maintains very good monitoring of its utilization. It has regional offices in almost all states. The financing is through both grants and soft loans.

The Kerala State Electricity Board actually maintains separate offices for monitoring of Rural Electrification Corporation-aided projects. Most of the developments in the rural sectors of the country could be achieved through the Rural Electrification Corporation. The North Eastern Electric Power Corporation Ltd concentrates its operation in the northeastern region. The northeastern region is comparatively weak in the power sector and this led to the setting up of the North Eastern Electric Power Corporation Ltd.

It operates 625 MW generating capacity and has 4 ongoing hydroelectric projects in the North East. The transmission network witnessed a growth from 52,034 circuit kilometers of 220kv/400kv lines to 135284 circuit kilometers. The Water and Power Consultancy Ltd is a consultancy organization under the ministry of water resources, specializing in the implementation of hydroelectric projects in association with the CEA. It functions as the nodal agency for providing the necessary state-of-the art know-how to the operating agencies in water and power.

The Central Board of Irrigation and Power provides assistance and co-ordination to the power research activities in the country. With its headquarters at New Delhi it not only disseminates up-to-date knowledge on the outcome of research activities worldwide, but also supports research activities within the country. It sponsors fully or partially the research projects approved by it. Through co-ordination of the works nationwide, it avoids duplication of works and provides a forum for interaction and thereby makes the nation wide work inter-supplementary.

Situated in Bangalore, the Central Power Research Institute provides testing and research facilities for the electricity industry in India and even in Asia. It is considered to be the premier organization of the country in power research. It takes up many applied research projects either for other organizations or for their own. The Central Power Research Institute has many notable contributions in the development of modern power system in the country.

Development of controls for H V D C System, development of modern earthing methods, newer tower designs etc are among the recent. The reforms process in India. India has also started the reforms process in the power sector, which is usually described as a part of a global process. It has been widely identified that the State Electricity Boards are no longer capable of meeting the growing energy demand of the country. The poor financial health of State Electricity Boards and the inadequate investment in power are largely responsible for this inability.

The problem areas in the power sector in India have been identified by many experts and authorities. Low plant utilization, plant availability and plant load factor, High transmission and distribution losses, Low productivity of manpower, cash-strapped State Electricity Boards due to negative return on investments, high outstanding dues, low collection efficiency, lack of professionalism and accountability, low quality and reliability of supply, etc, are the main ones of them.

These resulted in sharp deterioration of the financial health of the sector in 1990s. The annual loss of State Electricity Boards came up from 4, 600 crore in1992-93, and 26,000 crore in 2000-01. By March 2003 the total losses had reached the un-sustainable level of Rs. 33, 000 crore. According to Mr. Suresh Prabhu, the former Union Minister for Power, the financial state of State Electricity Boards would indicate an immediate reaching of a stage of non-return, if we do not take corrective measures without any further delay.

He points out India’s low per capita consumption to the tune of 338 units against the international figures of 800 units in China and 13,000 units in the U S A. 10 He predicts the possible fallouts of our inaction, as poor prospects of capacity addition (increasing demand supply gap), difficult financial closure of new power projects due to payment uncertainty, dues of central public sector units that may lead to their sickness, etc..

He further lists out the summary of possible consequences of the above as more blackouts, high cost of power, deterioration of quality of power, slow economic growth, rising unemployment and deterioration in quality of life Thus, reforms in the sector have to be undertaken immediately tomobilize resources, to match the decline in plan outlay, to arrest declining trend in village electrification, to bring in more focused approach to improvement and to rationalize tariff structure

In what can be considered as policy statement of the Union Ministry the article by the Union Power Minister finally declares the thrust areas for reforms. They are rationalization of tariff structure, reduction in transmission and distribution losses, transparency in the grant of subsidy, rural electrification, operational autonomy for State Electricity Boards, collection efficiency and privatization of distribution

The Government of India has actually gone a great way in the restructuring process. The Union Government has started signing MOU s with the state governments. Financing through Accelerated Power Development Programme and Power Finance Corporation has been linked with these MOUs to encourage or press the State Governments towards restructuring. The Electricity Bill 2003 has already been enacted in the Parliament (Details given earlier in this chapter. Other steps announced by the government are Energy Conservation Bills, implementation of Accelerated Power Development Programme, financial closure of Independent Power Producers, Special Purpose Vehicle with environment, action plan for 1,00,000 MW in generation, transmission and distribution including resource plan, feasibility study for hydro potential, action plan for short term measures to ease power situation, captive power policy, special packages for reforms of state including those from agencies like World Bank, Asian Development Bank etc, reduction of cost of power and benchmarking of cost of generation projects

Clean development mechanism, policy for bilateral negotiations with developed countries s for setting up of power generation projects, policy for encouraging power projects in the private sector, policy for encouraging privatization / restructuring of distribution, etc, are among other initiatives. Uneconomic pricing of retail power sales by State Electricity Boards, especially to domestic and agricultural consumers, is an absolute pre-requisite for restoring the financial viability of the sector and thereby for attracting large investments, both public and private, urgently required for bridging the demand-supply gap.

It has been well identified that any upward adjustment in pricing has to be balanced by improvement in quality of supply and standard of consumer services. The experience in other developing countries indicates that entrenched price subsidies can be eliminated only as a part of broader sector reforms. While price reform is a pre-requisite for providing required security to attract massive private investment, sector reforms would be the pre-requisite for price reforms. State Electricity Boards

The State Electricity Boards constituted under the Electricity Supply Act 1948 continue to be the mainstay of the country’s electricity industry. About 78 percent of the power capacity is in the State sector, and is owned and managed by State Electricity Boards. Now, there is a general belief that the State boards are non-viable and the banks consider them as non-bankable. Electricity Boards have been set up to build transmission and distribution infrastructure, produce electricity, sell it to consumers, and collect the charges for it.

Like any other infrastructure, this industry has also been heavily subsidized by the government for socio-economic reasons. Moreover, a good amount of political exploitation can always be observed, which has led to activities detrimental to the State and Central economies. ‘Southern Economist’ a financial publication from Bangalore, observes: ‘…Our State Electricity Boards suffered from inefficiency, mismanagement, corruption and ineptitude.

All of them are over-staffed, the number of workers being the highest in India’. 11 Though many of the states have started re- organization process, the role of the State Electricity Boards is not yet complete in the electrical scenario of the country, though they have given leadership in the phenomenal growth of electricity in India. However, it is true that with the inherent weaknesses of the Public Sector Undertakings, they could not follow the explosive pace of the industrial growth worldwide and in India.

This has made both the policy formers and the public at large to think of bringing private players also into the electricity sector. Non- remunerative tariff structure is one of the basic reasons for the poor financial state of the State Electricity Boards. While the cost of electrical energy has shown an increasing trend, the tariff has not been increased, commensurate with this. The present rate of realization is Rs. 2. 07 against the cost of Rs. 2. 80 per unit. Formation of the Kerala State Electricity Board

As stated above, the Electricity (Supply) Act 1948, which was enacted by the Government of India, ‘to develop a sound adequate and uniform national power policy, and particularly to co-ordinate the activities of the planning agencies in relation to the control and utilization of national power resources,’ led to the constitution of the State electricity Boards in various states under section 5 of the Act. Until the enactment of the Electricity Act 2003, the Act of 1948 had been in force.

The Kerala State Electricity Board was formed, on 1st April 1957 in order to cater to the electricity needs of the State, as the successor of the Electricity Department of the Kerala State. The growth of electricity system for Kerala took an unprecedented pace after the formation of the Kerala State Electricity Board. Speedy completion of the already started generation projects and starting of newer projects was the first task taken up by the Board. The implementation of the First Five-year plan was already completed by the Travancore Electricity Department. The installed capacity had grown to 86 mW.

There were about 79, 000 consumers by that time with a total revenue of Rs. 200 lakhs. There were 15 Extra High Tension Substations, 3783 km of low tension lines, and 3800 km of high voltage lines. Faster development in electricity generation In the initial years of the K S E B, the growth in installed capacity was rather fast so that electricity availability was considered abundant in the State. The development in those times concentrated on hydro-electric projects. However, the state of affairs started reversing in the later years as the development of generation schemes lagged much behind development in other sectors.

A large number of bigger hydro-electric stations were established. Six units of 50 mW each of the Sabarigiri Hydroelectric Project were commissioned during 1966 –67, thus making a total capacity of 300 mW. The commissioning of a station that had a far greater capacity than those of the older stations was a major milestone in the history of power system development in the State. The annual generation capacity of the Sabarigiri Project is 1338 mu. The station functioned well for about 40 years fetching revenue much more than the initial investment and now it is undergoing renovation process.

Three units of 25 mW each of the Kuttiadi Hydroelectric Project were commissioned during 1972, thus making a total capacity of 75 mW. The annual generation capacity of the station was 268 mu. The commissioning of the Idukki Hydroelectric Project was a major breakthrough in the power development of the State. Six units of 130 mW each of the Project were commissioned during 1976-86, thus making a total capacity of 780 mW, which was a huge leap in the installed capacity of the State. The Project, which was among the large stations of the country, was a unique one using many innovative technologies.

The arch dam concept, underground powerhouse, electronic and automatic controls, etc. , are a few among them. The annual generation capacity was also an all-high at 2455 mu. Still, even after a lapse of nearly three decades, a station of comparable capacity is yet to be formed in the State. The commissioning of the Idukki Hydroelectric Project created an illusion that power would remain abundant for many years and this caused serious lethargy in the planning and starting of new major projects. The commissioning of the next generating station was effected only in 1987. Two units of 37. mW each of the Idamalayar Hydroelectric Project were commissioned, thus making a total capacity of 75 mW. The annual generation capacity was 380 mu. The Kallada Hydroelectric Project was an effort to tap the potential of smaller water resources. The output from an already existing reservoir was utilized here. Two units of 7. 5 mW each of the project were commissioned during 1994, thus making a total capacity of 15 mW. The annual generation capacity was 65 mu. The need for tapping smaller water resources was badly felt by this time because of the environmental difficulties for larger projects.

The Peppara Station is such a unit. It is a small hydroelectric project with one unit and a capacity of 3 mw and generation capacity of 11. 5mu. Three units of 60 mW each of the Lower Periyar Hydroelectric Project were commissioned during 1997, thus making a total capacity of 180 mW, with an annual generation capacity of 493 mu. Mattuuppetty is a small hydroelectric project with one unit and a capacity of 2 mw and generation capacity of 6. 4mu. This station also started yet another era of small hydroelectric projects in the State.

The Peringalkuth Left Bank Station was commissioned during 1999. The capacity was 16 mw in one unit. The mu capacity was 74. The Kakkad Hydroelectric Project had two units of 25 mW each, totaling 50 mW. Commissioned during 1999, its annual generation mu capacity was 262 The Kuttiadi Extension Project commissioned during 2001 has a capacity of 50 mW in two units of 25 mW each. The annual generation capacity in mu was 75. Malampuzha was a small project with a single unit of 2. 5 mW and an mu capacity of 5. 6. It was commissioned during 2001. New Projects – Non-hydroelectric

The over-dependence on hydroelectric projects created acute power shortages during the years in which the monsoon failed. This led to the realization of the necessity for other forms of electricity generation. Thermal stations thus came into being. Non-conventional energy sources were, however, only sparingly used. The Brahmapuram Diesel Power Plant marked the start of yet another new era in the Kerala in electricity generation that is thermal generation. The Brahmapuram Diesel Power Plant has five generators with a capacity of 21. 32 mW each totalling to106. 6 mW. The units were commissioned during 1997-99.

The total generation capacity was 606 mu. The Kozhikode Diesel Power Plant has eight generators with a capacity of 16 mW each. The units were commissioned during 1999. The total capacity was 128 mW and the annual generation capacity was 896 mu. The Kanjikode (experimental) Wind Farm has nine units of 0. 225 mW each, thus totaling 2 mW. The total generation capacity was 4 mu The latest trend both in Kerala as well as in the country is outsourcing of Electricity generation. As such, other operators started coming to this field. The National Thermal Power Corporation, other private companies, etc. thus started Generating Stations in the State. The Kayamkulam Thermal Power Station owned by the National Thermal Power Corporation has now a completed capacity of 359. 58 mw with three units of 116. 6 mW each. The units with annual generation capacity of 2158 mu were commissioned during 1998-99. The addition of these stations in the central sector was another milestone in the power development of the State. A further development of the station into a super-thermal power plant with a capacity above 2000 mW is on the anvil. B. S. E. S was a thermal power station in the private sector, commissioned during 2001-2002.

It has three units of capacity 40. 5mW each and one unit of 35. 5 mW, thus totalling 157 mW. The total generation capacity was 1099 mu. The Kasargode Power Corporation was also a private sector thermal project with a capacity of 21. 9 mw with three units of 7. 3 mW each, commissioned during 2001. The total generation capacity was 140 mu. The growth of the Kerala Power System After the formation of the Kerala State Electricity Board, there has been considerable growth in all the parameters of the Kerala Power System. The growth has been swift from the end of the Second Five-year plan, i. . , from 1961. The growth in installed capacity has been dealt with in detail above. The growth in the various parameters including installed capacity from 1961 is briefly analysed below. Installed capacity The installed capacity at the end of the Second Five-year plan was 133 mW. The speedy constructions of generation projects caused phenomenal growth in installed capacity. The commissioning of the Idukki Project in 1978 was the major leap in this field, raising the total capacity to 1012 mW. However, there was stagnation in the growth after the commissioning of the Idukki project.

The growth during the last ten years, i. e. , from 1996 to 2005, is shown in the Table below. Table 2. 1 Growth of Installed Capacity |Sl. No |Year |Megawatts as on March 31st | |1 |1996 |1505. 5 | |2 |1997 |1508. 5 | |3 |1998 |1775. 8 | |4 |1999 |2046. | |5 |2000 |2350. 68 | |6 |2001 |2420. 68 | |7 |2002 |2601. 62 | |8 |2003 |2601. 62 | |9 |2004 |2614. 22 | |10 |2005 |2617. 2 | Source: Power System Statistics 2004-2005, Kerala State Electricity Board Thiruvananthapuram Maximum demand Maximum demand is the maximum average hourly consumption obtained at any point of time of the concerned year. It indicates the maximum burden on the power system and decides the maximum installed capacity necessary to cater to the needs. The gap between the maximum demand and installed capacity available results in peak load restrictions like load shedding etc. , There is an argument that the maximum demand now recorded is a shrunk-down value through low voltage and load shedding.

There has been a heavy growth in the maximum demand of the Kerala system during these years. The figure which was as low as 114 mW at the end of the Second plan, (1961) grew to 1372. 6 mW in 1966. The growth from 1996 to 2005 is shown in the following Table Table 2. 2: Growth of Maximum Demand |Sl. No |Year |Megawatts as on March 31st | |1 |1996 |1373 | |2 |1997 |1235 | |3 1998 |1337 | |4 |1999 |1896 | |5 |2000 |2177 | |6 |2001 |2316 | |7 |2002 |2333 | |8 |2003 |2347 | |9 |2004 |2426 | |10 |2005 |2420 | Source: Power System Statistics 2004-2005 Kerala State Electricity Board Thiruvananthapuram Generation, Import, Export and Sales per annum These factors represent the actual business of the Kerala State Electricity Board. In the earlier years, electricity was considered surplus for the State. Then things reversed. The latest picture is one of high deficit and it paves the way for thinking of drastic changes in the power-engineering field.

The Table below presents the data from 1996 onwards. Table 2. 3: Growth of Generation, Import and Sales per Annum |Sl. No |Year |Generation per annum |Import per annum |Export per annum |Total energy sales | | | |In million units as on 31st March | |1 |1996 |6662. 0 |2642. 2 |4. 1 |7418. 71 | |2 |1997 |5502. 9 |3298. 4 |2. 0 |7022. 4 | |3 |1998 |5189. 0 |4236. 9 |0. 7 |7716. 23 | |4 |1999 |7601. 6 |3595. 6 |0. 0 |9182. 89

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