The Central Electricity Authority?s reported proposal of a common regulator for the power and coal sectors might have a poetic ring to it, given how intertwined the two have become in India, but it really makes no sense from a governance viewpoint. Foremost, at the conceptual level, it would go against the current policy of instituting industry-specific regulators. This policy rests on the logic of diversifying the risks of regulatory failure as much as the rationale of domain expertise. Assorted sectors have their own peculiarities, and clubbing any two together would be whimsical even if the output of one is an input for the other. Sure, the idea of a common regulator for the entire energy sector has been doing the rounds in New Delhi, and there is also something to be said for the regulatory cohesion that this might bring about, but the ?common? approach falls apart when it comes to the special case presented by nuclear energy, which involves a set of input dynamics and functional complications that take it into an altogether less transparent realm that is less amenable to the policymaking processes that characterise other sources of energy. Multi-industry regulators are not unknown. But they are generally favoured if and only if one product is at least partly a substitute for the other. This is not the case with coal and power. Coal is used to generate electricity, not in its place, except in a very primitive sense (a steam iron could run on either). Other generic arguments in favour of multi-industry regulators include scenarios where there is scarcity of expertise or vulnerability to political/industry capture. These are not valid in this context either.
In practical terms, there?s the danger that such a move will make fuel choices inefficient through its implicit assumption that coal is best used for direct power generation. This could short-circuit current efforts towards coal gasification and development of coal-to-liquid technologies, which have attained viability now that oil prices are so high. Apart from all this, there is the mundane issue of regulatory performance. Power sector regulation has been abysmal in India. The reasons are many and mutually muddled, and with the commercial and other interests of so many actors and entities involved, it is unlikely that the problems can be resolved anytime soon. This is the bigger pity.
