The government has dropped plans to involve senior government officials and functionaries to appraise electricity regulatory commissions’ performance. The move comes in the face of strong opposition from the watchdogs.
Earlier, two committees were mooted, but later the plan was shelved.
?Appraising regulators’ performance is a good idea. However, the government should not get involved in this,? said VP Raja, chairman, Maharashtra Electricity Regulatory Commission, adding that the whole idea of setting up regulatory commissions was to distance state government from tariff determination.
Meanwhile, the power ministry has allayed the apprehension about the proposed body becoming a super regulator for the power sector. ?If an entity conducts appraisal of regulators’ performance, it does not mean that it will become a super regulator. We will give our inputs to the committee,? Union power secretary P Uma Shankar told FE.
The Centre has moved to set up an independent body to appraise performance of electricity regulatory commissions following the recommendation of the Shunglu committee which was constituted by the government to study systemic factors impacting financial health of power distribution companies. The ministry has constituted a working group headed by the Central Electricity Authority chairman to formulate performance evaluation matrix.
The committee ( the working group) has been mandated to seek inputs from various stakeholders including the various state electricity regulatory commissions.
Sources said the proposed body may function on the lines of the Department of Public Enterprises which is mandated to set targets and assess performance of central public sector enterprises.
The Shunglu committee has suggested setting up a mechanism for periodically evaluating functioning of regulatory commissions so that they could be restrained from shirking their responsibility to undertake periodic tariff revision. The regulator should be removed from his post if it is found in performance review that he has consistently failed to discharge his statutory responsibilities, the panel said.
The committee made these suggestions after it found during the study that majority of regulators had not exercised their power of tariff determination in a proper manner.
In the absence of adequate tariff hikes, discoms have been losing money on every unit of electricity sold to consumers. By one estimate, discoms’ combined losses have crossed R2 lakh crore as on March 2012 due to the continuing gap between their expenditure and revenue.
Disocms were earlier financing their cash losses with short-term loans from banks and financial institutions. But this source of funding has now dried up, with banks turning cautious about lending short-term loans to discoms.