Power Ministry Refers Plan For Regulatory Body To Cabinet

The power ministry has sent a proposal to the Union cabinet for setting up a 5-member Central Electricity Regulatory Commission (CERC).

Apart from taking over regulatory powers of the Central Electricity Authority (CEA), the CERC would be given statutory powers through an act of Parliament to regulate tariff of generating companies and also determine retail tariff for various categories of consumers, ministry sources said.

The CERC proposal was sent to cabinet last Saturday after considerable debate over its role amidst stiff opposition from CEA whose chairman M I Beg had even suggested winding it up after passing on its remaining advisory and planning powers to the power ministry.

 

In fact, Beg is understood to have written to power minister S Venugopalachari saying he was not opposed to the setting up of CERC in deference to the decision taken the chief ministers conference, but, in the changed scenario the ministry should manage CEAs remaining powers and close down this nodal agency.

Without specifying as to who should head the proposed body, appeals against which can only be made in the Supreme Court, the ministry note said the members of the commission could be selected by the Centre from the fields of law, economics, commerce, finance, accountancy, administration, engineering or power management.

The composition of the CERC is largely based on the T L Shankar Committee recommendation on restructuring of the power sector, which was discussed by experts at a meeting convened by Venugopalachari early this month.

Stating there were essential differences between CEA in its existing structure and the regulatory commission needed in the reorganised set up, the committee said it was not desirable for the regulatory commission to do both planning and critical review of the plans when considering investment proposals.

Hence it is proposed to separate the regulatory functions from CEA and create a separate organisation, it added.

Though the parliamentary standing committee on power had posed the question on the need for creating a separate regulatory body while wondering if the Central Electricity Authority could be converted into CERC, the minister had later said he wanted CEA to take up planning and consultancy tasks.

The main function of the proposed body would be to regulate tariff of generating companies owned by central public sector and private sector catering to more than one state; to regulate inter-state transmission, issue licences for such projects and adjudicate on differences between central units and licensees.