What is the issue?
- The Standing Committee on Energy recently submitted its report on the review of the National Electricity Policy.
- The central government had in 2005 released the Policy.
- With passage of 12 years and rapid changes in the sector, the committee aims at amending the policy considering a holistic view of the sector.
What are the notable observations?
- Proposed aims - The aims of the policy included:
- access to electricity for all households by 2010.
- meeting the power demand of the country by 2012.
- supplying reliable and quality power in an efficient manner and at reasonable rates.
- financial turnaround and commercial viability of the electricity sector.
- Achievement - The Committee noted that none of the Policy’s objectives could be met within the stipulated timeline.
- This is because:
- four crore households still need to be electrified.
- the demand for power has not been fully met due to affordability issues despite generation capacities being adequate.
- power distribution companies' (discoms) financial condition has worsened.
- New challenges - The economic viability of thermal power plants is deteriorating.
- One of the reasons is the competition due to falling solar tariff and its low gestation period.
- Notably, thermal power has been the primary source of energy and its importance cannot be undermined.
What are the key recommendations?
- Energy Options - It recommended that development of the power sector should be done in a balanced manner.
- This is with the view that only a mix of energy options could complement each other and help meet the demand.
- Electrification definition - As per the current definition, a village with 10% electrified houses is assumed to be electrified.
- Under this definition, 99.4% villages are electrified, but more than 4 crore households still do not have an electricity connection.
- The committee thus proposes to change the definition, to declare a village electrified only when all the households of the village are electrified.
- Further, no village should be declared as electrified unless at least 80% of the households have an electricity connection.
- Coverage - The current policy of village electrification caters only to below poverty line (BPL) households.
- It is recommended to amend the policy to include the above poverty line (APL) households as well, who could not afford getting an electricity connection.
- Further, provisions with regard to the quality of supply and reliability of supply for reasonable time should also be made.
- Hydro Power - The states with hydro potential must focus on its maximum development at the earliest.
- This is in the backdrop of reducing share of hydro power in the total energy mix.
- The hydro capacity that was harnessed as of March 2017 is 30% of the hydro power potential in the country.
- Notably, hydro power plants with a capacity of over 25 MW are classified as non-renewable sources in the country.
- However, the International Energy Agency classifies hydro power as renewable energy as it is derived from natural processes and replenished at a higher rate than consumption.
- The committee thus recommended declaring hydro power as a renewable source of energy.
- AT&C losses - The aggregate technical and commercial losses (AT&C) in the country are very high.
- This is also the major reason behind the distressed condition of the discoms.
- Markedly, the concept of AT&C losses is flawed as it disguises commercial losses which unlike technical losses can be eliminated completely.
- The committee thus suggested separating these two components, to rule out the anomaly.
- Distribution sector - The economic viability of the whole electricity sector depends on the distribution sector.
- However, given the outstanding debt of the discoms, they are the most financially distressed in the country.
- The Ujjwal Discom Assurance Yojana (UDAY), launched in 2015, seeks to achieve the financial turnaround of these discoms.
- In this context, the scheme should undergo necessary adjustments and upgradations to address any future challenges in implementation.
Quick Facts
AT&C losses
- AT&C loss is the sum total of technical and commercial losses in the distribution of electricity.
- Technical loss depends upon losses incurred from machinery (Transformers), lines and improper maintenance of plant and machinery, etc.
- Commercial loss arise due to operational loopholes and is the result of theft & hooking, metering issues, inefficient billing, inadequate revenue collection, non-remunerative tariff structure & subsidies. This is largely avoidable.
'Electrified' and 'Electricity connection'
- Programmes like the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) electrified many villages i.e. provided for electricity lines.
- However, the number of households that actually used electricity were less.
- Until there is power supply available in villages, a household isn’t meaningfully electrified, though it may have an electricity line laid out.
- Ensuring supply of power is the responsibility of the concerned State power utility.
- Also, affordability of taking electricity connection is another hurdle for households.
Source: Prsindia
