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Consumer Empowermentin Electricity Reforms

– A Review from South Asia

Consumer Empowermentin Electricity Reforms– A Review from South Asia

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CUTS Centre for Competition, Investment & Economic RegulationD-217, Bhaskar Marg, Bani Park, Jaipur 302 016, IndiaPh: +91.141.228 2821, Fax: +91.141.228 2485Email: [email protected],Website: www.cuts-ccier.org, www.cuts-international.org

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Citation: CUTS, 2010, Consumer Empowerment in Electricity Reforms– A Review from South Asia

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Unnayan ShamannayBangladesh

South Asia Watch on Trade, Economics &Environment (SAWTEE)Nepal

CUTS Calcutta Resource Centre (CUTS CRC)India

CUTS Centre for Consumer Action, Research& Training (CUTS CART)India

In Partnership With:

Table of Contents

Abbreviations ............................................................................................................................................................. i

Foreword .................................................................................................................................................................. iii

Preface .................................................................................................................................................................... v

AN OVERVIEW ......................................................................................................................... 1

1. Introduction ....................................................................................................................................................... 12. Power Scenario and Reform Initiatives .......................................................................................................... 43. Baseline Consumer Survey: Main Findings .................................................................................................. 94. Conclusion ....................................................................................................................................................... 16

CHAPTER 1POWER SECTOR REFORMS IN BANGLADESH .......................................................... 19

1. Background ..................................................................................................................................................... 191.1 Overview of Electricity Reforms in Bangladesh ................................................................................ 20

2. Main Findings of the Baseline Consumer Survey ................................................................................... 21

2.1 Background and Survey Methodology ............................................................................................... 212.2 Background Characteristics of the Respondents ............................................................................... 212.3 Quality of Electricity Supply ................................................................................................................ 222.4 Handling of Complaints ...................................................................................................................... 232.5 Awareness of the Consumers Regarding Electricity Reforms ......................................................... 232.6 Consumer Participation in the Electricity Reforms Process ............................................................. 24

3. Role of Consumers and CSOs in Electricity Reforms in Bangladesh ................................................... 26

4. Rights and Responsibilities of the Electricity Consumers ...................................................................... 26

5. Conclusion and Recommendations ............................................................................................................ 27

CHAPTER 2POWER SECTOR REFORMS IN RAJASTHAN .............................................................. 29

1. Electricity Reforms in Rajasthan ................................................................................................................. 291.1 Why Reforms? ........................................................................................................................................ 291.2 Reform Process ....................................................................................................................................... 29

2. Consumer Awareness for Reform .............................................................................................................. 302.1 The Baseline Consumer Survey ........................................................................................................... 302.2 Findings of Baseline Consumer Survey and Field Research ........................................................... 302.3 Recommendations Emerging from the Survey Findings .................................................................. 35

3. Regulatory Decision Making and Consumer ............................................................................................ 353.1 Role of Consumers in Regulatory Decision Making ......................................................................... 353.2 Role of RERC in Promoting Consumer Participation ....................................................................... 363.3 Grievance Redressal Mechanism ........................................................................................................ 38

4. Power Theft and Role of CSOs/Consumers .............................................................................................. 39

5. Conclusion ....................................................................................................................................................... 41

CHAPTER 3POWER SECTOR REFORMS IN WEST BENGAL .......................................................... 43

1. Electricity Reforms in West Bengal ............................................................................................................. 431.1 Background ............................................................................................................................................ 431.2 Importance and Need for Regulation .................................................................................................. 441.3 The Reform Process in West Bengal .................................................................................................... 44

2. Baseline Consumer Survey: Main Findings .............................................................................................. 452.1 Objective .................................................................................................................................................. 452.2 Scope ........................................................................................................................................................ 452.3 Methodology ........................................................................................................................................... 452.4 Background Information about the Respondents ............................................................................. 462.5 Awareness on the Changes in the Ownership and Regulation of the Electricity Sector ............. 482.6 Recommendations ................................................................................................................................. 50

3. Consumer Participation and Role of the CSOs in the Reform Process ................................................. 513.1 The Need for Consumer Participation ................................................................................................ 513.2 Role of Consumers and CSOs .............................................................................................................. 513.3 Implication of Power Theft and the Role of Consumers and CSOs ................................................. 513.4 Present Status and Hurdles in Effective Consumer Participation .................................................. 52

4. Suggestions for Effective Public Participation .......................................................................................... 52

5. Conclusion and the Way Forward ............................................................................................................... 525.1 Conclusion .............................................................................................................................................. 525.2 Way Forward .......................................................................................................................................... 52

Annexure A: The Consumer Rights Statement and the Regulations in West Bengal ..................................... 54

Annexure B: The Redressal Mechanism ............................................................................................................... 56

CHAPTER 4POWER SECTOR REFORMS IN NEPAL .......................................................................... 57

1. Electricity Reforms in Nepal ........................................................................................................................ 571.1 Introduction ............................................................................................................................................ 571.2 Regulatory Framework Governing Power Sector .............................................................................. 571.3 Power Sector Reforms ............................................................................................................................ 581.4 Proposed Regulatory Framework ........................................................................................................ 591.5 Involvement of Consumer ..................................................................................................................... 60

2. Baseline Consumer Survey: Methodology and Findings ........................................................................ 602.1 Scope ........................................................................................................................................................ 602.2 Methodology ........................................................................................................................................... 602.3 Findings .................................................................................................................................................. 612.4 Recommendations ................................................................................................................................. 63

3. Consumer Participation and their Role in Regulatory Decision Making ............................................. 643.1 Present Status of Consumer Participation .......................................................................................... 643.2 Grievance Redressal Mechanism ........................................................................................................ 643.3 Consumer-friendly Provisions in Proposed Electricity Law ........................................................... 643.4 Role of Consumers in Regulatory Decision Making ......................................................................... 643.5 Ways to Ensure Consumer Participation in Regulatory Decision Making .................................... 65

4. Rights and Responsibilities of Consumers ............................................................................................... 65

5. Conclusion and Recommendations ............................................................................................................ 66

REFLECTIONS ON THE PROJECT .................................................................................................................... 67

List of Figures

Figure 1: Per Capita Consumption of Power (Kwh) in Rajasthan .................................................................... 4

Figure 2: Source Wise Break up of the Total Capacity (7616 MW) .................................................................... 5

Figure 3: Households Electrification in Bangadesh (percentage) ..................................................................... 6

Figure 4: Consumption by Different Consumer Categories in Nepal (Gwh) ................................................... 8

Figure 5: Education Level of the Respondents .................................................................................................. 10

Figure 6: Reasons for No Access to Electricity ................................................................................................... 10

Figure 7: Major Consumer Problems in Electricity Sector ................................................................................ 11

Figure 8: Percentage Share of Consumers who Registered a Complaint ........................................................ 11

Figure 9: Education Level and Complaint Registration ................................................................................... 11

Figure 10: Complaint Registering Trend among Consumer Categories ........................................................... 12

Figure 11: Percentage Share of Respondents Stating ‘No Need to Complain’ ................................................ 12

Figure 12: Percentage Share of Respondents Stating 'No Hope from the System' ........................................... 13

Figure 13: Percentage Share of Respondent who are Aware of Reforms .......................................................... 13

Figure 14: Relationship between Level of Education and Awareness about Reforms ................................... 14

Figure 15: Relationship between Consumer Category and Awareness on Reforms ....................................... 14

Figure 16: Effective Means to Create Awareness among Consumers ............................................................... 14

Figure 17: Important Issues for Consumer Consultation .......................................................................... ......... 15

Figure 18: Means to Ensure Effective Consumer Participation/Protection ..................................................... 15

Figure 19: Development Plan: Installed Capacity ................................................................................. .............. 21

Figure 20: Education Profile of Respondents ...................................................................................................... 21

Figure 21: Sample Representation of Categories of Electricity Consumers ...................................................... 22

Figure 22: Proportion of Electricity Consumers among Respondents ............................................................. 22

Figure 23: Problems Faced by the Electricity Consumers ................................................................................... 22

Figure 24: Sufficiency of Voltage ........................................................................................................................... 23

Figure 25: Have you Ever Registered a Complaint Related to Electricity? ....................................................... 23

Figure 26: Percentage of Consumers Aware of the Ongoing Electricity Reform Process? .............................. 24

Figure 27: Suggestions to Enhance Consumer Awareness Level ..................................................................... 25

Figure 28: Have you Participated in Policy and Regulatory Decision-making Process? .............................. 25

Figure 29: Would you like to Attend a Training Programme on Electricity Reforms Issues? ....................... 25

Figure 30: Map of Project Areas in Bangladesh .................................................................................................. 28

Figure 31: Education Profile of Respondents ...................................................................................................... 30

Figure 32: Relative Strength of Categories of Consumers/Respondents Surveyed ...................................... 31

Figure 33: Proportion of Respondents with Access to Electricity ..................................................................... 31

Figure 34: Incidence of Reasons for Not Applying for New Connection ........................................................ 31

Figure 35: Incidence of Problems Facing Electricity Consumers ...................................................................... 32

Figure 36: Proportion of Consumers Who Have Ever Registered a Complaint Related to Electricity ......... 32

Figure 37: Consumer Incidence of Reasons for Not Making Any Complaint ................................................ 32

Figure 38: Proportion of Respondents Aware of the Ongoing Electricity Reform Process ........................... 33

Figure 39: Proportion of Respondents Aware of the Electricity Regulatory Commission ............................ 33

Figure 40: Respondent Perceptions About Consumer Awareness .................................................................. 33

Figure 41: Respondent Support for Alternative Suggestions to Enhance Consumer Awareness ................. 33

Figure 42: Proportion of Respondents Supporting Consultation of Consumers inthe Regulatory Decision Making Process .......................................................................................... 34

Figure 43: Proportion of Respondents Identifying Each Given Area as Important for Consultation ......... 34

Figure 44: Proportion of Respondents Identifying Each Given Method asDesirable for Public Consultation ...................................................................................................... 34

Figure 45: Proportion of Respondents that have Ever Participated in theRegulatory Decision Making Process? .............................................................................................. 34

Figure 46: Proportion of Respondents Who Would Like to Attend a TrainingProgramme on Electricity Reforms Issues ......................................................................................... 34

Figure 47: Educational Level of the Respondents .............................................................................................. 46

Figure 48: Respondents Classified by Access ..................................................................................................... 46

Figure 49: Composition by Category of Electrified Consumers ........................................................................ 46

Figure 50: Incidence of Consumer Problems ....................................................................................................... 47

Figure 51: Percentage of Consumers Who Had Ever Registered Complaints ................................................ 47

Figure 52: Reasons for not Registering Complaints: Percentage Incidence among Consumers .................. 48

Figure 53: Awareness of the Ongoing Reform Process ....................................................................................... 48

Figure 54: Awareness about the Role of the ERC................................................................................................ 48

Figure 55: Respondent Perceptions About Awareness Regarding Electricity Reforms .............................. 49

Figure 56: Relative Support for Alternative Means to Enhance Consumer Awareness ............................... 49

Figure 57: Respondent Support for Consumer Consultations .......................................................................... 49

Figure 58: Percentages of Respondents Identifying Listed Areas for Consultation as Important ............... 49

Figure 59: Relative Support for Methods for Public Consultation ................................................................... 50

Figure 60: Proportion of Respondents Interested in Training Programmes ................................................. 50

Figure 61: Education Levels of Respondents: Sample Shares ........................................................................... 61

Figure 62: Categories of Respondents: Sample Shares ...................................................................................... 61

Figure 63: Problems of Electricity Consumers ..................................................................................................... 61

Figure 64: Awareness Regarding Ongoing Electricity Reform Process ........................................................... 62

Figure 65: Awareness About the Existence of the Electricity/Energy Regulatory Commission .................. 62

Figure 66: Percentage Incidence of Consumer Awareness ................................................................................ 62

Figure 67: Suggestions to Enhance Consumer Awareness Level: PercentageSupport for Sampled Consumers ....................................................................................................... 63

Figure 68: Important Areas for Consumer Consultation: Percentage Support for Sampled Consumers .... 63

Figure 69: Desirable Methods for Public Consultation: Percentage Support for Sampled Consumers ....... 63

List of TablesTable 1: Total Installed Generation Capacity in India ..................................................................................... 4Table 2: Sample Details of Baseline Consumer Survey .................................................................................... 9Table 3: Respondents Participated in Regulatory or Policymaking Process .............................................. 16Table 4: Incidence of Reasons for not Applying for Electricity Connection ................................................ 22Table 5: Duration of Load Shedding Faced by the Electricity Consumers .................................................. 23Table 6: Types of Complaints made by the Electricity Consumers ............................................................... 23Table 7: Place of Making Complaints ............................................................................................................... 24Table 8: Satisfaction of the Electricity Consumers in the Result of Complaint Handling ......................... 24Table 9: Reasons for Not Complaining ............................................................................................................ 24Table 10: Important Areas of Consultation with Electricity Consumers ....................................................... 25Table 11: Possible Means of Consultation ......................................................................................................... 25

List of BoxesBox 1: The Electricity Act 2003: Key Features ................................................................................................. 2Box 2: Electricity Reforms in Bangladesh ....................................................................................................... 7Box 3: Rajasthan’s Reforms Programme ....................................................................................................... 29Box 4: Consumer Protection: Key Provisions in the Electricity Act, 2003 ................................................. 35Box 5: Plugging Power Theft: A Success Story of Piplod Village ............................................................... 40

Acknowledgements“Consumer Empowerment in Electricity Reforms – A Review from South Asia” is the outcome of thecumulative efforts of many individuals. Significant contributions were made by Project Partners, members ofthe Reference Groups in the project countries, members of the Project Advisory Committee, a young, dynamicand dedicated team at CUTS, and many other external experts to provide form and shape to this report.Words alone cannot convey our immense gratitude to them and to each and every individual who hascontributed in even a small way to this report.

Finally, we acknowledge and thank Norwegian Agency for Development Cooperation (NORAD) for havingsupported the project.

Contributors

South Asia Watch on Trade, Economics &Environment (SAWTEE), NepalAsish SubediDhrubesh Regmi

Unnayan Shamannay, BangladeshMonowar HosseinTaifur Rahman, Ex Staff Member

CUTS Centre for Consumer Action, Research& Training (CUTS CART), IndiaAmarjeet SinghDeepak Saxena

ReviewersAllan AsherChief Executive OfficeAustralian Communications Consumer Action NetworkAustralia

Bhavna BhatiaSenior Energy EconomistWorld Bank, India

Payal MalikReader in EconomicsUniversity of Delhi, India

S L RaoChairmanInstitute for Social and Economic Change, India

Steve ThomasSenior Research FellowPublic Services International Research Unit (PSIRU)The University of Greenwich, UK

CUTS Calcutta Resource Centre (CUTS CRC),IndiaKeya GhoshMrinmoy DeyPrithviraj Nath

CUTS Centre for Competition, Investment &Economic Regulation (CUTS CCIER), IndiaRajesh KumarSiddhartha MitraUdai S. Mehta

CUTS StaffMadhuri VasnaniMukesh TyagiRajkumar TrivediRicha Bhatnagar

Abbreviations

ADB Asian Development BankARR Annual Revenue Rate

BCs Beneficiary CommitteesBERC Bangladesh Energy Regulatory CommissionBPDB Bangladesh Power Development Board

CAB Consumers’ Association of BangladeshCEA Central Electricity AuthorityCERC Central Electricity Regulatory CommissionCESC Calcutta Electricity Supply CorporationCPP Captive Power PlantsCSOs Civil Society OrganisationsCUTS Consumer Unity & Trust Society

DESA Dhaka Electricity Supply AuthorityDESCO Dhaka Electricity Supply Company LimitedDoED Department of Electricity DevelopmentDPDC Dhaka Power Distribution Company

EGCB Electricity Generation Company of BangladeshERC Electricity Regulatory CommissionsETFC Electricity Tariff Fixation Commission

GoI Government of India

HDP Hydropower Development Policy

IPPs Independent Power Producers

NCT National Capital TerritoryNEA Nepal Electricity AuthorityNERC Nepal Electricity Regulatory CommissionNHPC National Hydro Power CorporationNORAD Norwegian Agency for Development CooperationNTPC National Thermal Power Corporation

OPA Office of Public Advocate

PAC Project Advisory CommitteePGCB Power Grid Company of BangladeshPLF Plant Load FactorPSRB Power Sector Reform in Bangladesh

iConsumer Empowerment in Electricity Reforms – A Review from South Asia

REB Regional Electricity BoardRERC Rajasthan Electricity Regulatory CommissionRPC Rural Power CompanyRSEB Rajasthan State Electricity BoardRTI Right to Information

SEB State Electricity BoardSERCS State Electricity Regulatory CommissionsSHG Self-help GroupSPPs Small Power PlantsSPSS Statistical Package for Social Sciences

T&D Transmission and Distribution

UMPPs Ultra Mega Power Plants

WAPDA Water and Power Development AuthorityWBERC West Bengal Electricity Regulatory CommissionWBREDC West Bengal Rural Energy Development CorporationWBSEB West Bengal State Electricity BoardWBSEDCL West Bengal State Electricity Distribution Company LtdWZPDC West Zone Power Distribution Company

Consumer Empowerment in Electricity Reforms – A Review from South Asiaii

Foreword

This report is part of a pilot project on capacity building on electricity reforms in Bangladesh,India and Nepal is by CUTS International (supported by NORAD), a premier consumerorganisation of India that is into research, advocacy and action. It is a commendable firstattempt of its kind to examine electricity reforms in two states of India – Rajasthan andWest Bengal, and in Bangladesh and Nepal. After over a decade of electricity reforms inIndia (less in the other countries), it is depressing to consider the state of the electricitysector in all three countries and the poor involvement of consumers in the process.

The electricity reform model for all three countries was based on a blueprint from theWorld Bank, the major external funding agency supporting government undertakings inthe three countries. Electricity reforms were proposed to attract large investments, bothforeign and domestic, required for electricity availability to improve considerably. However,the reform model was not subjected to public debate and did not have much publicknowledge or support.

In the pre-reform era, governments were the dominant owners of all parts of the electricitysector and it was the national governments in each country that initiated these reforms.The reform process was not initiated out of conviction about its suitability but out of hopethat interaction would attract investments. In India, state governments implemented thereforms with little conviction or enthusiasm.

The World Bank model required governments to unbundle the functions of generation,transmission and distribution that were hitherto integrated into a single governmentelectricity enterprise; then corporatising the entities so that they could enjoy more autonomythan as government departmental enterprises and finally facilitate their privatisation. Anindependent electricity regulatory commission was recommended at an early stage of thereforms in order to determine tariffs equitably, and in a transparent manner, after fullconsultation with stakeholders and based on norms announced in advance, againdetermined after full consultations. All the three national/state governments studied inthis survey have faithfully followed all the steps except that of privatisation.

Given predominance of government ownership, regulation was largely of governmententerprises. These enterprises even when corporatised, remained under the control ofMinistries and were governed by formal and informal directives issued by them. Evenindependent regulators were subject in practice to government authority. Since Membershipof these Commissions was regarded as a post-retirement benefit, most members were retiredgovernment servants. They were mostly amenable to the wishes of their former colleaguesin government,

In all of the regions studied, household access to electricity was poor (India-55 percent,Bangladesh-55 percent and Nepal-45 percent). Per capita consumption was low in relationto most other countries: 650 in India, 165 in Bangladesh and 83 in Nepal as against theglobal average of 3000 KW. Efficiency was poor with energy losses at 35 percent in India,32 in Bangladesh and 25 in Nepal. Almost all countries were heavily dependent on coalas fuel; Nepal with 42000 MW of hydro potential had only 560 MW hydro capacity.Bangladesh has sizeable gas reserves, but uses practically none for power generation. Aninteresting observation in the Report is that Bangladesh services 7 million consumerswith electricity through 70 cooperatives.

iiiConsumer Empowerment in Electricity Reforms – A Review from South Asia

It might have been advisable for the Report not to assume that the World Bank reformmodel was the right model for studied countries/states. States in India like Kerala andGujarat have shown that they function well despite not unbundling or corporatising.

The Survey seems to show that the reforms are little known to most consumers. Theiropinion on the content of reforms was not sought. Consumer categories contacted includedhouseholds, agriculture, commercial, industrial and non-consumers. The sample perhapswas not large enough to analyse responses by category. The majority of consumers contactedhad no access to electricity from government enterprises. This was mainly due to lack ofinfrastructure and unaffordable tariffs. Problems common to all regions were poor meteringand billing, high tariffs, poor quality of service and inadequate supply. Awareness ofelectricity reforms was highest in Rajasthan at 26 percent, and lower at nine percent inWest Bengal, two percent in Nepal, and 11 percent in Bangladesh.

This is a pilot survey and no doubt the full surveys to come will fill in more gaps ininformation/awareness. Some of the gaps are: awareness of the cost of generating anddistributing electricity and willingness to pay for electricity; unexploited new modes ofelectricity provision; awareness of citizens about the contribution they can make to tariffregulation; and finally information on citizens’ preferences in regard to private supply vsgovernment supply.

This pilot project already has some directions for policy. However, the role of politiciansin getting their communities to understand that electricity is expensive and thereforeshould be conserved is of utmost importance and should be emphasised by this projectand similar initiatives.

S L RAOChairman

Institute for Social and Economic Change (ISEC), India

Consumer Empowerment in Electricity Reforms – A Review from South Asiaiv

Preface

Electricity has been universally accepted as a major engine of economic growth and itsconsumption an indicator of the level of socio-economic development. Lack of electricityadversely affects every aspect of the economy — from production to consumption; fromindustry to agriculture. Given its significance, regulation of its supply and associatedconsumer welfare implications constitute an important subject for both advocacy andresearch.

In South Asia, governments have historically been solely responsible for almost everyfunction in the sector. As a strategy for accelerating development, governments investedhugely in generation, transmission, and distribution of electricity. Over the decades, thoughthere were some commendable achievements in expansion of grid networks and generatingcapacity, there were significant inadequacies in government regulation and operation ofthis sector. Some fundamental mistakes were made: on ostensible grounds of fosteringsocial equity, electricity supply to certain categories of consumers was provided at highlysubsidised rates without any attention to cost-recovery, the consequent deficit being fundedthrough state finances and a premium charged from industry over and above costs ofsupply. Such poor financial performance has been accompanied by abysmal technicalperformance — high energy losses, poor plant load factors etc.

Realising the growing gap between demand and supply and the inability of governmentsto fund the entire investment requirement, the electricity sector was liberalised in almostall South Asian countries to attract private entry. Independent regulatory agencies wereset up to facilitate the neutral and enabling regulatory environment needed in this regard.These regulatory agencies were mandated to maintain a balance amongst stakeholderinterests and facilitate the enhancement of economic efficiency and competitiveness.

Though consumer participation is the key to a representative, independent and balancedregulatory process, in South Asian countries consumer participation has been sub-optimal,poorly informed and therefore of poor quality. Most consumer groups lack ‘resources tocomprehend’/‘take up issues’ related to electricity regulation. Such sub-optimalrepresentation undermines the popularity of regulatory reforms. This state of affairs needsto be remedied through capacity building of CSOs in regard to policy advocacy so thatthese organisations can then empower consumers

Given the urgent need for remedial action, CUTS International with support fromNorwegian Agency for Development Cooperation (NORAD) undertook an initiative inBangladesh, twoIndian states (West Bengal and Rajasthan) and Nepal to build the capacityof consumers to participate effectively in the regulatory/policy making process and bringabout improvements in electricity supply.

The project is being implemented in association with partner organisations: South AsiaWatch on Trade, Economics & Environment (SAWTEE), Nepal; Unnayan Shamannay,Bangladesh; CUTS Calcutta Resource Centre (CUTS CRC), West Bengal and CUTS Centre forConsumer Action Research & Training (CUTS CART), Rajasthan in the respective territories.

vConsumer Empowerment in Electricity Reforms – A Review from South Asia

As part of the project, CUTS International came out with a detailed research report, entitled“Consumer Empowerment in Electricity Reforms — A Review from South Asia”. Theresearch report was prepared under my supervision and the respective country chapterswere written by Dhrubesh Regmi & Asish Subedi (SAWTEE, Nepal); Taifur Rahman (ExStaff Member) & Monowar Hossein (Unnayan Shamannay, Bangladesh); Deepak Saxenaand Amarjeet Singh (Rajasthan, India); and Keya Ghosh, Prithviraj Nath and MrinmoyDey (West Bengal, India). Rajesh Kumar and Udai S. Mehta, CUTS International preparedthe outlines for the country chapters and drafted the synthesis paper and SiddharthaMitra, Richa Bhatnagar and Madhuri Vasnani, CUTS International performed the role ofcontent editors.

The report reviews the status of consumer participation in the regulatory reform processin the project countries. It concludes that most of the consumers are not satisfied with theexisting complaint redressal mechanism as well as the quality of service available tothem. Moreover, there is a need to conduct capacity building activities so that consumersbecome aware of their rights as well as responsibilities.

This Report is useful not only for researchers but also for policy makers and regulators asit provides a comprehensive review of the status of reforms and consumer participationin select South Asian countries which could pave the way forward for future regulatoryreforms for ensuring effective consumer participation.

Pradeep S. MehtaSecretary General

CUTS International, India

Consumer Empowerment in Electricity Reforms – A Review from South Asiavi

1Consumer Empowerment in Electricity Reforms – A Review from South Asia

An Overview

1. IntroductionElectricity consumption is a crucial determinant ofeconomic growth as well as the pace ofindustrialisation. The low installed capacity inproject countries therefore seems inadequate forsignificant and sustainable economic growth. Toillustrate, the per capita availability in FY 2006-07was estimated to be 83 kilowatt-hour (Kwh) in Nepal,163 Kwh in Bangladesh and 650 Kwh in India whichappears miniscule in comparison to the world averageof 3000 Kwh.

Huge investments are required to raise the installedcapacity in project countries. It is also commonknowledge among all stakeholders that the publicsector alone would not be able to fulfil the requirementfor capacity expansion. Involvement of the privatesector is essential in this regard. Private participationwould also improve service delivery and facilitatecompetition.

A related move to increase power supply comprisesof the speeding up of regulatory reforms: unbundlingof the integrated power utilities, privatisation andestablishment of independent regulatory agencies etc.The main objective of reform is to ensure moretransparency and accountability in the system, enableappropriate regulation as opposed to over and underregulation and facilitate competition.

This report is divided into four sections. Theintroductory section (1), briefly highlights theobjectives of the RESA project and elaborates on thepossible consumer benefits from the project activities.Section two lists the key steps taken by policy makersto restructure the power sector in their respectiveterritories and thereby improve service deliverythrough the facilitation of competitive electricitymarkets. Section 3 captures the key findings of thebase line consumer survey conducted in all the projectterritories. It conducts a comparative analysis ofperformance in territories on the basis of someparameters relating to consumer satisfaction andawareness of reforms. It concludes that major reformshave been initiated in all project territories exceptNepal; however, most of the consumers are not

satisfied with the existing complaint redressalmechanism as well as the quality of service. Moreover,there is a need to conduct capacity building activitiesso that consumers become aware of their rights aswell as responsibilities. Section 4 draws conclusionsand makes policy recommendations.

Power Sector Reforms: A Brief Overview

Post-independence, the Government of India decidedto entrust the development of the electricity sector torespective states through the creation of StateElectricity Boards (SEBs) under the Electric (Supply)Act of 1948. SEBs were expected to develop networksof transmission lines which till then had been quiterudimentary, and add generation capacity whileoperating on commercial principles.

By the 70s, however, many of the SEBs startedincurring losses because of various factors includingpoor capacity utilisation of the thermal plants put upby them. There were many reasons for the poorperformance of SEBs direct political interference inSEB operation by governments, mismanagement andpoor industrial relations, and shop floor practices.Flat rate tariffs, i.e. usage charges which were nearlyzero, were introduced for agricultural connectionsused to run irrigation pump sets. These low tariffswere sought to be covered through higher tariffs onindustrial and commercial consumers. But thedysfunctionalities and distortions of such crosssubsidisation became associated with increasingtheft and leakages, loss of accountability, revenuecollection and misreporting.

Vested interests, dependent upon the subsidies andrents generated, emerged to politicise electricity tariffsand the management of distribution. The losses ofSEBs mounted and by the late 1980’s expectationsfor these had become extremely modest – for instance,these were not expected to earn more than threepercent on return on their equity capital. But eventhis proved to be difficult for most of them. Not onlydid SEBs not add sufficient capacity, but many wereoperating their generating stations far below optimalusage levels. This made SEBs increasingly dependenton budgetary allocations from their respective

Consumer Empowerment in Electricity Reforms – A Review from South Asia2

governments and at the same time reduced theirability to add generating capacity, and mostimportantly carry out periodic maintenance andupkeep of their distribution assets.

It was in such a situation that the central governmentset up two central sector utilities; NTPC for thermalgeneration and NHPC (National Hydro PowerCorporation Limited) for hydro power. Given thedeteriorating financial performance and pooroperating performance of SEBs, the onus of settingup new generation capacities fell increasingly oncentral sector utilities. Over the 1980s, the energyshortages and poor financial condition of SEBscontinued. The need to control fiscal deficit led toinitiation of reforms in the Electricity Sector in the1990s with opening of the sector for privateIndependent Power Producers (IPPs).

In the backdrop of the balance-of-payment crisis in1991, the Indian government decided to liberalise itseconomic policies. Many structural changes tookplace, including delicensing, drawing down of tradebarriers, and liberalisation of foreign capital inflows– both direct and portfolio. The need to control andreduce the fiscal deficit following frommacroeconomic structural adjustment considerationsin the early 1990s led to the initiation of the IPP policy.Recognising that electricity and other infrastructuresectors required substantial investments in the faceof resource constraints caused by fiscal tightening;the IPP policy was announced to allow investmentby the private sector (including foreign capital) inelectricity generation. Prior to this, save some privatesector licensees operating in a few urban areas, theelectricity sector was mostly in the hands of stateelectricity boards (SEBs) or central government ownedutilities created to supplement the efforts of SEBs ingeneration and transmission sub-sectors1.

‘Electricity’ is listed as a concurrent subject in theConstitution of India, i.e. both the Central as well asstate governments can enforce rules or regulations inthe sector. A few state governments such as Orissa,Haryana, Andhra Pradesh and Rajasthan etc. haveenforced independent acts to initiate reforms in thepower sector under the supervision of the World Bank.However, to consolidate the reform process andpromote a national market for electricity, theElectricity Act 2003, which can be considered as amilestone in the power sector reform process in India(Box 1), was enforced.

Box 1: The Electricity Act 2003: Key Features

• Delicensing of generation and completeliberalisation of captive generation

• Delicensing of both generation and distributionin notified rural areas

• Permission for private entry into thetransmission business which would howeverbe subjected to detailed regulation

• Recognition of trading as a distinct activity andprovision of authority to RegulatoryCommissions to fix ceilings on trading margins,if necessary and thereby curb excesses

• Open access in distribution with provision forsurcharge consistent with the current level ofcross subsidy, which would, however,gradually be phased out

• Freedom to ‘distribution licensees’ to undertakegeneration and trading

• Reorganisation of State Electricity Boards (SEBs)which could however continue to perform therole of State transmission utilities and licensees,subject to approval from the state and centralgovernments

• Setting up of the State Electricity RegulatoryCommission (SERC) made mandatory

• Constitution of an Appellate Tribunal to hearappeals against decisions of the CentralElectricity Regulatory Commission (CERC) andSERCs

• Metering of all electricity consumption mademandatory

• Provisions relating to theft of electricity mademore stringent

• Permission for stand alone generation anddistribution systems in rural and remote areas

In Bangladesh, the very important Energy RegulatoryCommission Act 2003 was enacted as a part ofongoing reforms. In the same year, two moreimportant policy measures were implemented, i.e.creation of the West Zone Power Distribution Company(WZPDC) and establishment of Electricity GenerationCompany of Bangladesh (EGCB). Following the Act in2003, the Bangladesh Energy Regulatory Commission(BERC) was established in 2004. In the same year, theBangladesh Power Development Board (BPDB) wasgranted approval to become a holding company. In2006, yet another company named Dhaka PowerDistribution Company Limited (DPDC) wasincorporated and a policy guideline for powerpurchase from captive power plants (CPPs) was alsoprepared.

1. Pandey. A and Morris. S (2009), “Electricity Reforms and Regulations – Critical Review of last 10 years experience”,Indian Institute of Management, Ahemdabad


In the process of power sector reforms, Nepal hastaken a step forward including preparation of a draftelectricity reform bill (2002) which provides for thesetting up of an independent regulatory agency andunbundling of the integrated Nepal ElectricityAuthority (NEA.) An important considerationbehind these reforms is the need for fuller utilisationof hydropower potential: only 1 percent of theavailable potential of about 40,000 MW has beentapped so far.

The transformation of regulatory regimes in manydeveloping countries involves a move to make theregulatory decision making process more transparentand participatory. The reform processes in the threeproject countries require various stakeholders suchas governments, regulators, utilities, consumers andmedia to play a more proactive role in regulation sothat these becomes more consumer centric. Consumerscan perform the role of watchdogs in regard to theperformance of utilities as well as regulatory bodies.

Need for Capacity Building

In spite of a good mechanism, public participation inmany cases has been inadequate in terms of bothquantity as well as quality and therefore ineffectivewith no salutary effect on the quality of regulationwhich has continued to remain poor. Electricity is acomplex sector in which effective participation byconsumers is a must. Generally, consumers arerequired to participate in the tariff fixing process andframing of regulations on various importantregulatory issues such as licensing, quality of servicestandards, complaint redressal procedure etc. Thus,there is a need to build the capacity of CSOs tounderstand these and related issues.

In developed countries such as UK, US, Australia etc.,the Office of the Public Advocate (OPA) has beenconstituted within or in association with theregulatory agencies. Promotion of consumerparticipation and protection of their interests are someof the important responsibilities being carried out bythe OPA. However, in the project countries, a formalarrangement to enhance the capacity building of CSOsis missing and the filling of this vacuum throughother means is imperative.

Information asymmetry also impedes effectiveconsumer participation. The basic premise ofindependent regulation is that it provides eachstakeholder due institutional space and opportunityto participate in the process. Independent regulationpromises balanced decision making in line withstated policy objectives set by the government. Whilethe electricity companies are well equipped with

adequate information and appropriate tools,consumers do not have access to reliable informationwhich hampers their ability to intervene effectivelyin the regulatory process.

It is not just the numbers but also the quality ofintervention made by consumer representatives thatmatters. Most consumer groups lack the capacity tocomprehend issues related to electricity regulationor resources to take up these issues in a consistentmanner. Ironically, in India, it has been recorded thatlarge numbers of consumers have taken part in publichearings. But due to the absence of required capacity,CSOs or consumers have failed to make successfulappeals in front of the concerned regulatory bodies.The sub-optimal representation of consumer interestsundermines the progress of the regulatory reforms.

Thus, enhancing capacity of consumerrepresentatives and other non-state actors is vital forensuring effective and participatory regulatorygovernance in the sector. This involves engaging thesegroups and equipping them with necessaryinformation, knowledge (on process and contents,both) and skills so that they perform the role ofeffective watchdogs and effective facilitators ofregulatory reforms.

RESA Project

In light of the discussed lack of capacity of consumersto effectively participate in the regulatory process,CUTS International with the support of NORAD isundertaking an initiative over two years (2008-2010)in Nepal, Bangladesh, and two states of India – WestBengal and Rajasthan – to build the capacity ofconsumer groups/CSOs in action oriented research,and advocacy with policymakers and regulatoryagencies.

The project is thus being implemented in associationwith partner organisations with the followingobjectives:

• Facilitate effective incorporation of the views ofconsumers and civil society in policy formulationand design of regulatory processes in the electricitysectors of project countries;

• Strengthen capacity of civil society to take upaction research and advocacy on regulatory/policy issues in the electricity sector;

• Encourage regional co-operation and experiencesharing on the subject through networking; and

• Create a vertical mechanism to transmit concerns/views from the grassroots to the policy level andvice-versa, as well as horizontal linkages amongdifferent players at the same level.


2. Power Scenario and Reform InitiativesIndia

Historically, in all the project territories, the powerindustry was initially structured as an integratedmonopoly under public ownership. All the majorfunctions – generation, transmission anddistribution (T&D) were discharged by a single utility.In India, the SEBs were constituted at the state levelunder the Electricity Supply Act, 1948. At the nationallevel, the Central Electricity Authority (CEA) wasconstituted to plan and coordinate issues related togeneration of T&D. Before the reforms, most of thegeneration capacity was owned by SEBs. In 1975, theNational Thermal Power Corporation (NTPC) andNational Hydro Power Corporation (NHPC) wereconstituted to speed up power generation in India.

Till 1991, the key functions in the power sector –generation and T&D – were mainly discharged bySEBs enjoying monopoly power in the respectiveareas. The key thrust of related governance (Statesand Central), during this period was to supply lowcost electricity to consumers and ensure universalaccess – both rural and urban. SEBs continuedproviding power at subsidised rates to a fewconsumer categories, such as agriculture anddomestic users. Consequently, the average tariff waslower than the average cost of supply in these cases.Consequent losses implied that it became difficult forthe governments to expand infrastructure or evenmaintain existing facilities well. This led to furtherdecline in the financial viability of these SEBs. Theircommercial losses increased from Rs 4117 crore in1991 to Rs 28445 crore in 2001 (Economic Survey, 2000-01, Government of India).

Post independence, the Indian government has madesignificant progress in adding new generationcapacity. As a result, the new generation capacityhas increased from 1713 MW in 1950 to 1,45,627 MWin 2008. The break up of total installed capacity isgiven in Table 1.

Out of this total capacity about 14 percent is ownedby private players. The Government of India has givensome incentives to promote private investment in thesector. The target is to add about 78,577 MW by theend of the 11th Five Year Plan (2007-2012). Anotherimportant policy initiative has been to installgeneration capacity though Ultra Mega Power Plants(UMPP), each with a capacity exceeding 4000 MW.The Indian government has identified nine sites invarious states. The GOI has allotted four UMPPsthrough a competitive bidding process. Out of these,Reliance Power has been allotted three and oneproject has been bagged by Tata Power.

Power Scenario in Rajasthan, India

In Rajasthan, total installed capacity has increasedfrom 3998 MW in 2000-01 to 6421 MW in 2007-08(Department of Energy). This capacity also includesthe state’s share in the central and shared powerundertakings. The state has shown good progress indeveloping wind energy by commissioning capacityof 535 MW — about eight percent of the total dedicatedcapacity of the state.

As a result of the increase in installed capacity, percapita consumption has increased significantly from517 Kwh in 2002-03 to 600 Kwh in 2006-07 (see Figure1).

Table 1: Total Installed GenerationCapacity in India

Fuel Source MW In percent

Thermal (Including gas 93,114.64 64.6capacity 14, 716 MW)

Hydro 36,197.76 24.7

Nuclear 4,120.00 2.9

Renewable (Wind, 12194.57 7.7solar, small hydro etc.)

Total 1,45,626.97 100Source: Ministry of Power (www.powermin.nic.in)

Figure 1: Per Capita Consumption of Power(Kwh) in Rajasthan

334

540583 600

1999-00 2004-05 2005-06 2006-07

In spite of the enhancement of generating capacityand per capita consumption of power, the stateelectricity utilities have showed poor operational andfinancial performance. The average T&D losses wereestimated to be above 40 percent in FY 2006-07. Afterreforms, the state utilities have controlled T&D losses,especially in the urban areas. However, losses in ruralareas still remain very high.

Rajasthan has been a pioneer among Indian states inundertaking reform initiatives. These were started inthe early 1990s to enhance economic efficiency andprivate sector participation. Later, Rajasthan Power


Sector Reforms Act, 1999 was enacted and enforcedto further the reforms. Under the Reforms Act, twomajor institutional changes have been initiated:

• Establishment of Rajasthan Electricity RegulatoryCommission (RERC), an independent agency toregulate the generation and T&D of electricity atthe state level; and

• Unbundling of the integrated Rajasthan StateElectricity Board (RSEB) into separate generationand T&D entities as given below:

Generation: Rajasthan Rajya Vidyut Utpadan NigamLtd. (RVUN)

Transmission: Rajasthan Rajya Vidyut Prasaran NigamLtd. (RVPN)

Distribution: Jaipur Vidyut Vitran Nigam Ltd. (JVVNL);Ajmer Vidyut Vitran Nigam Ltd. (AVVNL); JodhpurVidyut Vitran Nigam Ltd. (JDVVNL)

The state government owns all these five companies.Distribution companies still enjoy monopoly powerin their respective jurisdictions and operate withoutany threat of competition. Given this model, it is theresponsibility of the regulatory body to protect theinterest of consumers.

Power Scenario in West Bengal

The history of power generation in India started inKolkata (West Bengal) in 1899 with thecommissioning of the first Indian (thermal) powerplant. As was the case in the other states in the pre-reform period, the West Bengal State Electricity Board(WBSEB) was responsible for the entire generation aswell as T&D operations at the state level with thesole exception of Kolkata. In Kolkata City, CalcuttaElectricity Supply Corporation (CESC) operated theindustry. The state has showed remarkableperformance in terms of addition to generatingcapacity and in improving technical and financialperformance. The total generating capacity availablein the state was 7616 MW in 2008 (Figure 2).

The West Bengal Electricity Regulatory Commission(WBERC) was constituted in January 1999 under theElectricity Regulatory Commission Act 1998, a statuteenacted at the national level. After its constitution,the Commission has enforced various regulations toregulate the generation, distribution and transmissionoperations in the state. Most of the importantregulations issued by WBERC are available on itswebsite (http://www.wberc.net/).

Even after initiating reforms, the state continued withan integrated set up for power supply. In April 2007,the WBSEB was unbundled and three majorcompanies were constituted - one each for generation,transmission and distribution:

• West Bengal Power Development Corporation Ltd.(Generation)

• West Bengal State Electricity TransmissionCompany Ltd. (Transmission)

• West Bengal State Electricity DistributionCompany Ltd. (Distribution)

The state government owns all these companies. Theutilities have made remarkable progress in improvingtheir technical and financial performance. Energylosses have come down from 45 percent in 2002 toaround 30 percent in 2007. There is significantimprovement in the Plant Load Factor (PLF) andrevenue recovery from consumers. Consequently,WBSEBCL has become one of the few powerdistribution companies in the country generatingsurplus revenue.

However, there is still a lot to do in the West Bengalpower sector. About 50 percent households still donot have access to electricity. The per capitaconsumption of electricity is very low and wasreported to be 450 Kwh in 2006-07. As per the NationalElectricity Policy 2005, the target is to ensure universalaccess and increase per capita consumption to 1000Kwh by 2012 – a big challenge for the government

Figure 2: Source Wise Break up of the TotalCapacity (7616 MW)


Thus, the key agenda before the government as wellas regulators is to promote competition in the sectorthough open access. As per Electricity Act 2003, anyconsumer having connected loads of 1 MW andabove should be able to have open access to the T&Dnetwork. Like other ERCs, WBERC and RERC haveissued regulations to ensure open access. However,capacity shortages and the poor infrastructure ofutilities have frustrated the attainment of theseobjectives.

Power Scenario in Bangladesh

Before independence, the electricity sector was underprivate management and ownership. Electricitysupply was restricted to only few areas, mostly urban.After independence, the industry was kept underpublic ownership and control because of therationale that electricity is a primary mover of energyand economic development.

In Bangladesh, the absence of significant hydropowerpotential has resulted in extreme dependency onfossil fuels such as coal and gas. Out of the totalcapacity of 5269 MW, only 230 MW (four percent) ishydro based.

The aggregate capacity is also extremely low, giventhat total population exceeds 150 million As a result,per capita consumption was just 165 Kwh duringthe FY 2006-07 – one of the lowest in the world. Eventhis has been attained after improvement was broughtabout by the constitution of the Rural ElectrificationBoard (REB) in 1977 to give pace to ruralelectrification. Household electrification for the wholeof Bangladesh was just 43 percent in FY 2007-08.

and improve technical and financial performance.However, DESA could not perform in the desiredmanner. The overall performance of the power sectorwas not satisfactory in Bangladesh. The followingkey constraints affecting the performance of the powersector were observed.

• Acute scarcity of resources for the huge task ofdeveloping the electricity sector.

• High systemic losses in the sector and largeunpaid dues and inappropriate tariff rates &structure affecting financial viability andattractiveness for investment, domestic as well asforeign.

• Absence of clear organisational goals, adequatefinancial and commercial autonomy and lack ofadequate incentives.

• Lack of differentiation of responsibilities forgeneration and T&D hindering segment specificcorrective measures.

• Lack of appropriate cost and asset accountingsystems and absence of effective operationalperformance evaluation of the differentcomponents of the electricity sector such asgeneration, T&D etc.

In 1993, a high-powered inter-ministerial committeeon power sector reform (PSRB) was constituted inBangladesh. Following the recommendations of thiscommittee, a road map for undertaking reforms inthe sector was drafted. In 1996, the Bangladesh PowerDevelopment Board was unbundled and a separatetransmission company was created.

Two more important policy measures wereimplemented in 2003: creation of theWest Zone Power Distribution Company(WZPDC) and establishment of theElectricity Generation Company ofBangladesh (EGCB). In 2006, yet anothercompany named Dhaka PowerDistribution Company Limited (DPDC)was incorporated. Other thanenterprises created throughunbundling, BERC was constitutedunder the Bangladesh EnergyRegulatory Commission Act 2002. Themajor companies in the generation,transmission and distributionsegments are given below.

• Generation: Bangladesh Power DevelopmentBoard (BPDB); Independent Power Producers(IPPs); Rural Power Company (RPC); ElectricityGeneration Company of Bangladesh (EGCB)

Figure 3: Households Electrification in Bangadesh (percentage)

The power sector reforms started in the early 1990swith the unbundling of the electricity sector. DhakaElectricity Supply Authority (DESA) was created tomanage the supply of electricity in the capital city


• Transmission: BPDB; Power Grid Company ofBangladesh Ltd. (PGCB)

• Distribution: Dhaka Electricity Supply Authority(DESA); Dhaka Electric Supply Company Ltd.(DESCO); Rural Electrification Board throughRural Electric

• Co-operatives: West Zone Power DistributionCompany (WZPDC); Dhaka Power DistributionCompany Limited (DPDC)

BERC has been assigned vary important functionsunder the Act: regulation of tariff, licensing andmaintenance of quality of service as well as promotionof competition. The functions are supposed to bedischarged in a transparent and participatorymanner. Given the current level of performance inrural electrification, attainment of universal accessat affordable prices by 2020 would be a big challengebefore the policy makers, regulators and the utilities.Electricity reforms in Bangladesh are summarised inBox 2:

Box 2: Electricity Reforms in Bangladesh

Reform ObjectivesThe Government of Bangladesh issued its Vision and Policy Statement on Power Sector Reforms in February,2000, with the following objectives (GoB 2007):1. Bringing the entire country under electricity service by the year 2020 in phases2. Making the power sector financially viable and able to facilitate economic growth3. Increasing the sector’s efficiency4. Introducing new corporate culture in power sector entities5. Improving the reliability and quality of electricity supply6. Using natural gas as the primary fuel for electricity generation7. Increasing private sector participation in mobilising finances8. Ensuring reasonable and affordable price for electricity by pursuing least cost options9. Promoting competition among various entities

Components of ReformThe principal components of the reform programme have been envisaged as follows (GOB 2007):1. Segregation of power generation, transmission and distribution functions into separate services; creation

of the BPDB holding company as an apex body where generation and T&D operating companiesfunction as subsidiaries of the holding company

2. Corporatisation and commercialisation of emerging power sector entities3. Effective regulation through BERC for power and gas4. Private sector participation and private-public partnership in the power sector5. Financial Restructuring and Recovery Plan for the sector6. Introduction of cost reflective tariffs for financial viability of the utilities and promotion of efficient use

of electricity7. Development of Demand Side Management (DSM), including energy efficiency measures, to conserve

energy8. Creation of an appropriate framework and institution to facilitate the development of alternative/

renewable energy resources9. Utilisation of captive power potential of the country through an appropriate policy framework10. Capacity building and HRD for sector entities and corporatised bodies

Present Structure of the Power Sector upon ReformThe reform process in the power sector is not yet complete. In particular, corporatisation of various entitiesunder BPDB is going on very, slowly. These reforms in the electricity sector can be characterised at presentas follows:1. Generation, T&D have been separated2. Private sector participation in generation has been allowed3. State enterprises have been corporatised mainly in distribution but to some extent also in the field of

generation while some others have been transformed into private companies owned by BPDB4. BPDB is the owner of all corporatised and decentralised parts of the erstwhile state-owned sub-systems

and acts as the single buyer of electricity from both state and private generators5. An energy regulatory commission has been put in place which has the mandate of overseeing the

electricity sector as well


Power Scenario in NepalIn Nepal despite the huge potential for hydropower,the development of the power sector has been slowand inadequate. Out of commercially viable totalhydro potential of 42,000 MW, the nation hasinstalled only 556 MW. The total generation capacityincluding private sector is 611 MW. Poor politicalwill and unfocused electricity policy are the mainreasons for this poor performance. As a result,consumers have to depend upon alternative sources.Traditional energy sources such as fuel wood, animalresidue etc. account for 85 percent of total energyconsumption. The average load shedding is aboutseven-eight hours per day. Thus, shortage of powerhas adversely affected the economic development ofthe country. In consumption, the share of the domesticand industry sectors is the highest and accounts foralmost 80 percent of the total. As shown in Figure 4,the household sector has the largest share in totalconsumption.

The Ministry of Water Resources is the line ministryresponsible for policy and coordination of the powersector while the Department of ElectricityDevelopment (DoED) is the regulatory agency. Apartfrom providing policy guidelines, the latter alsofacilitates private investment in the sector. The presentshape of the Nepal electricity industry was given in1984 with the enforcement of the Nepal ElectricityAuthority (NEA) Act. Under the provisions of the Act,the Nepal Electricity Authority was constituted in1985 with an integrated system combining generationand T&D functions.

As a result of poor commercial outlook, the technicaland financial performance of the power sector hasnot been satisfactory. It has suffered from manyproblems including high electricity tariffs, systemic

losses (about 25 percent), high generation andoverhead costs, over staffing and lack of consumersatisfaction. The problem is not only poor access toelectricity but huge disparities in rural and urbanaccess. Rural access was only 5 percent against urbanaccess of 90 percent (Kirti Chand Thakur, 2003,w w w . s a r i - e n e r g y . o r g / P u b l i c a t i o n s /NepalPowerSectorReform/NepalPowerSectorReform.pdf).

Power reforms started in the early 1990s withamendments of the NEA Act. In order to ensureautonomous status of the NEA, the following changeswere made:

• NEA has the freedom to frame rules andregulations regarding personnel, administrationand finance which however would have to beapproved by the government.

• Tariff fixation by the Electricity Tariff FixationCommission.

• NEA to sell, transfer or deal any amount of itsproperty as it deems fit.

• Right to compensation from the government toNEA on account of concession/subsidy given bythe government to different consumer groups.

Thus, major changes have been made in the statutesto improve the performance of NEA. In order to takereforms in the sector further, the draft electricityreforms bill is in process. In the draft bill, unbundlingof the NEA to make the sector more competitive aswell as the constitution of an independent regulatorycommission to regulate the power sector have beenproposed. The commission would also be responsiblefor the protection of consumer interests.

The analysis of reforms in the electricity sectors invarious project territories shows that major steps have

Figure 4: Consumption by Different Consumer Categories in Nepal (Gwh)


been taken to improve service delivery. There is,however, not much information on the role ofconsumers which is also equally important inensuring more transparency and accountability inthis sector. For instance, the extent of consumerawareness about reforms and the complaint redressalmechanism, and consumer perceptions about theadequacy and reliability of consumption neither areissues on which there is almost no information norare there is awareness on consumer viewsabout regulation of the power sector,especially the tariff structure and normsrelating to quality of service. Detailedanalysis of consumer feedback isimportant to evaluate the functioning ofthe power sector and the quality ofunderlying regulation as well as to chartout an action plan for improvement. It isto analyse these important consumerperceptions that a base line consumersurvey was conducted in the entire projectarea. The main findings of this surveyhave been highlighted and analysed inthe next section. This exercise also enables us toundertake a comparative analysis of theperformances of the power sectors in different projectterritories.

3. Baseline Consumer Survey: MainFindings

Survey Methodology

A baseline consumer survey was conducted inassociation with local CSOs in all the projectterritories. The main objective of the survey was toassess the awareness level at the grassroots aboutthe need for and progress made in electricity reforms.The survey was designed to yield awareness to thefollowing questions.

• What are the major consumer problems?• How are consumer complaints redressed?• Are consumers aware of the ongoing reform

process?• Are they aware of the regulatory decision making

process?• Do the consumers possess the capacity required

for effective participation?• How should consumers/CSOs be engaged to

ensure effective consumer participation?

Sample Size: About 700 respondents were targetedin each of the project territories. The sample comprised

all major consumer categories such as households,agriculture, and commercial stakeholders. To assigndue weight to each of the consumer categories andinclude few non-electrified households, a purposivesample was drawn. To make the samplerepresentative in each of the selected districts, about60 percent of the blocks chosen for the survey wererural and semi-urban in nature. The details of areawise samples are given in Table 2.

Survey Method: The interview method was used toelicit the views of respondents. A standardisedquestionnaire was drafted after incorporating inputsfrom project partners as well as members of the ProjectAdvisory Committee (PAC). The first draft wasprepared in English and translated into vernacularlanguages to facilitate comprehension by fieldinvestigators as well as respondents.

The survey was carried out with the support of localpartners at the grassroots level. Each of the CSOsemployed one or more of its workers to collect datafrom the field. Before the survey a training sessionwas conducted for field investigators. During thetraining session the questionnaire was discussedthoroughly and queries were answered. The nodalpersons travelled to the field to supervise work andresolve the problems faced by investigators.

Survey Findings

Education level of the respondentsEducation is revealed to be a very important factoraffecting the level of awareness among consumers.Thus, assessment of the education levels ofrespondents would be useful for conducting capacitybuilding activities effectively. The education levelsin the various project territories are depicted inFigure 5.

Table 2: Sample Details of Baseline Consumer Survey

Bangladesh Nepal Rajasthan West Bengal

No of Districts 13 10 10 10

Total respondents 701 700 700 700

i) Domestic 261 339 342 320

ii) Agriculture 241 69 217 168

iii) Commercial 72 144 94 81

iv) Industrial 36 118 32 28

v) Non-consumers 91 30 15 103


As is clear from the diagram, there is considerablevariation in education levels in all territories exceptRajasthan. Among all education levels, ‘High School’accounts for the largest percentage of respondentsand is therefore also the modal category. Overall,about 60 percent of the respondents had an educationlevel of high school or above. The high average levelof education of the target audience could be veryhelpful in creating awareness on electricity reformsand regulations.

Access to ElectricityThe literature survey revealed that roughly half ofthe households in the project territories still do nothave access to electricity, the main reasons being poorinfrastructure and low purchasing power ofconsumers. The survey findings corroborate thosefrom the literature (Figure 6).

Above 55 percent of non-connected households inBangladesh as well as Rajasthan stated that theconnection fee as well as electricity rates were too

high leading to a preference forthe use of kerosene overelectricity. The other importantreason for not using electricitywas the poor availability ofinfrastructure – for instance,consumers in West Bengalrevealed that distances betweentheir places of residence andnearest electricity poles were toolarge.

The connected consumers wereasked to state major problemsencountered in their areas. Amenu of possible problems was

listed in the questionnaire and they were asked tochoose the ones relevant for them. Most of theconsumers (100 percent in case of Bangladesh) statedthat poor quality of service, high tariffs and powerthefts were major consumer problems. However, inWest Bengal the percentage of consumerscomplaining about poor metering and power theftswas distinctly lower than that in other territories(Figure 7). This is possibly reflective of both higheradministrative efficiency and better institutionaldesign and policy implementation in West Bengal ascompared to the other territories, given that it is notvery different from the others in terms of socio-economic indicators. A detailed study of relevantinstitutions and processes in West Bengal may yielduseful lessons for the other project partners andenable them to solve the stated problems.

Complaint Redressal Mechanism

The quality of service, especially the complaintredressal mechanism, is a very important issueaffecting the consumer interest at large. One of theprime objectives of electricity reforms is to improve

the redressal mechanism. In thepre-reform period, no significantattention was provided to thisissue. In the regulatory process,the role of the regulatory bodiesis to direct the distributioncompanies to constitute forumsfor redressing consumercomplaints. However, due tolack of awareness or otherreasons, a majority of consumersdid not register complaints, asrevealed by Figure 8.

Figure 5: Education Level of the Respondents

Figure 6: Reasons for No Access to Electricity


Figure 8 also reveals wide differences in the incidenceof complaints across territories. In Nepal only 12percent of consumers have ever registered complaints.This percentage is almost the same (27 percent), inBangladesh and West Bengal but is still notsatisfactory, given the poor state of infrastructure andquality of service in these project territories comparedto international standards.

It was also tested whether the education level of theconsumer significantly affected the incidence ofcomplaints. A positive correlation between educationlevel and the incidence of complaints was revealed,i.e. the probability of making complaints increasedwith the level of education.

It is evident from Figure 9 thateducation level is a significantfactor affecting the ability andinclination of a consumer tomake a complaint. The upwardsloping nature of the graphsacross all states leads to thisfinding. In the combinedsample for Nepal, Rajasthan andWest Bengal, only about 11percent of connected consumerswith education below theprimary level ever madecomplaints. This number wasslightly higher in Bangladesh at17 percent.

The graphs reveal territoryspecific peculiarities: the overallincidence of complaints was thehighest in Bangladesh followedby West Bengal for almost eachlevel of education. In Nepal, theincidence of complaints was thelowest at each level ofeducation, probably a result ofthe slow progress in electricity

reforms which in turn implied poor facilities formaking complaints. The tendency for incidence ofcomplaints to increase with education was theweakest in Nepal among all territories – a findingwhich deserves further investigation.

We can also study the incidence of complaints acrossvarious sectors – domestic, commercial, industrial andagricultural. Figure 10 reveals that the percentage ofconsumers in the domestic category makingcomplaints was the lowest in Nepal (10 percent)whereas in all other territories it was almost the same.The domestic sector shows the least variation amongall studied sectors in the incidence of complaintsacross project regions.

Across category-territory combinations,the percentage was the highest for theindustrial category in West Bengal(where 64 percent of the surveyedconsumers registered complaints withthe utility) and the lowest in the case ofdomestic consumers in Nepal (only 10percent).

Nepal showed the lowest incidence ofcomplaints in all the studied sectors.However, the graphs reveal somevariation across sectors (but not a lot)

Figure 7: Major Consumer Problems in Electricity Sector

Figure 8: Percentage Share of Consumers who Registered a Complaint

Figure 9: Education Level and Complaint Registration


in the relative positions of other project territories.For example, while West Bengal is in second placefor commerce and agriculture and is tied with allpartners except Nepal in the domestic sector, it is wayahead of others in the industrial sector. Rajasthanshows more stability across sectors – it is tied withall others (exceptional) in the domestic sector and isin third place in all other sectors.

A finding which emerges unambiguously across allsectors, except the domestic sector, is that the abilityand inclination to register complaints is by far thepoorest in Nepal and the second poorest in Rajasthan.There is a convergence in the incidence of complaintsin the domestic sector among project regions butNepal is an exception even here. Quite clearly, theinability of Nepal to initiate significant reforms isrevealed by these trends.

Further, the respondents were asked the reasons formaking a complaint and to provide information onthe nature of complaints made. In Bangladesh, 52percent of the complaints were against disconnectionwhile 25 percent of the total were related to voltagefluctuation.

Figures on incidence ofcomplaints do not convey muchinformation about the redressalmechanism or the ability orawareness of consumers (in thisregard) unless these aresupplemented by otherinformation. Therefore,respondents in the non-complainant category wereasked to give reasons for notregistering complaints. Variousreasons were given including‘no need to complain’, implyingsatisfaction with service. It

would be quite interesting toknow how the size of thisgroup in percentage termsvaried across territories(Figure 11).

As is explained in Figure 11,the percentage share ofrespondents stating ‘No needto complain’ in the broadercategory of non-complainants is the highest inWest Bengal. Thiscorroborates our previous

findings about reforms having made considerableheadway in West Bengal.

In the domestic as well as industrial categories inWest Bengal, 40 percent of non-complainants haveidentified this option as the reason for notcomplaining. In the commercial sector thecorresponding figure is 30-35 percent.

While West Bengal is the leader in choosing thisoption (which is a positive reflection on its electricitysupply system) in the domestic and industrial sectors,Rajasthan is the leader for the other sectors –agriculture and commerce – at around 28 and 35percent respectively. Quite strikingly, it is Bangladeshand not Nepal (where reforms have ostensibly beenthe slowest) which brings up the rear in terms of thisstatistic in all sectors except the domestic one.

The other important reason for not makingcomplaints is the lack of hope from the system. Morethan one-third of the non-complainants said that lackof hope was the main reason for not making anycomplaints. Most of them offered the followingarguments:

• Time consuming and overly tedious procedures(West Bengal)

Figure 10: Complaint Registering Trend among Consumer Categories

Figure 11: Percentage Share of Respondents Stating‘No Need to Complain’


• Past complaints failing to get a positive reaction.(Rajasthan)

• No hope of getting the problem redressed(Bangladesh)

• Corruption and poor response of the utility(Nepal)

The details on the relative sizes of consumercategories associated with ‘No hope from the system’as a reason for not complaining are given in Figure12.

It is shown in Figure 12 that among all industry-territory combinations the percentage of non-complainants identifying ‘No hope from the system’as a reason for not makingcomplaints is the highest in theindustry sector in West Bengalwhich ironically is the leaderalso in terms of ‘no need tocomplain’ as a reason.Following industry in WestBengal at the top, in terms of thisstatistic which reflects poorly onthe system, are the domestic andcommercial sectors in Nepal andthe industrial sector inRajasthan. The lowest figure isobserved in the case of the domestic sector in WestBengal and immediately above it are the industrialand commercial sectors in Bangladesh.

For the most part, the above results do not reveal anyclear tendency/trend – the relative positions of statesvary across sectors. The only unambiguous result thatemerges is that Bangladesh shows the lowestincidence of this ‘negative’ statistic in all sectorsexcept the domestic one. This is a positive reflectionon the utility as well as the redressal mechanism inBangladesh. Lessons from Bangladesh’s experiencein this regard might be useful for the other projectregions.

The high figures corresponding to this statistic revealthat the existing complaint redressal mechanismneeds a lot of improvement to make it consumerfriendly.

Awareness on Reforms and Regulation

A lot of government initiatives have been taken invarious project territories. As stated in Section I, apartfrom unbundling of the integrated utilities,independent regulatory agencies have beenconstituted to regulate the power sector in

Bangladesh, Rajasthan andWest Bengal. In Nepal, apartfrom the Tariff Commission,some initiatives have beenimplemented to provide a moreautonomous status to the NepalElectricity Authority. A draftElectricity Reform Bill is underdiscussion in the country.Further, policy amendmentshave been made to attractmore private investment in thesector.

However, most of the respondents replied that theywere not aware of the reform process in their territory(Figure 13).

Apart from lack of efforts by the government or theregulatory body to enhance awareness, poorconsumer outcomes are also a major reason for thisdeficiency. Over the reform period, there was nosignificant improvement in the quality of service oraccess to it.

The survey results also indicate that education has apositive impact on awareness (see Figure 14). InBangladesh, the awareness level among therespondents is the lowest for each level of educationwhile in Rajasthan it is by far the highest. This

Figure 12: Percentage Share of Respondents Stating'No Hope from the System'

Figure 13: Percentage Share of Respondent who are Aware of Reforms


probably implies that the regulator/government/civil society through organisations (like CUTS) hasbeen more pro-active in Rajasthan than in the otherproject regions in building awareness levels.

It is shown in Figure 15 that on an average, non-connected households as well as agriculturalconsumers are less aware than commercial andindustrial consumers. The only exception to thisgeneral trend is Nepal.

Some activities can be initiatedto shore up the currently poorawareness levels. Respondentswere asked to choose amongoptions such as workshops,grassroots meetings, circulationof handouts, newspaper articles,use of mass media etc. Overall,more than one-third of the totalrespondents chose all thesemethods as viable means forraising awareness. Howeverwithin these means, grassrootsmeetings and workshopsfollowed by newspaper articlesand handouts find favour

among most respondents(Figure 16).

The survey results thereforepoint to the usefulness ofgrassroots interface meetings inbuilding awareness and relatedcapacity under the RESAproject. Most of the respondentshave also conveyed interest inattending training programmesand grassroots meetings underthe project.

Consumer Participation in Regulatory Process

As per provisions in the respective statutes, it ismandatory for regulatory bodies to ensure adequateconsumer participation in the decision makingprocess. Consumer views need to be taken into

account while framingdecisions on proposals underconsideration. This will not onlyensure transparency in thesystem but also help in holdingthe regulators as well as utilitiesaccountable for their decisionsand performance.

Regarding whether consumersshould be consulted at all inpolicy formulation andregulatory decision-making,about 98-99 percent

respondents felt they should be consulted.

In developed countries, the office of public advocate(OPA) has been constituted to protect the interests ofconsumers. In India, Bangladesh and Nepal there isa lack of such provisions. Only a few state ERCs suchas Karnataka and Andhra Pradesh have appointed

Figure 15: Relationship between Consumer Category andAwareness on Reforms

Figure 16: Effective Means to Create Awareness among Consumers

Figure 14: Relationship between Level of Education andAwareness about Reforms


consumer representatives advocates to these offices.In Nepal, there is a provision for the consumernominee appointed on the board to take policydecisions. However, in reality, this provision has notbeen implemented effectively. In Bangladesh, BERChas just started implementing a participatorymechanism.

The respondents were also asked to identifyimportant issues on which consumers should beconsulted. The responses of consumers are tabulatedin Figure 17.

More than 80 percent of the respondents in eachterritory stated that the tariff-making process is animportant issue for consumer consultation. It isfollowed by the issue of enforcement of laws.Licensing and other governance regulation have beenassigned lower priority. Interestingly, in Bangladesh,hardly any respondents have suggested that ‘rulesfor governing electricity companies’ are also animportant area for public consultation. Thisobservation may be a result of lack of awarenessamong consumers as its domain includes importantregulations related to quality ofservice, consumer grievanceredressal mechanism etc., all ofwhich affect consumer interestsat large.

Formulation of policyguidelines is an important partof governance. As perprovisions of relevant Acts,governments are authorised toissue policy guidelines fromtime to time. About more than50 percent of the respondentssuggested consultingconsumers on this matter.

Further, consumers were also asked to shed light oneffective methods that could be used by regulatoryagencies for consumer consultation. Respondentfeedback on this issue is captured in Figure 18.

From the figure it can be inferred that public hearingsare the most effective means of consumerparticipation. More than 80 percent of the respondentssuggested holding public hearings to protectconsumer interest. Consumers preferred this to othermeans including submission of written comments tothe commission on proposals under consideration

probably because they werelacking in capacity needed foreffective use of the lattermechanism. Other modesdeemed effective by consumersare the appointment ofconsumer advocates andconsumer representatives.

In India, all regulatorycommissions hold publichearings on most importantissues relating to regulation ofthe power sector includingLicensing, Annual RevenueRequirement (ARR), tariff

application, quality of service standards, complianceregulations etc. However, WBERC has recentlystopped public hearings on ARR and tariff-relatedmatters whereas respondents to the mentionedsurvey have identified ‘tariffs’ as the most importantissue on which consumers should be consulted.Moreover, according to them, public hearings are themost suitable method for consumer consultation.Thus, the WBERC decision should be reversed andnot replicated elsewhere. Instead all regulatory bodies

Figure 17: Important Issues for Consumer Consultation

Figure 18: Means to Ensure Effective Consumer Participation/Protection


should give due importance to public hearings andthe associated capacity of CSOs/consumers toparticipate effectively in the decision making process.

In Bangladesh, the BERC has issued its first tarifforder for the bulk supply business. In the proposal,the generation companies had requested a 40-50percent tariff hike. BERC provided an opportunity toall stakeholders to comment on the proposal. A publichearing was also held to take note of consumer’sviews. Ultimately, the Commission allowed only a16 percent hike in the bulk supply tariff which wasconsiderably more protective of consumer intereststhan the proposal made by the generation companies.Thus, the consumers have found a very usefulplatform to comment on tariffs, question theperformance and motives of licensees and presenttheir own views.

Out of the surveyed consumers, few respondentsactually participated in the policy and regulatoryprocess. Most of the respondents were not even awareof the process followed in decision making. Thepercentage of respondents who actually participatedin the regulatory-decision making process is given inTable 3.

Table 3 reveals that in Bangladesh only 23respondents (3.29 percent of the total) hadparticipated in either policy formulation or theregulatory decision making process.

Therefore, there is a need to build the capacity ofconsumers/CSOs to participate effectively in thedecision making process. Government as well asregulatory bodies should take the lead in ensuringadequate consumer participation in the process. Itincludes wide dissemination of the public noticeissued for comments and building capacity ofconsumers by organising training programmes,workshops, seminars etc.

4. ConclusionDespite the fact the electricity is crucial for rapideconomic development, the availability of electricityis not adequate in the project territories. In fact, theper capita consumption levels in Bangladesh andNepal are among the lowest in the world. Therespective governments have recognised that it wouldnot be possible to fulfil the growing need for powerwithout the help of the private sector. At the sametime it has also been recognised that privateinvestment will not occur unless reforms are initiated.

Reforms have been started in India, Bangladesh andNepal to promote economic efficiency andcompetition in the sector. Apart from the unbundlingof the integrated power utilities, constitution ofindependent regulatory bodies is in process. In India,including West Bengal and Rajasthan, SERCs havebeen established to regulate the generation and T&Dbusiness at the state level. Further, CERC has beenempowered to regulate inter-state transactions inpower. Important matters such as tariff, licensing,and quality of service standards have been kept underthe jurisdiction of these ERCs.

The Bangladesh Energy Regulatory Commission(BERC) has also been constituted. Otherthan electricity, oil, coal and gas are otherimportant areas regulated by this body.Various important functions such as tarifffixation, licensing, investment regulationetc. have been assigned to BERC. Capacityshortage among others is a major challengebefore BERC.

Nepal is also on the way to reforms. A tariffcommission has been established to fix electricitytariffs. A draft electricity reforms bill is also underconsideration. Unbundling and open access havebeen proposed as key strategies for promoting privateinvestment in the sector.

In the new era of reforms, regulatory bodies arerequired to function in a transparent and accountablemanner. The statutes envisage active consumerparticipation in the decision making process. To fulfilthis requirement, regulators need to hold publichearings and open consultations to seek the views ofconsumers on the proposals under consideration.However, it has been revealed from the baselineconsumer survey that most consumers are unaware

Table 3: Respondents Participated in Regulatory orPolicymaking Process

Bangladesh Nepal Rajasthan WestBengal

Respondents 23 10 01 05participated

Percentage in total 3.29 1.43 0.15 0.71


of the regulatory decision making process. Out of thetargeted respondents, hardly anyone haveparticipated in this process. Moreover, in almost allcases such as Bangladesh, very few were aware ofthe reforms.

Though with reforms, some initiatives have beentaken to improve the quality of the complaintredressal mechanism, consumers are still not satisfiedwith the existing system. Most of the consumers saidthat they had never registered complaints with theutilities. For example, in Nepal only 12 percent ofconnected respondents (those with electricityconnections) have ever registered complaints. ‘Poorhope from the system’, among others, is an importantreason for not making complaints. Therefore, there isan urgent need to make the redressal mechanism moreconsumer friendly.

Respondents were also requested to identify the majorproblems associated with the power sector. A majorityidentified high tariffs, poor quality of service, powerthefts etc. as critical problems. In rural areas, longhour power cuts were also reported as a majorproblem.

One of the primary objectives of reforms is theprovision of improved quality of service at affordablerates. This objective is still a dream for consumers inthe project regions and lot of work needs to be doneby governments, regulatory bodies and utilities in thisregard with CSOs inducing and motivating them todo so. About half of the household population stilldoes not have access to electricity in India as well asBangladesh. In Nepal, the status of rural householdaccess is very poor.

One positive outcome of the survey which was carriedout as a part of the RESA project is the interestconveyed by consumers to know more about theregulatory decision making process and complaintredressal mechanism. Almost all of them expressedthe desire to participate in the training programme orawareness meetings conducted under this project.

It is clear from the analysis that despite opportunitiesfor consumers, public participation has not beeneffective in many cases. The poor capacity ofconsumers or CSOs to take up these issues is probablyto blame in this regard. Another important reasonmight be the apathy of government as well asregulatory bodies or even their ignorance aboutconsumer needs. Consumers should be providedtraining and financial assistance by the governmentand regulatory bodies to effectively participate inpublic hearings. Taking into account the policychanges in project territories and the scenarios at thegrassroots, the following recommendations are inorder.

• The reform process needs to be made consumercentric. Presently, most of the consumers are notaware of reforms. Proper support from consumersis a must for timely implementation of the reformagenda. Therefore, the government should activelyengage consumers in the reform process.

• Complaint redressal mechanisms are not in asatisfactory state and need to be made moreconsumer-friendly through efforts from the utilitiesas well as regulatory bodies.

• Most of the consumers are not aware of thefunctioning of independent regulatory agencies.The government as well as regulatory bodiesshould take pro-active steps to create moreawareness on the reform and regulatory process.

• Public participation has not been effective in mostof the cases. Lack of required capacity amongconsumers is the main reason for poorparticipation. Regulatory bodies as well asgovernments should organise seminars,workshops, training programmes etc. to developthe capacity of consumers.

• Power theft and energy conservation are majorconsumer priorities. Support from consumers isneeded to reduce power theft and the governmentshould seek help from consumers in this regard.

• The government as well as utilities shouldmotivate consumers to save energy. Some financialincentives for conserving power and purchasingenergy efficient equipment might be needed.

Proceedings at theNational Reference

Group Meeting - Phase Iin Dhaka, Bangaldesh,

2008

a

Opening Session at theProject Launch Meetingin Kolkata, West Bengal,India, 2008

a

Glimpses of the Project

Participants during theTerritorial TrainingProgramme in Kolkata,West Bengal, India,2008

a

Participants during theTerritorial Training

Programme in Jaipur,Rajasthan, India, 2008

a

Participants during theTerritorial TrainingProgramme inNagarkot, Nepal, 2008

a

Participants duringthe Grassroots

Interface Meeting -Phase I in Udaipur,

Rajasthan, India2008

a

Participants during theMid Term Review

Meeting in Jaipur,Rajasthan, India, 2009

a

Pradeep S. Mehta,CUTS International andDag Larsson, NORADduring the Mid TermReview Meeting inJaipur, Rajasthan,India, 2009

a

Proceedings at theGrassroots InterfaceMeeting - Phase II inComilla District,Bangaldesh, 2009

a

Participants during theNational AdvocacySeminar in Dhaka,Bangladesh, 2009

a

Proceedings duringthe NationalAdvocacy Seminar inKathmandu, Nepal,2009

a

Opening Session at theNational AdvocacySeminar in Jaipur,

Rajasthan, India, 2009

a


Chapter 1

Power Sector Reformsin Bangladesh

1. BackgroundHistorically in Bangladesh, the government has beensolely responsible for almost every function in thesector including generation, transmission anddistribution. As a strategy to accelerate development,governments have been investing hugely in thissector. Over the decades, though some significantachievements have been made particularly inexpansion of the grid networks and productioncapacities, far more remains to be done. Increase inper capita consumption of electricity and improvingavailability and quality of services are among theimmediate priorities of policy makers.

With a view to achieve social objectives, the electricityservices to certain categories of consumers have beenprovided at highly subsidised rates. Very littleattention has been given to cost-recovery and deficitpartly funded through state finances and littlepremium on industry. Over the years, the sector hasgone from bad to worse and availability and qualityof services has been constantly deteriorating. Cash-starved government owned utilities have not been ableto recover their operating costs and the businessmodel to attract fresh investments. Poor managementand large operational losses, including pilferages,transmission and distribution losses made the sectorun-viable and no incentives for improvements andprivate sector participation have been provided. Thishas led to significant commercial losses especially tothe industry.

Production and distribution of electricity being ahighly cost-intensive activity maintaining a balancebetween social objectives and commercial viabilityassumes significance. The long-term interests ofconsumers are being compromised to achieve gainsin the short term, which at times are motivatedpolitically. The situation has been similar across allSouth Asian countries.

Realising the growing gap between the demand &supply and governments’ inability to fund the entirerequirements, the electricity sector was liberalisedand opened to the private sector in Bangladeshfollowing the precedent set by other countries inSouth Asia. Independent regulatory agencies wereset up to facilitate a consistent and enablingregulatory environment. One importantresponsibilities vested with these regulatory agencieswas to maintain a balance amongst stakeholdersinterests (e.g. consumers, producers/sellers) and toensure development of the sector to attain efficiencyand competitiveness.

Another significant benefit envisaged for the settingup independent regulatory commissions was to bringin clarity about the roles that various actors wouldhave in the sector. As per the new arrangement,government was supposed to confine itself to settingout a broad policy framework and facilitatingeffective governance in the sector. The regulatoryagencies were mandated to perform day-to-dayactivities in accordance with the policy objectivesformulated by the government. The government isexpected to maintain an arm length distance withthe regulator and not influence their regulatorydecisions. The regulatory agencies amongst severalothers are vested with the responsibility to promotecompetition, and operational efficiencies, and tomake the processes transparent and participatory.

In South Asia, independent regulatory commissionshave been set up in India and Bangladesh, whileNepal is on the way to establish an independentregulatory commission. In Bangladesh, the regulatorycommission is not responsible for electricity only, buthas a much wider domain covering the entire energysector. The Commission has two broad objectives:• To frame rules and regulations to ensure

transparency in management and operations as


well as tariff determination in electricity, gas andpetroleum sectors.

• To protect consumer and industry interest andpromote competition.

The following are the major functions of the BERC.• Issue, cancel, amend and determine conditions of

licensees.• Determine tariff safety enhancement.• Frame codes and standards and enforce those to

ensure quality of service.• Resolve disputes between licensees and

consumers and refer those to arbitration ifnecessary.

• Advise the government regarding electricitygeneration, transmission, marketing, supplydistribution and storage of energy, protectconsumer and industry interest and promotecompetition.

1.1 Overview of Electricity Reforms in Bangladesh

Before Independence, private sector generation anddistribution was confined to a few urban areas. Afterindependence, the State took over the responsibilityof all the three major functions of electricity supplyand integrated them into one state monopoly, theerstwhile Water and Power Development Authority(WAPDA) in Pakistan period which latermetamorphosed into the Bangladesh PowerDevelopment Board (BPDB).

Though BPDB has been in charge of generation,transmission, and distribution of electricity, thesefunctions are technically separable and separate.BPDB’s situation is not unique. State monopolies inpower supply from generation to distribution havebeen the practice practically all over the world. Theorganisational structure of the electricity sector inBangladesh around the 1990s consisted of a verticallyintegrated system with the Power Division of theMinistry of Power, Energy and Mineral Resources atthe apex with BPDB in charge of all generation,transmission and distribution with one exception,as explained above.

Reforms in the electricity sector of Bangladesh startedway back in 1977 although initially these wereneither planned nor comprehensive with the creationof the Rural Electrification Board (REB), which isclaimed to be one of the major successes in the sector.Under the REB, 70 large electric cooperatives calledthe Palli Bidyut Samities were established countrywidethrough which electricity was supplied to 7 millionconsumers out of the country’s 9.7 million up to 2006.The interventions of the REB also had a significant

positive impact on poverty reduction and socialbenefits in rural areas.

Since the early 1990s, unbundling of the electricitysector started. The first attempt was to create theDhaka Electricity Supply Authority (DESA) to managethe supply of electricity in the capital city in a moreefficient way. Unfortunately, this initiative did notperform as expected.

Officially, reforms in the power sector started in 1993when a high powered inter-ministerial committee onPower Sector Reform in Bangladesh (PSRB) wasconstituted. The committee came up with three majorrecommendations:• unbundling of the sector according to functional

lines;• corporatisation of sector entities; and• establishment of an independent regulatory

commission.

The Power Cell was created under the EnergyMinistry in 1995 to steer power sector reforms andpromote private power development. Two companieswere created in 1996: the Power Grid Company ofBangladesh Limited (PGCB) and the Dhaka ElectricitySupply Company Limited (DESCO).

A number of policies have been adopted in the last10-12 years. The National Energy Policy was adoptedin 1996 with emphasis on sector unbundling, privatesector participation and establishment of an EnergyRegulatory Commission. In the same year, the PrivateSector Power Generation Policy of Bangladesh wasadopted. Two years later the Policy Guidelines forSmall Power Plants (SPP) were approved.Subsequently, the Vision Statement and PolicyStatement on Power Sector Reforms were brought outin June 2000. In 2002, the Ashuganj Power Station,one of the major power generating plants in thecountry, was corporatised.

In 2003, the Energy Regulatory Commission Act 2003was enacted. In the same year two more importantpolicy measures were implemented: creation of theWest Zone Power Distribution Company (WZPDC) andestablishment of Electricity Generation Company ofBangladesh (EGCB). Following the Act in 2003, theBangladesh Energy Regulatory Commission wasestablished next year. In the same year, the BangladeshPower Development Board (BPDB) was granted thestatus of a holding company. In 2006, yet anothercompany named Dhaka Power DistributionCompany Limited (DPDC) was incorporated. In thesame year, policy guidelines were laid down for powerpurchase from captive power plants (CPPs). Although


some progresses has been made over the last twodecades in the power sector of the country, the overallsituation of the sector still remains poor.

To achieve the goal of providing electricity to all bythe year 2020, the power sector of the country has toadd 14,525 MW to its generation capacity. This ofcourse will be a daunting task given the current statusas presented above. Figure 19 presents requiredaddition to generation capacity of the country overtime up to 2020.

Overall, Bangladesh has not experienced a very stableand sound political situation since its independence.Regimes have been lacking in transparency andinclusiveness.

Although most of the reform initiatives have beenundertaken during democratic regimes after 1991, theeffectiveness of reforms and the extent of people’sparticipation have not been very positive. Allegationsof corruption in the electricity have come to the forein reviewing of reforms. The above evidence indicatesthat political will for meaningfulelectricity reforms has always beenlacking.

2. Main Findings of the BaselineConsumer Survey

2.1 Background and SurveyMethodology

ScopeA baseline consumer survey wasundertaken in 13 selected districts:Gaibandha, Nawabganj, Rajshahi,Sirajganj, Gazipur, Meherpur, Jessore,Khulna, Barisal, Bhola, Comilla,Khagrachhari, Cox’s Bazar to gauge thelevel of understanding and awareness of

consumers/users regadring the scope for theirengagement in the process of electricity reforms. Atotal of 701 respondents were sampled for survey(Figure 30).

Methodology• One person, preferably head of the family or

another in a similar capacity, from each householdwas interviewed with the help of a questionnaire.

• The survey tried to target consumers who wereinterested, willing to join project activities and

available later for the finalconsumer survey.• To maintain quality, check-back visits to review the filledup questionnaires wereorganised. The filled upquestionnaires were finalisedonly after the nodal person wasfully satisfied.• In order to identify andaddress specific genderconcerns, attempts were madeto ensure adequaterepresentation of females.

2.2 Background Characteristics of the Respondents

A review of respondent education levels (see Figure20) reveals a mixed profile – while 10 percent of therespondents were graduates, as many as 26 percentwere not even educated up to the primary level. Theeducation profile of respondents thus providessubstantial scope for awareness generation.

The composition of the sample in terms of consumercategories is fairly representative of the actual

Figure 19: Development Plan: Installed Capacity

Figure 20: Education Profile of Respondents


population of consumers (Figure 21). Note thatdomestic and agricultural consumers dominate,accounting for 82 percent of the sample.

An overwhelming majority (87 percent) of therespondents out of 701 respondents had access toelectricity. This section should be given specialattention in the reforms and their legitimate concernsshould not go unheard.

Out of the respondents withoutaccess to electricity as many as62 percent attributed the absenceof access to lack of affordability,25 percent to the absence ofinfrastructure required for anew connection and 21 percentto other reasons (Table 4).Interestingly, 10 percent of therespondents having noelectricity connection did notthink that electricity connectionswere useful for them.

2.3 Quality of Electricity SupplyA number of dimensions of the quality of electricitysupply were investigated in the baseline survey. The

dimensions (issues) includedproblems in electricity supply,frequency and durations ofoutages, and sufficiency ofvoltage.

In response to the questionrelated to problems in electricityconsumption, inadequatesupply of power, poor meteringand billing, high electricitytariffs and poor quality ofsupply were the mostcommonly identified problemsfollowed by power theft (Figure23). Thus, projects such as RESAwhich empower consumers to

access better facilities and service through capacitybuilding seem to be the need of the hour.

Further analysis into the problems reveals interestingresults. The duration of electricity outages (loadshedding) reveals an extremely dim picture of thequality of service. Close to 60 percent of therespondents did not have access to electricity for morethan half of the day (Figure 24).

Figure 21: Sample Representation of Categories ofElectricity Consumers

Figure 22: Proportion of ElectricityConsumers among Respondents

Table 4: Incidence of Reasons for not Applyingfor Electricity Connection

Reason for No Percentage ofConnection respondents not

having connection

Too expensive 62

Absence of infrastructure 25

Not useful 10

Other 21

Figure 23: Problems Faced by the Electricity Consumers


2.4 Handling of Complaints

Figure 25 and 29 reflects the ineffectiveness of thepresent grievance redressal mechanism. As 72 percentsaid that they had never lodged a complaint (Figure25) and as many as 56 percent of non-complainantsattributed such passiveness to the lack of hope ofgetting redressal (Table 9). Only around 33 percentof non-complainants attributed their not complainingto the lack of a reason.

The most common complaints are regardingdisconnection, fluctuation of voltages andfrequent outages (Table 6). Almost two thirdsof the complaints are made to the offices ofthe Rural Electrification Board (REB).Another one-third of the complaints go to thezonal offices (Table 7). However, almost halfof the electricity consumers are not happywith the way the complaints are handled(Table 8). This is the reason why only a smallpercentage of consumers complain to theauthorities.

2.5 Awareness of the Consumers RegardingElectricity ReformsThe baseline consumer survey reveals a very low levelof awareness regarding electricity reforms in thecountry. Only 2 percent of the respondents knew

about the reforms adopted in Bangladesh(Figure 26). This reflects that the RESA projectis being launched at the right time and wouldcreate a platform to disseminate informationto the consumers about the implementationof reforms in Bangladesh.

83 percent of the respondents suggested theorganisation of workshops/seminars while79 percent felt that grassroots meetings wouldbe effective. Use of mass media, circulation ofhandouts/booklets, and publication ofnewspaper articles were considered goodsuggestions by a large proportion ofconsumers. Only 5 percent of the respondents,suggested other means to raise awareness,such as organisation of public lectures;forming of electricity consumer groups, etc.(Figure 27).

Figure 24: Sufficiency of Voltage

Table 5: Duration of Load Shedding Faced bythe Electricity Consumers

Duration of Number of PercentageLoad Shedding consumers

Up to 4 hours 63 10.3

4 to 6 hours 7 1.1

6 to 12 hours 204 33.4

More than 12 hours 336 55.1

Total 610 100

Table 6: Types of Complaints made by theElectricity Consumers

Type of Complaint Number of PercentageConsumersmaking complaints

Meter change 13 7.8

Excess billing 16 9.6

Disconnection 52 31.3

Fluctuation of voltage 25 15.1

Excess meter reading 13 7.8

Phase problem 13 7.8

Frequent outages 21 12.7

Other problems 13 7.9

Total 166 100

Figure 25: Have you Ever Registered a ComplaintRelated to Electricity?

Yes28%

No72%


2.6 Consumer Participation in the ElectricityReforms ProcessAll the respondents of the baseline consumer surveywere of the opinion that consumers should beconsulted by the government while formulatingpolicy and regulations on electricity. More than 81percent of respondents opined that consumers shouldbe consulted in enforcement of law and more than 76percent felt that they should be consulted in the tariffformulation process. The other areas of consultationincluded formulation of policy guidelines and issuinglicenses (Table 10).

The respondents of the baseline consumer surveyprovided suggestions regarding desirable methodsof public consultation from a list provided to them.Most respondents opined that consultations shouldbe done through public hearings and writtencomments. A few other respondents (69 percent)suggested appointment of consumer representativesand consumer advocates (Table 11).

However, till date the participation of electricityconsumers in the regulatory decision making hasbeen almost nil. Only 3 percent of the respondentswere able to remember engaging in some sort ofparticipation, but were not sure of the details (Figure28).

Almost all the respondents were of the opinion thatcapacity building on issues relevant to electricityreforms were required to enable them to comprehendthe issues and participate effectively in the electricityreform process (Figure 29).

Table 7: Place of Making Complaints

Place of Complaints Number of PercentComplaint

Makers

Zonal office 58 34.9

REB office 104 62.7

Other 4 2.4

Total 166 100

Table 8: Satisfaction of the ElectricityConsumers in the Result of

Complaint Handling

Satisfaction Number of PercentageComplaint Makers

Satisfied 84 50.9

Non satisfied 82 49.1

Table 9: Reasons for Not Complaining

Reason for Not Complaining Percentage ofConsumers notComplaining

No reason to complain 33

No chance of getting redressal 56

Time consuming process 26

Other 2

Figure 26: Percentage of Consumers Aware of theOngoing Electricity Reform Process?

Yes2 %

No98%


Figure 27: Suggestions to Enhance Consumer Awareness Level

Figure 28: Have you Participated in Policy andRegulatory Decision-making Process?

Figure 29: Would you like to Attend a TrainingProgramme on Electricity Reforms Issues?

Table 11: Possible Means of Consultation

Possible Means of Consultation Percentage

Public hearing 79

Written comments 66

Consumer representatives 37

Consumer advocates 32

Table 10: Important Areas of Consultationwith Electricity Consumers

Areas of Consultation Percentage

Enforcement of laws 81

Formulating policy guidelines 46

Issuing license 24

Tariff fixing process 76

Yes3 %

No97%

Yes3 %

No97%


3. Role of Consumers and CSOs inElectricity Reforms in BangladeshThe process of reforms in electricity in Bangladesh sofar has been highly bureaucratic and devoid ofconsumer participation and consultation. The reformsinitiatives described above have been highlycentralised and devoid of consumer consultation andparticipation. Even the parliamentarians have beenbypassed in most cases as hardly any of the policieshave been raised for discussion in the parliament.

The Bangladesh Energy Regulatory Commission Act2003 has introduced some provisions for consumerparticipation in the regulatory processes to be carriedout by the Commission. In fact, one of the main thrustof the Act is to protect the interests of consumers inenergy in general and electricity in particular. Theprovisions such as the one in regard to publichearings, if implemented properly, can really ensureconsumer participation in electricity regulation.However, till date implementation has been poor. Thequality of public hearings organised by the BERC hasalways been doubted. Thus, ensuring consumerparticipation in the regulatory process still remainsa challenge which needs to be addressed urgently.

Bangladesh’s civil society continues to grow andbecome more vocal on a range of issues. On electricityissues however, Bangladesh has less of a history ofpublic participation, to the detriment of consumers.In the province of Kansat, several consumers whowere protesting electricity quality and prices werekilled by the police in early 2006. To make matters

worse, the electricity supply situation continues todeteriorate, averaging at least several hours ofblackouts a day. Thus, it has become even moreimportant for consumer groups to become involvedin electricity issues. The RESA Project should help inthis regard.

4. Rights and Responsibilities of theElectricity ConsumersConsumers have the right to energy in terms ofaccessibility, affordability, continuity andsustainability. The consumer movement has longrecognized that energy is of fundamental importanceto public welfare and the well-being of consumersworldwide. The satisfaction of basic needs is one ofthe basic rights of consumers. The provisions ofenergy, sustainable consumption and its impact onthe future are key challenges being faced byBangladesh especially for poverty alleviations. At thesame time, there is a need to develop energy serviceswhich are financially, environmentally sustainableand within the limits of consumer affordability.

A major problem threatening the sustainability of thesector is the high incidence of power theft. Power theftleads to violation of rights of the electricity consumersas it results in deprivation of genuine consumers fromproper supply of electricity. The electricity consumerscame up with a wide range of opinions regardingpower theft. The different categories of opinions arepresented below:

Issue Opinions

Judgment • Power theft is an offense or a crime; it should be stopped anyway.• Power theft creates social tensions and economic problems.

Causes of power theft • A fixed line rent is one of the causes of power theft.• If power was available to all, there would be no theft.

Who are responsible? • Electricity department has the overall responsibility.• People having technical knowledge regarding electricity supply are the

ones who are involved.Recommendations • Awareness of the masses is required.

· Mobile courts should be run to stop theft.• A social movement is required.• Administrative measures are essential.• Effective law enforcement is the need of the hour.• Those involved in power thefts should be punished.• Capacity of consumers needs to be enhanced through meetings, trainings

and workshops.• Consumers have to launch strong protest against power theft.• Authorities need to be notified about power thefts on a regular basis.


Alongwith rights, energy (electricity) consumers havethe following responsibilities according to thosesurveyed:

• To be alert and question the price & quality ofelectricity being supplied.

• To assert and act to ensure that they get a fairdeal. As long as consumers remain passive, theywill continue to be exploited.

• To be aware of the impact of consumption ofelectricity on other.

• To understand the environmental consequencesof electricity consumption. The consumers shouldrecognise their individual and socialresponsibility to conserve natural resources anduse renewable energy.

There are different ways through which theconsumers can be made aware about their rights andresponsibilities. The following are some of those.

• Through media: media people need to be orientedproperly and consumer organisations shouldprovide relevant information to the media.

• Arranging seminars, symposiums, dialogues,workshop etc. ensuring participation byconsumers.

• Distribution of educational materials such aspamphlets, leaflets, posters etc.

• Incorporating consumerism in the educationalcurriculum alongwith discourse on rights andresponsibilities of all consumers including thoseconsuming electricity.

• Involving social actors, leaders (e.g. imams,priests, teachers, local governmentrepresentatives).

• Awareness building by BERC among consumers.

In light of the above, the RESA project hopefully isgoing to contribute significantly in terms ofdeveloping such an environment favourable forcapacity building to establish the rights of consumersand stimulate awareness of responsibilities. Theareas of intervention designed in the RESA projecttouch almost all the areas discussed above. Some ofthese interventions have been inspired by findings ofthe consumer baseline survey.

5. Conclusion and RecommendationsIt is evident from the discussion presented in thepaper that the reform process has made some progressthough much remains to be achieved. Unbundlinghas been accomplished to some extent with scope forfurther work. Some corporatisation has been achieved

although the pace has been rather slow. Althoughpolicies for promoting IPPs have been adopted but inreality hardly any progress has been made.

As noted, lack of autonomy, hesitant ownership ofreforms, lack of transparency and lack of publicconsultation appear to be the norms in the sector’sgovernance. Inspite of the reforms the outage situationhas deteriorated continuously over the past 3-4 years.Drying up of investment resources for both publicand private sources has been a major roadblock. Onthe distribution side, major system losses and lack ofreconciliation of metered imports and sales/exportsremain major technical problems.

As evident from the findings of the baseline survey,the level of awareness of the electricity consumers isvery poor and there has hardly been any participationof the consumers in the policies and reformsundertaken in the sector. Therefore, consumers’interests in the sector have hardly been protected.

Given this backdrop, the RESA project aims atenhancing capacity of the electricity consumersthrough CSOs so that the consumers and CSOs canparticipate effectively in the decision making andregulatory processes.

RecommendationsIn light of the situation described in this paper andthe issues raised, the following recommendations inregards to reforms and consumer participation hasbeen made:

• Strengthening the BERC to ensure effectiveparticipation of electricity consumers andprotection of their rights.

• Review of mechanism already existing within thecurrent regulatory system regarding consumerparticipation consisting tools such as publichearing.

• Need to build capacity of all stakeholders in thesector. However, utmost importance should begiven on developing the capacity of the electricityconsumers and CSOs working for establishingconsumer rights. Apart from NGOs and donors,the government, particularly the BERC shouldcome forward to expedite the process of capacitybuilding.


Figure 30: Map of Project Areas in Bangladesh


Chapter 2

Power Sector Reformsin Rajasthan

1. Electricity Reforms in Rajasthan

1.1 Why Reforms?Electricity is the engine of economic and even socialdevelopment. The biggest problem facing theelectricity sector of a developing country such as Indiais mismanagement and lack of commercial planning.The State Electricity Boards (SEBs) were constitutedunder the provisions of the Electricity Supply Act,1948, to discharge the functions of generation,transmission and distribution (T&D) at the state level.When the state started to provide electricity in thepost- independence era, it felt compelled to cross-subsidise across classes of consumers. When positiveand negative net revenues from subsidising andsubsidised consumer categories did not cancel out,the financial losses of SEBs and consequently theirdependence on state governments increased. In otherwords, most of the SEBs incurred heavy financiallosses and became dependent on financial supportfrom their respective state governments.

The introduction of subsidies also made theelectricity market inefficient and there was lack ofincentive to perform with economic efficiency. Thisresulted in high T&D losses, skewed tariffs, poorquality of supply, weak and deteriorating T&Dnetwork and rapidly declining capability of stategovernments to provide budgetary support to thepower sector. States in India were characterised bymore or less similar conditions and Rajasthan wasno exception. Realisation of the need for urgent stepsto reinvigorate the sector led to reforms.

1.2 Reform Process

1.2.1 Pre-Reforms ScenarioIn the power sector, the government was the producer,distributor and financier, and enjoyed monopolycontrol of the sector. It set prices, decided uponproduction, rationed or cut power and determined

subsidies. In the Indian democratic set up, since thegovernment is formed politically, political factorsplayed a crucial role in all decisions which led tofurther deterioration in the situation. Though underthe provisions of the Electricity (Supply) Act, 1948,SEBs were constituted as autonomous bodies forperforming the electricity business independently,they fell prey to state level political compulsionswhich subsequently led to bankruptcy.

Like other SEBs in India, the Rajasthan StateElectricity Board (RSEB) was characterised byproblems of frequent service interruptions, highsystem losses, unexpected voltage and frequencyswings, restrictions on demand, poor cost recoveryand heavy commercial losses. Reforms and themobilisation of private investment thus becamenecessary.

1.2.2 Immediate Post-Reform ScenarioIn 1993, the Government of Rajasthan decided toreform its power sector with the objective of creatingconditions for sustainable development of the powersector and improving the efficiency and the qualityof service to consumers by allowing privateparticipation in the state power sector, particularlyin generation.

Box 3: Rajasthan’s Reforms Programme

• Enactment of the Rajasthan Power SectorReforms Act, 1999

• Establishment of an independent RajasthanElectricity Regulation Commission (RERC)

• Unbundling of the SEB and incorporatingseparate companies for generation,transmission and distribution functions


The loss-making Rajasthan State Electricity Board(RSEB) was divided into three independent electricitydistribution companies (discoms) — Jaipur VidyutVitaran Nigam, Jodhpur Vidyut Vitaran Nigam andAjmer Vidyut Vitaran Nigam, operating in the Jaipur,Jodhpur and Ajmer areas, respectively. Anindependent regulatory authority — the RajasthanElectricity Regulatory Commission (RERC) — wasestablished in December 1999 to oversee tariff-setting,and to monitor the quality of service delivery by thethree newly established distribution companies.RERC was empowered to issue transmission anddistribution licenses; to encourage competition; topromote transparency, efficiency and economy in theoperation and management of Rajasthan powerutilities; and to ensure a fair deal to the customers.

Subsequently, some other positive developments tookplace which are listed below:• Policy for Promoting Generation of Electricity

through Non-Conventional Energy Sources wasissued in 2004 to encourage the use of non-conventional energy sources such as solar andwind-based energy;

• Open Access Code to boost competition;• Captive Power Plants Policy;• Preparing for introduction of ‘Private Participation

in Distribution’ of electricity;• A massive Feeder Renovation Programme – the target

in 2008-09 was to cover all 8475 rural feeders andthus reduce T&D losses by 15 percent; and

• Increase in installed electricity generationcapacity.

1.2.3 Present Power ScenarioThe present scenario in Rajasthan can best bedescribed as ‘very poor’ and is characterised by largeand increasing financial burdens on utilities andinadequate and poor quality of power supply. Nomajor reform has taken place except the unbundlingof the electricity board. The distribution companiesare not working independently but continue to beunder the influence of political compulsions and thesame bureaucratic setup.

The tariff structure in Rajasthan is highly distorted.The price per unit changed from industry as well ascommercial users is very high as these subsidise otherconsumer categories. Apart from socio-economicconsiderations, political factors are responsible forthis skewed tariff structure. Poor financial health ofstate utilities due to huge T&D losses and power theftare a major roadblock to the development of thissector.

2. Consumer Awareness For Reform

2.1 The Baseline Consumer Survey

Under the CUTS initiated project entitled ‘CapacityBuilding on Electricity Reforms in Bangladesh, Nepaland India (RESA)’, a consumer perception surveywas undertaken in 10 select districts of Rajasthan –Banswara, Bikaner, Chittorgarh, Churu, Dholpur,Jhunjhunu, Kota, Sawai Madhopur, Sirohi andUdaipur – to gauge the level of understanding andawareness of consumers/users about the scope fortheir engagement in the process of electricity reformsand major problems faced by them. A sample of 700respondents comprising all categories of users wassurveyed.

2.1.1 Methodology• At least 60 percent of the total number of blocks in

each district was covered. From each selected blocka representative sub-sample was taken.

• One person, preferably head of the family oranother in a similar capacity, from each householdwas interviewed with the help of a questionnaire.

• The survey tried to target people who wereinterested, willing to join project activities andavailable later for the final survey.

• To maintain quality, check-back visits to reviewthe filled up questionnaires were organised. Thefilled up questionnaires were finalised only afterthe nodal person was fully satisfied.

• In order to identify and address specific genderconcerns, attempts were made to ensure adequaterepresentation of females.

2.2 Findings of Baseline Consumer Survey andField Research

A review of respondent education levels (Figure 31)reveals a mixed profile – while 25 percent of therespondents were graduates, as many as 28 percentwere not even educated up to the primary level. Theeducation profiles of respondents thus providesubstantial scope for awareness generation.

Figure 31: Education Profile of Respondents


The composition of the sample in terms of consumercategories is fairly representative of the actualpopulation of consumers (Figure 32). Note thatdomestic and agricultural consumers dominate,accounting for 81 percent of the sample.

Out of 700 respondents, only 2 percent did not haveaccess to electricity services (Figure 33) due to reasonsdescribed in Figure 34. This section should be givenspecial attention during reforms and their legitimateconcerns should not go unheard.

Out of the respondents without access to electricityas many as 53 percent attributed the absence of accessto lack of affordability, 13 percent to the absence ofinfrastructure required for a new connection and 33percent to other reasons. Given that lack ofaffordability is a major reason for non-access, thereform process should focus on special connectionschemes for the poor. Lack of action on the part of thegovernment and bureaucratic barriers to access bythe grassroots need to be addressed.

In response to the question related to problems inelectricity consumption, power theft was mostlycommonly identified as a problem followed byinadequate supply of power, poor metering andbilling, high electricity tariff and poor quality ofsupply (Figure 35). Thus, projects such as RESAwhich empower consumers to access better facilitiesand service through capacity building seem to be theneed of the hour.

The data in Figures 36 and 37 reflects theineffectiveness of the present grievance redressalmechanism. As Figure 36 reveals, 80 percent said thatthey had never lodged a complaint and as many as49 percent of non-complainants attributed suchpassiveness to the lack of hope of gettingredressal (Figure 37). Around 28 percent ofnon-complainants did not provide a reasonfor their not complaining.

Analysis of data reveals that most consumersare ignorant of the reform process (Figure 38).Thus, this project, apart from building thecapacity of consumers, aims to createconsumer awareness.

The data further reveals that a large numberof consumers are not aware of the existenceof the RERC and its role, functions andprocedures. There is an urgent need to createawareness about the need for promotingconsumer participation in deriving benefitsfrom existing institutions (Figure 39).

Figure 32: Relative Strength of Categories ofConsumers/Respondents Surveyed

Figure 33: Proportion of Respondents withAccess to Electricity

Figure 34: Incidence of Reasons for Not Applyingfor New Connection


When respondents were asked to providetheir perceptions on the state of awarenessof consumers, a large proportion (Figure 40)felt that consumers were not at all aware (33percent) while an even larger proportion feltthat they were not adequately aware (65percent).

76 percent of the respondents suggested theorganisation of workshops/seminars while75 percent felt that grassroots meetingswould be effective. Use of mass media,circulation of handouts/booklets, andpublication of newspaper articles wereconsidered good suggestions by a largeproportion of consumers. Only 8 percentsuggested other means to raise awareness.chas organisation of public lectures; formingelectricity consumer groups, etc. (Figure 41).

On being asked whether the consumer should beconsulted in the policy and regulatory decision-making process, 98 percent of the respondents gavean affirmative answer. This implies that consumerconsultation on these issues should be promoted morevigorously and effectively, thus justifying the mainobjective of the project (Figure 42).

Each respondent was asked to identify areas thatseemed important to him/her from the point ofconsultation. These perceptions are an importantinput into advocacy efforts to influence the agenda ofelectricity regulators regarding consultations (Figure43). Around 87 percent of respondents felt that tariffformulation was an important topic for consultationand only a slightly smaller proportion identified‘enforcement of laws’ as important. A substantial

proportion of respondents identified each ofthe candidate area as important apart from‘any other’.

Each respondent was asked to identifydesirable methods for public consultationfrom a given list (Figure 44). The most popularchoice was ‘public hearings’ (identified by90 percent of respondents as desirable)followed by the use of consumerrepresentatives, written comments and theuse of consumer advocates (52, 49 and 49percent respectively).

One of the respondents had participated inthe regulatory process (Figure 45). Thispresents an accurate picture of the level ofcurrent consumer participation in theregulatory process and thus highlights the

Figure 35: Incidence of Problems FacingElectricity Consumers

Figure 36: Proportion of Consumers WhoHave Ever Registered a Complaint

Related to Electricity

Figure 37: Consumer Incidence of Reasons for Not MakingAny Complaint


Figure 38: Proportion of Respondents Aware ofthe Ongoing Electricity Reform Process

Figure 39: Proportion of Respondents Aware ofthe Electricity Regulatory Commission

Figure 40: Respondent Perceptions AboutConsumer Awareness

Figure 41: Respondent Support for Alternative Suggestionsto Enhance Consumer Awareness


Figure 42: Proportion of Respondents Supporting Consultation ofConsumers in the Regulatory Decision Making Process

Figure 43: Proportion of Respondents Identifying EachGiven Area as Important for Consultation

Figure 44: Proportion of Respondents Identifying EachGiven Method as Desirable for Public Consultation

Figure 45: Proportion of Respondents thathave Ever Participated in the Regulatory

Decision Making Process?

Figure 46: Proportion of RespondentsWho Would Like to Attend a Training

Programme on Electricity Reforms Issues

No2%

Yes98%

Yes0.15%

No99.85%


need for promoting consumer consultation,simplification of the underlying process as well aswider dissemination of information pertaining to it.

Figure 46 reflects that most (94 percent) respondentswould definitely like to attend trainings, seminars,meetings etc. if such opportunities are provided. Theconsumers (6 percent) who conveyed anunwillingness to participate attributed it to paucityof time, occupational responsibilities orineffectiveness of such measures.

Thus, organising trainings/workshops on electricityrelated issues is an imperative and would help garnerconsumer support and participation in reforms.

2.3 Recommendations Emerging from the SurveyFindings

• Grievance redressal mechanism needs to be mademore proactive and responsive ;

• Awareness generation regarding the reformprocess, role of RERC, the consumer consultationprocess, and the grievance redressal mechanismis an imperative;

• Consumer participation in every field relating toelectricity reforms should be enhanced and morepublic hearings need to be organised;

• There is an urgent need to take definite steps tocurb power pilferage and improve quality ofservice; and

• Consumer consultation process should besimplified and more widely publicised.

3. Regulatory Decision Making andConsumer3.1 Role of Consumers in Regulatory DecisionMakingConsumer protection is a primary mandate forinfrastructure regulators. To fulfil this mandate,regulators must ensure effective consumerparticipation in the regulatory process. Dependingon how effectively regulators fulfil their mandate vis-à-vis consumers, the regulatory process benefits froma higher degree of consumer involvement. TheElectricity Act 2003 facilitates a more pro-active roleby consumers in protecting their interest in the sector.

Unfortunately, consumers have often been the mostneglected segment in the state owned and operatedpower sector. In the new regulatory and governanceprocess emerging in the post reform period,consumers are supposed to play a proactive role inpromoting their interest. This would go a long wayin achieving the basic objectives of economic reformand liberalisation — growth with equity.

Consumer participation in electricity regulation ishighly desirable because of the essential nature ofthe service, as well its crucial role in rapid economicdevelopment. Apart from household use, electricityis a basic input into agricultural, commercial andindustrial activities. Therefore, all consumers –domestic, agricultural, industrial and commercial –have a vital stake in the sector. Taking this intoaccount, the Electricity Act 2003 envisages effectiveconsumer participation in the regulatory decision-making process (Refer to Box 4).

Box 4: Consumer Protection: Key Provisions in the Electricity Act, 2003

Some of the major provisions pertaining to protection of consumer interests in the Act are:• Section 23, which, inter-alia, refers to issue of directions to licensees for promoting

competition• Section 42(6) which provides for appointment of an Ombudsman by the state commission.• Section 57(2) which makes a licensee liable to pay compensation for non-compliance

with the standards of performance to the person affected as may be determined by theregulatory commission

• Section 64(3) which refers to the procedure for issuing a tariff order after considering allsuggestions and objections received from the public

• Section 60 regarding avoidance of market domination• Section 61 regarding the factors which are to be kept in view in tariff determination. Sub-

section (c) thereof refers to encouragement of competition, efficiency, economical use ofresources, good performance and optimum investments


In the pre-reform phase, the participation of thegeneral public was almost non-existent, mainlybecause of the technical nature of related issues andlack of awareness among them. Similarly, thegrievance redressal mechanism involved complaintsonly to the nearest sub-station and frontline staff.People rarely approached higher authorities even ifthe frontline staff were not able to redress theirgrievances, especially in the rural areas. This state ofaffairs provided an opportunity for corruptionbecause bribery was a cheaper option than pursuingthe matter with higher authorities from whomredressal was also not assured. Utilities were mostlyunresponsive and insensitive.

The findings of the consumer base line consumersurvey conducted under the RESA project reveals that98 percent of respondents supported consumerconsultation in the policy and regulatory decisionmaking process (Figure 42). This emphasises theappropriateness of the project for enhancingeffectiveness of regulatory regimes in the electricitysector as it aims to build the capacity of consumers toparticipate in the regulatory process and that of civilsociety organisations (CSOs) for suitably empoweringthe former.

Pre-conditions that encourage private sectorinvestment are safety and adequate returns on suchinvestment. The attainment of these pre-conditionsrequires that all stakeholders, including consumers,understand their responsibilities/roles. It is expectedthat consumer participation will help in making thesystem more transparent and accountable. Extensiveefforts such as public hearings, posting ofinformation on the web, media outreach campaigns,etc are required to engage the relevant stakeholdersin the process of regulatory reforms.

3.2 Role of RERC in Promoting ConsumerParticipationThe Electricity Act 2003 requires that the ElectricityRegulatory Commissions (ERCs) invite consumers toparticipate in the decision making process and thattheir views are heard. Given the findings of the survey,there is a need for increase in consumer participationin electricity reforms and the regulatory process.

At the state level, the RERC has issued decisions onabout 200 important proposals, including annualrevenue requirement, tariff applications andlicensing, after inviting consumers to present theirviews. Public notices are published giving the salientfeatures of the proposals and mentioning the placeswhere consumers may view these documents. These

notices also specify the process and time forsubmitting comments to the RERC.

In spite of this opportunity available to consumers,their participation has not been adequate in manycases. Hence, the RERC has directed the distributioncompanies to ensure wide publicity of public notices.During the tariff formulation process for the AnnualRevenue Rate (ARR) for FY 2006-07, a copy of thepublic notice was circulated to consumers withelectricity billing statements. In spite of these efforts,only two consumers responded to the Commissionon the matter.

However, on certain occasions, a good response onbehalf of consumers has been seen. For example, inresponse to repeated public notices for the ARR andTariff Application for FY 2004-05, about 105consumers submitted comments to the Commission.The Commission considered all the submissionsmade on behalf of the consumers though many ofthese were submitted without following the properprocedure laid down for this purpose (Annual Report2004-05, RERC).

The baseline consumer survey reflects a sorry pictureof consumer participation in the regulatory process.One of the respondents out of a total of 700 hadparticipated in the regulatory process (Figure 45). Thisreveals a need to build awareness and capacity ofconsumers, especially in comprehending issuesrelated to effective participation in the process.

Consumers need adequate information on theregulatory system and procedures, and the skills toanalyse and interpret such information to provideappropriate responses. Relevant provisions in thestatutes and regulations do require RERC to take stepsto generate awareness on policy and regulatoryissues.

To benchmark this against a developed country case,it should be noted that most PUCs (Public UtilitiesCommission) in US brings out public involvementguides for their consumers. These guides containinformation to help consumers participate inCommission activities, and acquaint them with keyPUC personnel and publications. The Commissiondisseminates relevant information through pressreleases on important PUC decisions and activity factsheets as well as consumer bulletins on various PUCprogrammes and current utility issues. Copies of thesepublications are made available to the interestedpublic. Notices of tariff filings by regulated utilitiesto change a rate or service are also disseminated. The


Commission holds public meetings at a pre-announced location. It also sets time aside at eachmeeting for public comments during which, membersof the public can bring up any subject related to a rateor service regulated by the Commission, or commenton matters for Commission action. Consumerassistance organisations also represent consumersin matters before the PUC.

Few examples of consumer awareness generationinside India include:

• Madhya Pradesh Electricity RegulatoryCommission (MPERC), has involved NGOs onconsumer education and empowerment and isreported to have used the technique of street playsto spread information in the local language anddialect.

• The Uttar Pradesh Electricity RegulatoryCommission (UPERC) has engaged an NGO forconsumer education.

• The Jharkhand Electricity RegulatoryCommission (JSERC) has advertised through the‘Kya Aap Jante Hai?’ series to educate theconsumers about their rights and duties in termsof availing electricity supply from the SEB. As partof this initiative, the Commission periodicallypublishes information about facilities thatconsumers can avail of and the provisions laid bythe Commission for the betterment of the servicein the leading newspapers. Under this series, acase came to light wherein a village under theRanchi zone filed a petition before the Commissionagainst the JSEB (Jharkhand State ElectricityBoard) against its being denied connection despitefilling of the application as per the rules andpaying of the requisite amount. In response to thesame, electrification work was started in thevillage. JSERC has also started the Nukkad Natakconcept to create awareness in rural areas.

• Vernacular publications, web pages, web postingof information, consumer capacity building/awareness programmes etc. can be effective toolsfor ensuring better consumer participation in thereform/regulatory process and enhancingconsumer protection and welfare. The practiceadopted by TRAI to register Consumer AdvocacyGroups (CAGs) for building their capacity andawareness is also an effective strategy, which canbe considered by RERC. TRAI is also organisingtraining for CAGs by utilising the consumerwelfare fund created from license fee collections

and penalties imposed on utilities for violation ofregulations.

• The Uttarakhand Electricity RegulatoryCommission (UERC) has instructed utilities tohave display boards at all cash collection centres,and divisional and sub-divisional offices ofdistribution licensees so that awareness regardingkey regulations and consumer issues is createdThe Commission has conducted Jan Goshthies atvarious remote places to educate consumers abouttheir rights under the Commission’s Regulations.

• The website of Delhi Electricity RegulatoryCommission (DERC) is very useful for consumersand provides them relevant information rangingfrom FAQ on electronic metering to energyconservation and the grievance redressalmechanism. It is a good example of pro-activenessof an ERC. DERC also gets periodic ConsumerSatisfaction Surveys administered. It also holdstraining programmes for consumer awarenessand capacity building.

In order to involve rural consumers and increase theirawareness regarding reforms, the followingadditional and targeted steps should be undertakenby RERC:

• Involvement of the Panchayat in seminars andworkshops to foster effective participation by localinstitutions and thus evoke a positive responsetowards reforms;

• Production of a documentary film to capture bestpractices and benefits from reforms anddisseminate information;

• Generation of involvement by consumers invarious initiatives pertaining to QoS (Quality ofSupply) and billing related issues through camps;and

• Stimulating involvement of local CSOs byconducting local level activities pertaining togrievance redressal mechanism issues, etc.

However, there are a few other hurdles which limitthe capacity of consumers to participate in theregulatory decision making process. These includefinancial constraints, poor regulatory response,information asymmetry, absence of trainingprogrammes for related consumer groups, etc. Someproven tools that can be used are as follows:


• Creation of awareness about the reform process,issues involved and consumer rights andresponsibilities;

• Capacity building of network partners and otherCSOs;

• Sensitisation of relevant stakeholders such asutilities, politicians, media, consumers, block anddistrict administration officials and regulators;and

• Development of a mechanism to supportconsumer interventions in the regulatory processby establishing an Office of Public Advocate (OPA)within the regulatory body – for instance, theestablishment of the ‘Electricity ConsumersAdvocate Committee’, headed by a Retired HighCourt Judge, by the government of the NationalCapital Territory (NCT).

3.3 Grievance Redressal Mechanism

3.3.1 Setting up of ForumThe Electricity Act 2003 requires the distributionlicensees to set up a forum in accordance with theguidelines issued by the Commission for the redressalof consumer grievances. The RERC issued (Guidelinesfor Redressal of Grievances) Regulations, 2008 relatingto classification of complaints, setting up of forumsat different levels, and a time frame for redressal ofgrievances. These include:

• Every licensee in the state should have a“Grievance Redressal-cum-Settlement Forum” atits Corporate Office for the redressal of consumergrievances in accordance with the guidelinescontained in these regulations.

• The licensee may establish more than one suchforum for timely disposal of consumer grievances.

3.3.2 Jurisdiction of the Forum(1) Grievances of Non-monetary/General Nature• Divisional Forum – Grievance of LT supply

consumers of the division;• Circle (District) Forum – Grievance of HT supply

consumers of the circle; and• Corporate Forum – Grievance of EHT supply

consumers.

(2) Grievance of Monetary Nature• Sub-divisional Forum – Monetary limit of Rs

10,000/-;

• Divisional Forum – Monetary limit ofRs 25,000/-;

• Circle (District) Forum – Monetary limit of Rs3,00,000/-; and

• Corporate Forum – More than Rs 3,00,000/-.

3.3.3 Registration of Complaints/Grievances

• The licensee needs to make public its offices wherecomplaints can be made and registered.Complaints can be made orally in person, ontelephone or in writing to the duty in-charge atthe specified office. Each complaint has to beentered in a register meant for that purpose underthe RERC (‘Distribution Licensees’ Standards ofPerformance) Regulations, 2003 and needs to beassigned a number which is to be conveyed to theconsumer.

• At urban complaint centres, the licensee has toprovide the facility of complaint registration viaan interactive voice recording system throughtelephone in a phased manner for which a definitetime frame will be given and acted upon.

• The licensee has to endeavour to redress theconsumer complaint at the initial stage. However,in case of non-satisfaction, the aggrievedconsumer may approach the appropriate Forumin person or through post for redressal of his/hergrievance and may also request interim relief, ifso required. The office of the Forum Chairman orthe authorised officer/official will acknowledgethe grievance received, indicating the registrationnumber and the date.

3.3.4 Registration FeeNo fee shall be payable by the consumer for redressalof grievances that do not correspond to demands formonetary settlement.

Those that do will attract a fee of:• Rs 50 at Sub-divisional Forum;• Rs 100 at Divisional Forum;• Rs 250 at Circle Forum; and• Rs 1000 at Corporate Forum.

3.3.5 Disposal of Grievances(1) The Forum will redress the consumer grievancesas per provisions of the Act, Rules and Regulationsmade there under and general orders/directionsgiven by the Commission from time to time in settlingthe grievances with mutual consensus:


• Where the mutual consensus is arrived at thesettlement proceeding, it will be recorded and acopy thereof will be made available to theconsumer.

• Where no mutual consensus is arrived at, theforum will pass speaking orders on merits,indicating the contention of the consumer and theruling of the forum.

• The consumer aggrieved by the decision of Sub-Divisional/Divisional/Circle Forum will have theoption to approach the Corporate Forum, beforemaking an appeal to the Ombudsman. Forgrievances asking for monetary settlement, a feeof Rs 750 needs to be deposited while appealingto the Corporate Forum.

(2) The Chairman of the Forum on considering thegrievance, if satisfied, may grant interim relief andkeep the final disposal of the grievance pending,where prima-facie it appears to be genuine and theconsumer is likely to suffer an irreparable loss if suchimmediate relief is not provided.

(3) Every Forum, at the office will display the date ofthe meeting last held and the next meeting scheduledas well as number of grievances settled and pending.

The grievance should normally be disposed off in 30days and at most 45 days from the date of its receipt/registration.

3.3.6 Appeal

• If a consumer’s grievance is not redressed by theForum within the specified time or the consumeris not satisfied with the disposal of his grievance,he will be free to approach the ‘Ombudsman’appointed by the Commission as per the RERC(Settlement of Dispute by Ombudsman)Regulation, 2003.

• If an appeal is made by the aggrieved consumerdue to non-disposal of his grievance by the Forumin the given time frame, the matter with the earlierForum will stand dropped.

3.3.7 Recent InitiativeThe Energy Department of Rajasthan has startedholding ‘Electricity Chaupals’ (Advertisement inRajasthan Patrika, May 19, 2008):• At Sub-station level: on every Tuesday;• At Sub-division Level: on the 10th of every month;

and• At Circle Level: on the 20th of every month.

Apart from this, it has issued a list of toll-freetelephone numbers for consumers of different districtcircles to register their complaints. Discoms haveinitiated the process of spot billing, and startedconsumer call centres and feeder renovationprogrammes to improve the quality of service, butthere are limitations, challenges and internal orexternal oppositions to such new initiatives.

3.3.8 Ground Realities of Present MechanismThe survey data provide evidence of theineffectiveness of the present grievance redressalmechanism. In response to a question relating tocomplaint registration, as many as 80 percent ofconsumers said that they had never lodged acomplaint (Figure 36) and out of these 49 percentattributed such passive behaviour to the lack of hopeof getting redressal and 25 percent to the cumbersomeand time consuming nature of the process (Figure37).

The data given in the RERC Annual Report, 2006-07on consumer who approached the Ombudsman forgrievance redressal shows that this forum is neitherwell known nor effective. Moreover, there is acondition in the regulation that the consumer canapproach the Ombudsman only after he/she hasexhausted all remedies available with the RedressalForum. The Ombudsman cannot intervene till thedisposal of the matter by the Forum.

It is strange that millions of consumers fall withinthe jurisdiction of each Ombudsman, but hardly anyconsumer approaches him/her. If the Ombudsmanis given the authority to stay any coercive actionagainst the consumer during the pendency of theproceedings in the Redressal Forum or his own office,it would make the office of the Ombudsman moreeffective. The aggrieved consumer, through themechanism of stay, would be able to get prompt relieffrom the Ombudsman, which cannot be provided tohim under the present provisions.

4. Power Theft and Role of CSOs/ConsumersThe theft of electricity is a challenge that needs to beeradicated. Consuming electricity without beingofficially connected to the supply point or registeredas a consumer of electricity as well as meter tamperingis considered to be illegal.

It has been estimated that, in India, theft alone causesa loss of about Rs 20,000 crore (US$4.4bn) annually.Corruption, power theft, inefficient functioning of


utilities, etc act as speed breakers in the way ofeffective implementation of regulatory reforms. Suchfactors deter potential investors and thus depriveconsumers of the benefits of liberalisation of thesector.

Rajasthan alone faces an annual loss of Rs 2,400 crore(US$527mn) due to theft of electricity, which costsaround Rs 1.20 per unit. The distribution companiesare running huge debts which are bound to be passedon to the consumers sooner or later and as a result,paying consumers will have to suffer. Loss due topower theft is a big obstacle in the reform process.The act of power theft has been declared a non-bailable and cognisable offence under Section 135 ofthe Electricity Act which is punishable withimprisonment up to three years or fine or both. Butincidence is still high, as has been revealed throughthe perception survey (Figure 35). Thus, relevantsteps are required for curbing this problem.

Theft of electricity cannot be stopped only with legalsanctions. It is a social evil and therefore, socialawareness and sensitisation is required tounderstand its implications. The role of CSOs increating awareness to help curb the incidence of theftis important.

CSOs can make people realise that honest consumerspay a heavy price because of corrupt consumers and

officials indulging in power theft. CSOs can take upvarious awareness generation programmes on theissue of power theft through street plays, posterdisplays, public debates and demonstrations, andother innovative ideas to shame the dishonestconsumer.

Given below are certain measures that can be adoptedto curb the problem of power theft:

• Electricity Committees should be constituted atthe village level to create awareness about theimplications of power theft and grievanceredressal procedures.

• Research to provide more accurate estimates oflosses due to theft would help paying consumers,CSOs and regulators in their attempts to reduceits incidence.

• Capacity building of consumers and CSOs onissues related to power reforms should beundertaken so that they can act as watchdogs inregard to the functioning of service providers(Refer to Box 5).

• The quality of service should be improved andtariffs should be reduced.

• Incentives should be provided to people workingto curb power theft and welfare activities shouldbe undertaken by utilities in areas where powertheft is low to spur concerted community actionto bring about a decrease in its incidence in allareas.

Box 5: Plugging Power Theft: A Success Story of Piplod Village

The experience of Piplod village located in Jhalawar district of Rajasthan in reducing powertheft is quite interesting. The villagers had been suffering from acute shortage of power andpoor quality of service for a long time. On the other hand, due to huge electricity theft and lowrecovery of electricity dues from consumers, it was unprofitable for the company to ensure betterquality of service in the village. Consequently, frequent failure of service lines and transfers wasa continuous problem in the village.

A meeting to resolve the problem through dialogue process was organised by CUTS International,Jaipur (Rajasthan), a non-governmental organisation (NGO) working towards consumeradvocacy and research. Village Panchayat and officers of the distribution company discussedthe problem and finally, it was resolved. The villagers will support the company to curb thepower theft and pay the pending electricity dues. A committee comprising villagers andemployees of the company was constituted to monitor the quality of supply and discourage thetheft of power.

According to the plan, the total village area was divided into different segments. Sub-meterswere installed for each of the segments. Further, tamper proof cables were installed to supplythe electricity at consumer ends. Within a period of two years, significant improvement wasreported in the system. Transformer failure rate and energy losses came down drastically thatfurther resulted into the improvement in the quality of service to the villagers.

Source: http://www.cuts-international.org/psr-04.htm


5. ConclusionThe reform processes in the power sector willnecessarily take time to show results, given that thesituation immediately preceding reforms was woeful– financial and operational conditions in electricityutilities had deteriorated to such an extent that it willtake sustained effort over a long period of time toimprove the situation. It is, therefore, of utmostimportance that Regulatory Commissions and thegovernment work in concert towards developing thesector, while clearly recognising and respecting theirrespective roles and functions.

Creating and sustaining investor confidence is thekey to power sector reforms. This would imply viableand rational policies implemented in a transparentmanner. Guarantees by state governments andcounter-guarantees by the centre, and escrowaccounts are not substitutes for properly designedpolicies.

The RESA project will contribute in getting the viewsof the public on the opportunities for public-private-people partnerships in the electricity sector. A multi-stakeholder approach might be helpful in addressingthe possible doubts that consumers might have about

the reform process. The presence of all majorstakeholder groups, including the media, would behelpful in conveying the right message to the massesfor getting their support for rapid, smooth andeffective reforms.

The future activities of the project include ReferenceGroup Meetings, training of CSOs at TerritorialLevels, Grassroots Interface Meetings, NationalAdvocacy Seminars for influencing policy, and aRegional Conference. These will facilitate effectiverepresentation of consumer views in policyformulation and regulatory processes, strengthencapacity of consumer organisations to take up actionoriented research and advocacy on regulatory/policyissues, encourage regional cooperation andexperience sharing through networking, and finallycreate vertical mechanisms complemented byhorizontal linkages among stakeholders at the samelevel to take the concerns and views from the grassroots to the policy level and vice-versa.

The fleshing out of the present scenario through thebase line consumer survey and field research is a goodbeginning – a bright future beckons.


Chapter 3

Power Sector Reformsin West Bengal

1. Electricity Reforms in West Bengal

1.1. Background

In the Constitution of India “Electricity” is a subjectthat falls within the concurrent jurisdiction of theCentre and the States. The Electricity (Supply) Act,1948, provides an elaborate institutional frameworkand financing norms for the performance of theelectricity sector. The Act led to the creation of StateElectricity Boards (SEBs) for planning andimplementing the power development programmesat the state level. The Central Electricity Authority(CEA) constituted under the Act has been responsiblefor planning issues related to generation,transmission and distribution of electricity at thenational level. In addition, from the beginning theElectricity (Supply) Act has also allowed privatelicensees to distribute and/or generate electricity inareas specified by the concerned state government/SEB.

During the post-independence period, various stategovernments have played a predominant role in thedevelopment of the electricity sector. Most of theseestablished SEBs. In some of these states, separatecorporations were also established to install andoperate generation facilities. In the rest of the smallerstates and union territories, the power sector wasmanaged and operated by the concerned electricitydepartment.

Till 1991, power generation and distribution remaineda near monopoly of the public sector. The key thrustof the governments (state and central) during thisperiod was to supply low cost electricity to consumers.However, it became difficult for governments toprovide enough capital for supplying electricity atlow cost. Lack of funds, corruption and inefficiency

compounded the problem. As a result, most of theSEBs ran into irrecoverable losses and huge deficits.

However, with the introduction of liberal policies in19911 by the Government of India (GoI), andconsequent amendments in the Electricity (Supply)Act, the picture changed. Steps were taken to attractprivate investments to the electricity sector. Majorpolicy changes were made by the GoI to trigger thereform process in the electricity sector. Some of theimportant policy changes were:

• The Electricity (Supply) Act, 1948 was amendedin 1991 to allow creation of private generatingcompanies for setting up power generatingfacilities and selling power in bulk to the grid orother users.

• The financial environment for private sector unitswas modified to allow liberal capital structuringand an attractive return on investment. Up to 100percent foreign equity participation was permittedfor projects set up by foreign private investors inthe Indian Electricity Sector.

• The administrative and legal environment wasmodified to simplify procedures for projectapprovals.

• In 1995, policy guidelines for private sectorparticipation in the renovation andmodernisation of power plants were issued.

• GoI promulgated the Electricity RegulatoryCommission Act, 1998 for setting up independentregulatory bodies both at the central and statelevels viz., the Central Electricity RegulatoryCommission (CERC) and the State ElectricityRegulatory Commissions (SERCs) respectively.

1. www.rediff.com/money/2005/sep/26pm.htm


• The Electricity Laws (Amendment) Act, 1998 waspassed to make transmission a separate activity.It was hoped that this would facilitate greaterinvestment in transmission by the public as wellas private sector.

• To uphold the spirit of fair competition andtransparency in every sphere of economic activity,the Electricity Act 2003 consolidated the lawsrelating to generation and T&D; trading and useof electricity and other measures for thedevelopment of the electricity industry; promotionof competition therein; protection of consumerinterests and universal access to electricity;rationalisation of electricity tariffs; ensuringtransparent policies regarding subsidies;promotion of efficient and environmentallybenign policies; and establishment of theAppellate Tribunal and matters connectedtherewith.

The policy changes thus did not aim just at increasedgeneration capacity, promotion of competition toencourage fresh private investment, and commercialviability of the utilities but also made provisions toprotect consumer interests.

1.2 Importance and Need for Regulation

The sector started witnessing reforms in the mid1990s. It witnessed active participation of privateplayers, especially those endowed with large amountsof capital, in terms of investment, production anddistribution of energy A new range of services relatingto electricity supply was launched for both domesticand industrial consumers. However, the governmentrealised the pitfalls of handing over the power sectorto private players without bringing them under thepurview of proper regulation. It was feared that theywould only concentrate on maximising economicprofits and not pay due attention to consumerinterests.

The government, therefore, felt the need to introducea set of controls and regulations to prevent suchprofiteering at the expense of consumer welfare.Accordingly, the GoI promulgated the ElectricityRegulatory Commission Act, 1998 for setting upindependent regulatory bodies, i.e. Central ElectricityRegulatory Commission (CERC) and State ElectricityRegulatory Commission (SERC) at the central andstate levels respectively. The regulatory commissionswere created to act as independent regulators fortaking decisions on tariff; capacity addition plans;

power purchase agreements; prevention of marketdominance by the respective service providers andensuring public benefits. The regulatory bodies werecreated to act as a link among producers, distributorsand users, thereby optimising the price, quality andquantity of power supplied.

1.3 The Reform Process in West Bengal

The West Bengal Electricity Regulatory Commission(WBERC) was constituted on March 31, 1999. TheCommission enacted regulations for generation;distribution; transmission; recovery of expenditurefor providing new connections; standards ofperformance for distribution licensees relating toconsumer services; guidelines for establishment ofredressal forums; phasing for open access and manyothers. The regulatory commission, through theseregulations, has provided proper guidelines fordifferent units involved in the process of powersupply. The commission has also ensured properpenalisation of rule breakers.

Before the enactment of these regulations, the stepsto be followed by the “Regulators”, i.e. the regulatorycommissions, and the “Regulated” i.e. the serviceproviders and the consumers were not clear. Both thedistribution licensees and the consumers were notaware of their respective rights and responsibilities.But these problems have been addressed by theintroduction of regulations. The regulations havediscussed at length the modalities for provision ofdifferent services. At the same time, these have helpedthe consumers immensely in identifying their rightsin regard to the consumption of electricity. Theseregulations have further provided the consumers withan opportunity and a clear path for registering theirclaims and grievances with the authorities.

The Ministry of Power, West Bengal has set up aseparate organisation, the West Bengal Rural EnergyDevelopment Corporation (WBREDC) in 19982 toundertake the major responsibility of ruralelectrification and supply of electricity at 400 voltsand below to consumers in rural areas with the activeinvolvement of Panchayat institutions. TheGovernment claims that, as of March 2008, WestBengal has 5,700 electrified mouzas (village clusters),which account for 91 percent coverage, though 900mouzas still remain un-electrified.

Other developments that took place under statereforms include 100 percent feeder metering;computerisation of all commercial activities; and

2. http://www.powermin.nic.in/acts_notification/westbengal.htm


strong anti-theft legislations. Some major outcomesof the reform process are as follows:

• There has been a continuous increase in annualrevenue in the recent past (it reached a level of Rs.5,600 crore in 2007) which is attributable not totariff increase but improvements in recovery ofdues and reduction in T&D losses.

• Energy losses have come down from the level of45 percent in 2002 to around 30 percent in 2007.

• SEB profits which were at Rs. 500 crore in 2002turned positive due to reforms and reached a levelof around Rs. 100 crore in 2007.

• Other state utilities, e.g. Power DevelopmentCorporation saw profits to the tune of rupees onecrore to thirty five crore.

• West Bengal State Electricity Board has beendivided into two separate companies: WestBengal State Electricity Distribution Company Ltd(WBSEDCL) and West Bengal State ElectricityTransmission Company Ltd (WBSETCL).

• The WBERC Regulations, 2006 has madeprovision for redressal of grievances of consumersagainst the licensees regarding supply ofelectricity and related matters (such as excessbilling, incorrect disconnection and non receiptof meter).

• To promote Open Access and ensure morecompetition, WBERC adopted relevantregulations (Nos. 20, 21, 30 3) which lay downterms and conditions for schedule of charges , feesand format for long term, short term and temporarytypes of open access. The guidelines for phasingopen access in distribution/sale of electricity havealso been laid down.

Efforts are going on to achieve the target of zero un-electrified villages. This, however, requires that atleast 10 percent of the households in each mouzashould be electrified. Collection of revenue from therural households seems to be an area of concern. Tomeet the challenge, the Department of Power isthinking of appointing women meter readersbelonging to various Self-Help Groups (SHGs).

However, mere celebration of achievements is notenough. There is a need to highlight inadequaciessuch as poor consumer participation in the reformprocess.

2. Baseline Consumer Survey: MainFindings

2.1 Objective

The fundamental objective of the survey was to assessthe level of consumer awareness about reforms in theelectricity sector, especially at the grassroots, andgauge capacity and preparedness of consumers toparticipate effectively in the reform process.

2.2 ScopeField surveys were conducted in 10 select districts ofWest Bengal — Uttar Dinajpur, Malda, Murshidabad,Purulia, Nadia, Hooghly, Howrah, Midnapur, North24 Parganas and semi-urban areas of Kolkata — togauge the understanding and awareness of electricityconsumers/users about the following issues:

• Rights of electricity consumers;

• Grievance Redressal Mechanism for poor qualityof service, power theft etc.;

• Ongoing reform process in the electricity sector;and

• Scope for their engagement in the process ofelectricity reforms.

A sample of both electrified and non-electrifiedrespondents numbering 700 and drawn from varioussectors – commercial, industrial, agricultural anddomestic – was surveyed.

2.3 Methodology

As the local CSOs in these districts do not haveenough outreach to cover the whole district, it wasdecided that these would cover at least 60 percent ofthe total blocks in their respective home districts.Thus in each district 5-6 blocks (on an average) werecovered.

One person – preferably head of the family and onhis non-availability, another family member withsimilar knowledge about household affairs – fromeach household was interviewed on the basis of astructured questionnaire. The survey was supervisedby a nodal person who periodically met the surveyteams and reviewed the completed questionnaires.The filled in questionnaires were finalised only afterthe nodal person was satisfied.

In order to identify and address specific genderconcerns, attempts were made to ensure maximumrepresentation of women.


2.4 Background Information about the Respondents

2.4.1 Educational Level of RespondentsOut of a sample of 700 respondents, 22 percent weregraduates; 40 percent were high school pass outs butnot graduates; 11 percent were primary school passouts and the rest (27 percent) had even lowereducation. It can, therefore, be inferred that theeducation level of a majority of the respondents was‘secondary or below’ (Figure 47).

2.4.2 Respondents Classified by AccessThe survey also tried to elicit the views and concernsof non consumers in order to find out the causes forabsence of access. Out of the 700 respondents, only85 percent had access. An important reason for thelack of access to electricity was inadequacy ininfrastructure and high cost of electricity supply.

Within the sub-sample of non-electrified respondents,62 percent identified unavailability of electricitypoles/posts in the vicinity of their residence as themain reason for lack of access. Such lack ofavailability is a very common characteristic of ruralmouzas in West Bengal.

While 27 percent of the mentioned sub sample didnot apply for new connections because they couldnot afford to pay for electricity, 8 percent of non-electrified respondents reported that new connectionshad not been provided even though the requiredamount had been paid to the distribution licenseeand the limitation period of six months had expired.Only 3 percent actually confessed to a lack of needfor electricity.

Thus, near universality of the need for electricity butpoor access to its supply are major findings of thesurvey.

2.4.3 Composition by Category of ElectrifiedConsumersOut of all consumers interviewed, 14 percent belongedto the commercial sector whereas 5, 28 and 53 percentbelonged to the industrial, agricultural and domesticsectors respectively (Figure 49).

2.4.4 Common Consumer Problems Experiencedduring the Last Year96 percent of consumers reported inadequate supplyof power. This was expected given that large parts ofthe state face an acute power crisis. It was also foundthat villagers suffered more than urban and semi-urban consumers (Figure 50).

Figure 48: Respondents Classified by Access

Figure 47: Educational Level of the Respondents

Figure 49: Composition by Category ofElectrified Consumers

Graduate &Above22%

Primary11%

High School40%

BelowPrimary

27%

Un-Electrified15%

Electrified85%

Domestic53%

Other 0%Commercial 14%

Industrial 5%

Agriculture28%


79 percent reported that they did not get the requiredvoltage to carry on their work smoothly. In many partsof the state, agricultural pump sets get burnt due tovoltage fluctuations.

Many of the consumers were not aware of the processfor registration of complaints against power theft.Respondents recommended reduction in power theftthrough increased vigilance by government officialsand the electricity department, stricter enforcementof anti-theft laws and heavy punishment for arrestedwrongdoers.

Only three percent of the respondents reported otherkinds of problems viz. rude behaviour of theemployees of the distribution company, insufficientpatrolling arrangement at night, etc.

2.4.5 Registration of ComplaintsThough the majority of responding consumers faceddifferent kinds of problems, yet only 27 percent hadever registered complaints with their respectiveelectricity suppliers (Figure 51).

The main reasons for not registering complaints asrevealed by the survey were as follows:

• 41 percent did not complain because they did nothave much faith in the grievance redressalmechanisms.

• For 24 percent, the time consuming nature of theprocess was the main reason.

• 39 percent did not register complaints because theyhad no reason to complain.

4 percent did not register a complaint because ofreasons other than the ones listed above (Figure 52).

Figure 50: Incidence of Consumer Problems

Though most of the respondents were not aware ofthe frequency of electricity tariff hikes, 75 percent feltthat the tariff being charged was very high. While 37percent complained of poor metering and billing, veryfew complaints of irregularities were reported. Thesurvey revealed that consumers of Calcutta ElectricitySupply Corporation (CESC) were billed on a monthlybasis whereas those of WBSEB received bills everyquarter.

The consumer survey revealed that consumers in allareas of West Bengal, whether urban, semi-urban andrural, faced difficulty in comprehending theinformation provided on their billing statements inEnglish. Thus, it is important to issue these in Bengali,the vernacular language.

Electricity theft was reported as being widespreadbut in general, further comments were not available.29 percent of the respondents described it as anunfortunate phenomenon and were aware that it is acrime. The handful of respondents willing to expresstheir views further said that it was committed at anindividual as well as an organisational level and wasmore common in rural areas. According to them, muchof it took place through ‘hooking’ and the magnitudevaried across localities. Further, local residents donot dare to complain to the WBSEDCL officialsbecause of fear of intimidation by local political partyworkers (Figure 50).

Figure 51: Percentage of Consumers Who HadEver Registered Complaints

f) Any Other

e) Theft of Power

d) Poor Metering &Billing

c) High Electricity Tariff

b) Poor Quality ofService

a) Inadequate Supply

27% Registered

73% NotRegistered


Two respondents of Medinipur reported that threatsof physical harm or damage prevented them fromfiling complaints. In stark contrast, one resident ofHooghly remarked that the promptness with whichhis telephonic complaint was attended implied thata written complaint was not needed.

2.5 Awareness on the Changes in the Ownershipand Regulation of the Electricity Sector

2.5.1 Awareness of the Ongoing Reform ProcessAs mentioned at the outset of this paper, since 1999 anumber of reforms have been introduced in theelectricity sector viz. unbundling of generation,transmission and distribution of electricity;establishment of a Central Electricity Authority;introduction of pro-consumer regulations etc.However not many respondents were aware of theongoing reform process.

Out of 700 sampled respondents, only eight percentwere aware of the reform process (Figure 53).

According to the respondents of Murshidabad, newdistribution mains, transformers and powerproduction houses have been established. People havewitnessed privatisation in the power sector andcomputerisation of billing. One of the respondentswas aware of the formation of three new entities –WBSEDCL, WBSETCL, and West Bengal PowerDistribution Company Ltd. (WBPDCL).

The respondents of North 24 Parganas felt that therehas been considerable improvement in the electricitysector due to the introduction of new laws. They feltthat these laws have proved effective in making thedistribution licensees more efficient in providingservices. The respondents have also appreciated thecreation of a centralised grid system for supply ofelectricity to the nation.

The people of Purulia seemed to be aware of theunbundling process and creation of three new entities.New developments like regular meter reading,increased number of consumers, timely receipt ofelectricity bills etc. have reportedly been facilitatedthrough SHGs.

2.5.2 Awareness About the Role of the ElectricityRegulatory CommissionVery few respondents (2 percent) were aware of theelectricity regulatory commission’s responsibilitiesand functions. This there is a urgent need to createawareness about the need for promoting consumerparticipation in deriving benefits from existinginstitutions (Figure 54).

2.5.3 Respondent Perceptions About AwarenessRegarding Electricity ReformsThe universal perception was that people were notadequately aware about the reform process. Thus,they expressed a desire to be informed about theimportant issues related to the electricity sector andthe reform agenda (Figure 55).

Figure 52: Reasons for not RegisteringComplaints: Percentage Incidence among

Consumers

Figure 54: Awareness about the Role of the ERCFigure 53: Awareness of the Ongoing

Reform Process

d) Others

c) Timeconsumingeffort

b) No hope togetting redress

a) No reason tocomplain

8% Yes

92% No 98% Unaware

2% Aware


2.5.4 Suggestions to Enhance Level of ConsumerAwarenessAn important objective of this study was not only togauge the level of awareness of the electricityconsumers about their rights but also to capture theirviews on effective ways of information dissemination.According to a large number of respondents (71percent) grassroots meetings constituted an effectivetool for enhancing consumer awareness while 63percent attested to the effectiveness of workshops/seminars. Circulation of handouts and use of mass mediascored 47 and 46 percent respectively. 37 percent ofrespondents expressed support for the publicationof articles in local newspapers (Figure 56).

encouraged more vigorously and effectively, thusjustifying the main objective of the project (Figure 57).

2.5.6 Important Areas for Public ConsultationA majority of respondents – 78 and 69 percentrespectively – identified the tariff formulation processand enforcement of electricity laws as important areasfor consumer consultation. According to 41 percent,such consultation was important before issuing policyguidelines while 32 percent felt the same about theissue of licenses. Only 21 percent felt that publicconsultation should precede the formulation/modification of rules governing electricity companies(Figure 58).

2.5.7 Methods for Public ConsultationHaving identified the important areas for publicconsultation, the next objective of the survey was toidentify effective mechanism/s for consumerconsultation as viewed by the electricity consumersthemselves.

Figure 55: Respondent Perceptions AboutAwareness Regarding Electricity Reforms

Figure 56: Relative Support for AlternativeMeans to Enhance Consumer Awareness

2.5.5 Consumer Consultations99 percent respondents were of the opinion that thegovernment or the electricity regulatory body shouldconsult consumers in the process of framing laws,policies and other regulations. This implies thatconsumer consultation on relevant issues should be

Figure 57: Respondent Support for ConsumerConsultations

Figure 58: Percentages of RespondentsIdentifying Listed Areas for Consultation as

Important

c) Not at allaware

b) Not adequatelyaware

a) People arewell aware

f) Other

e) Using massmedia

d) Circulatinghandout/smallbooklet

e) Publishing newspaper articles

b) Grassrootsmeetings

a) Organisingworkshop/Seminar

Yes 99%

No 1%

f) Any others

e) Rules to governElectricityCompanies

d) Tariff makingprocess

c) Issuing licences

b) Issuing policyguidelines

a) Enforcement ofLaw


75 percent expressed support for public hearingswhile 59 percent were in favour of nominatingconsumer representatives to advisory committees/bodies. 46 percent respondents opined that invitingwritten comments from consumers is a desirablemethod for facilitating public consultation while 31percent supported the use of consumer advocates forrepresenting public opinion (Figure 59).

2.5.8 Participation in Consumer Consultation ProcessOnly five respondents participated in the consultationprocess or public hearing conducted by thegovernment or the energy/electricity regulatoryagency. This finding clearly depicts the absence ofeffective consumer participation in the electricityreform process in West Bengal.

Therefore, implementation of the RESA project is verytimely and will go a long way in creating consumerawareness and capacity to participate in theelectricity reform process.

2.5.9 Participation in Training ProgrammesOut of the 700 respondents, 88 percent expressedinterest in participating in training programmes/seminars on electricity reforms. For those notinterested paucity of time and lack of funds were majorreasons (Figure 60).

2.6 Recommendations

Major recommendations emerging from the findingsof the consumer baseline survey are as follows:

2.6.1 The criteria laid down for a mouza to beconsidered ‘electrified’ needs to be revised.Electrification of just 10 percent of the households ineach mouza is not sufficient. When the administrationtries to meet this criterion the infrastructure developedis often not sufficient to ensure electrification of allhouseholds and results in access becoming expensiveand unaffordable for many potential consumers..

2.6.2 There is an urgent need to improve the qualityand quantity of electricity supply in rural WestBengal.

2.6.3 Electricity bills should be published in Bengali,the vernacular language, at least for the ruralconsumers.

2.6.4 Enforcement of anti-theft laws needs to be stricterand people’s participation in reducing theft shouldbe secured through innovative and effective methods.Access to electricity at affordable prices to all wasalso identified as an important means for reducingtheft. As one of the respondents opined, “Why willpeople steal power if the government ensureselectricity for all at reasonable tariff rates?”

2.6.5. The grievance redressal mechanism needs tobe simplified and made more transparent and efficientso that consumer complaints are redressed quickly.

2.6.6 Large scale consumer education programmes(including grassroots meetings, training workshops,write ups and talk shows in media) should beconducted at regular intervals at the district level bythe regulatory commission to make consumers awareof the reform process and thus encourage and enhancetheir effective participation.

2.6.7 Public hearings should be reintroduced tostrengthen public consultation.

2.6.8 The regulatory commissions should alsocollaborate with local CSOs to undertake activities atthe grassroots level.

Figure 60: Proportion of RespondentsInterested in Training Programmes

Figure 59: Relative Support for Methodsfor Public Consultation

e) Any other

d) Consumeradvocates

c) Consumerrepresentative

b) Writtencomments

a) Publichearing

No 12%

Yes 88%


3. Consumer Participation and Role of theCSOs in the Reform Process

3.1 The Need for Consumer Participation

The universal acceptance of consumer sovereigntyby market economies should encourage consumersto come forward and be proactive in the enforcementof their rights and promotion of their interests.Consumers not only should have the right tosatisfaction from goods and services paid for but alsothe prerogative to intimate the service providers aboutthe kind of services they want to avail. The same istrue of electricity consumers.

Thus, consumers of electricity need to be proactive inorder to make the distribution licensees more efficientin their performance. In the event of infringement ofrights or receipt of inadequate and irregular supply,consumers should complain to the appropriateauthorities on their own. Though no provision forpublic hearing has been provided for in the ElectricityAct, 2003, there is no reason why consumers shouldnot voice their objections and suggestions forconsideration. It is active consumer participation thatwill make the whole process of power reforms moreeffective.

3.2 Role of Consumers and CSOsNow that the necessity of consumer participation hasbeen analysed, it is important to understand the actualrole that can be played by consumers and CSOs.

At the outset, it is important for consumers tounderstand that they have the right to judge the kindof services they are provided with and in case of anydeficiency complain to the relevant authorities forredressal.

The consumers need to question the concernedauthorities through valid queries on issues such asestablishment of new electric connections, delay orirregularity of electricity supply etc. This can easilybe done by consumers using the Right to Information(RTI) Act, 2005 or through the process laid out indetail by the regulations brought out by the ERC.Consumers can also enforce their rights regardingelectricity consumption with the help of the ConsumerProtection Act, 1986.

The main problem in this regard is the ignorance ofconsumers regarding procedures and the authoritiesthat need to be approached. Such information gapscan be alleviated by CSOs. While consumers need tobe educated about the existence of acts relating to

RTI, electricity supply and consumer protectionissues, there is a need for CSOs and the othervoluntary organisations to play an active role ininforming consumers in simple language about theservices they deserve to receive and dispute settlementprocedures. It is only then that consumers would beable to optimise their participation in the regulatoryprocess.

However, consumer welfare gains do not follow fromthe actions of consumers alone. CSOs will have totake proactive steps to make the governmentauthorities aware of their responsibilities andliabilities towards the people. If the distributionlicensee does not perform his duty of displayingdetails about the complaint redressal procedure, theCSOs should obtain such required information andintimate the same to the public.

3.3 Implications of Power Theft and the Role ofConsumers and CSOs

Power theft (or illegal access to electricity) from eitherthe service line or the main cable by hooking is agrowing problem and imposes costs on the payingconsumer by causing recorded consumption of suchconsumers to exceed actual consumption orinadequate collection of tariff revenue.

Moreover, power thefts impose unanticipatedpressure on infrastructure – cables designed to supplya certain amount of power are subjected tounmanageable load leading to permanent faults,irregular supply of power, shortage of supply orvoltage fluctuations.

The consumers themselves have to find ways to checkpower theft using existing legal provisions. Such useby consumers is pre-conditioned on awareness.However, mere awareness often is not associatedwith use because of intimidation by certain elements,lack of faith in authorities etc. CSOs can intervenemeaningfully by preventing intimidation and actingas a bridge between the authorities and the consumersto facilitate effective redress of complaints and thusrestore the faith of all consumers in the system.

Thus, CSOs themselves would have to be aware ofthe mentioned legal procedures and should theninform consumers of the same by conductingmeetings and awareness campaigns. Furthermore, aCSO representing a consumer group can itself file acomplaint to the concerned authorities regardingpower theft.


3.4 Present Status and Hurdles in EffectiveConsumer ParticipationWest Bengal has witnessed minimal consumerparticipation. Consumer complaints againstlicensees made so far include those alleging thecharging of excessive security deposits, excessivebilling, use of faulty disconnection procedures,malfunctioning meters etc. (Figure 51).

The commission so far has received only 720complaints (39 in 2006-07). Out of 720 complaints,554 were disposed of (67 in 2006-07), 51 cases werereferred to ombudsman and the remaining 115complaints were in the process of disposal at the endof the period being reported.

It is true that the Electricity Act, 2003 has not providedfor any provision for public hearings. But people haveshown minimal participation even in the submissionof their complaints and suggestions to the localdistributors and the regulatory commission.

As mentioned above, information gaps, lack of faithin the system and fear of intimidation inhibitparticipation. Moreover, there is also a paucity ofCSOs which can take up education and awarenessbuilding of consumers as well as tackle elementsposing a threat to consumer participation.

4. Suggestions for Effective PublicParticipationSome suggestions that follow from the findings of thesurvey and their analysis are as follows:

Participatory research on consumer demands andopinions expressed through surveys, interviews, andworkshops facilitated by cooperation amongdistribution licensees and voluntary organisationswill be helpful. The results of these surveys whenmade public will prompt remedial action.

The distribution licensees should be persuaded topublish the reasons for tariff hikes and respond tosubsequent public feedback.

Public appeals need to be made to the State Legislaturefor amendments to the Electricity Act and theElectricity Regulations so that suitable provisions forincluding needed measures of public participationcan be incorporated.

The RTI Act, 2005 should be utilised to makeappropriate queries and follow up action to ensureresponse should be taken.

5. Conclusion and the Way Forward

5.1. Conclusion

This paper brings to light the findings of the baselineconsumer survey which was an effort to assess andcapture the ground realities (i.e. achievements anddeferred achievements) of the reform processintroduced in the power sector of West Bengal as wellas gauge the awareness and participation of thepublic in regard to the same. Ascertaining publicopinion on vital issues to identify needs for capacitybuilding at the grassroots was another objective. Thispaper is not only targeted at consumers and CSOsworking at the grassroots but also attempts to makepolicymakers and local legislators cognisant of thekey areas of grassroots concern and bring aboutsuitable policy change.

The project has been reasonably successful insensitising consumers about the state of electricitysupply and empowering them to identify their ownproblems and come up with suggestions. They havealso come to understand the importance of publicparticipation and are willing and eager to participatein training programmes to enhance their ownknowledge.

The baseline consumer survey has revealed thatthough the reform process is ongoing, the fruits areyet to reach the grassroots stakeholders. The WestBengal Electricity Regulatory Commission hasenforced many pro-consumer regulations, but theconsumers are completely ignorant about these. Thereis therefore an urgent need to educate the people aboutelectricity reforms and their own responsibilities andrights in making the reform process more meaningful.CSOs and the Regulatory Commission must joinhands to play a pro-active role in educating themasses.

5.2. Way ForwardThis paper has successfully identified the wayforward for different stakeholders. Grassroots effortsto educate electricity consumers and people in generalon ongoing reforms in the electricity sector as well asenhancement of the capacity of local CSOs to work inthis sector are the need of the hour. Only then caneffective and meaningful consumer participation beensured.

To achieve these two ends –

• The regulatory commission and the governmentshould initiate new and extensive awarenessgeneration programmes.


• CUTS on its part will immediately come up with a‘training manual’ to train local grassroots trainerswho in association with CUTS resource personswill educate the masses on their responsibilitiesand rights through grassroots meetings.

• CUTS and the local partners will jointly try toactivate the Beneficiary Committees (BCs) at thepanchayat level to prevent theft of power. TheseBCs would be comprised of Gram Panchayatmembers, local teachers, youth etc. During the baseline consumer survey, it was observed that thoughthere is a regulatory provision for BCs at the GramPanchayat level no such committees areoperational.

• The utilities should set up efficient redressalmechanisms to stimulate back consumerconfidence as well as take up awareness andeducational initiatives.

• The policymakers should amend laws toreintroduce effective procedures of consumerconsultation.

• A joint initiative of government, CSOs and publicshould be launched to reduce and stop theft ofelectricity.


The Consumer Rights Statement and theRegulations in West Bengal

The Consumer Rights Statement under the ElectricityAct 2003 is a synopsis of rights available to theindividuals regarding the supply of electricity. It isbasically a step to create awareness among theconsumers regarding their own rights andresponsibilities towards deserving quality supply ofelectricity.

• As far as the first basic right mentioned in thesynopsis is concerned, the regulations brought outby the Electricity Regulatory Commission havedealt with it quite effectively. Regulation 24elaborates on the release of a new connection toany interested consumer and the requirementsthereof.

A customer intending to seek inspection of hispremises by the distribution licensee or a distributor(holding a proper license for the purpose) forprovision of electricity supply , can obtain an estimateof the expenditure to be incurred as well as depositsto be made to the distributor in the specified form byfiling a request to the distributor in writing, andsending him the required earnest money. This earnestmoney is later adjusted against the amount payableto the distribution licensee for the availed connection.

The distribution licensee on receipt of the requestfrom the intending customer for electricity supplyshall authorise its representative to conduct aninspection of his/her premises and would thereafterprovide an estimate of the expenditure likely to beincurred as well as the deposits to be made by thecustomer to the distributor. The distributor has toperform this task within specified time limits.

• The second issue dealt with in the synopsis isStandards of performance regarding quality andservices to be provided by DistributionLicensees.

In this regard, the consumers have been guaranteeduninterrupted transmission of low cost but goodquality power or electricity. The Regulations broughtout by the ERC have also guaranteed the same.Regulation 24 again deals with the rights of theconsumers and the responsibilities of the distribution

licensee to complain against planned and unplannedinterrupted power supply, low voltage power supply,prolonged power cuts, faulty meter reading etc.

In case of unplanned interruptions caused by naturalcalamities in electricity supply, consumers areentitled to get their supply restored by the distributionlicensee for stipulated types of faults. When there isplanned interruption of supply lasting more than 6hours at a stretch for planned maintenance but notemergency repair, the distribution licensee shallnotify the consumers at least 3 days before the supplyis cut off through announcements.

For complaints regarding voltage, voltagefluctuations, meter and meter equipment, andmodifications to existing connections, there exists aprovision for customers to apply to the distributionlicensee with proper details of the problem. In theevent of non-performance of functions by thedistribution licensee, customers are also entitled toseek corrective action and compensation for theinconvenience caused by applying to the grievanceofficers.

• The third issue is the code of practice relating topayment of bills and has also been dealt byRegulation 36.

The specified time periods for the receipt and theacceptance of bills, steps to be taken in the event ofnon-receipt of bills, manner of payment of bills, andredress of any dispute regarding the payment of billsetc. have been discussed at length by the regulation.

The bill should be sent to the customer by the licenseeat least seven days before the due date of payment. Ifthe consumer does not receive the bill in time he mayrequest the licensee to send him a copy of the bill orrelevant portions from the original bill from theconcerned area office by fax or courier or the speediestmeans possible.

The consumers can normally pay their bills atdesignated collection centres and also by cheque orbank draft to the concerned authority, as mentionedin the details given in the bill.

• The fourth issue that has been addressed by thesynopsis is the Complaint handling proceduresand grievance redressal.

Annexure A


This issue has been effectively dealt with byRegulation 27 which elaborates on the process offiling a complaint to the distribution licensee; thenapproaching the Grievance Officers for fairadjudication; and finally appealing to theOmbudsman for final resolution of the problem.

The customer is required to submit his/her grievanceto the Grievance Officer at the lower level in writing.The officer then has to take up the complaint andtake action for its redressal. The customer should beprovided the written acknowledgment of the receiptof complaint by the Grievance Officer within sevenworking days. Every complaint is assigned a numberwhich is communicated to the petitioner.

A consumer has to approach at least one GrievanceRedressal Officer or one Central Grievance RedressalOfficer before representing his case to theOmbudsman. If a consumer is not satisfied with anorder from a Grievance Redressal Officer or if he doesnot receive any order from the Grievance RedressalOfficer approached by him within 60 days of thelodging of his grievance, he may submit a writtenrepresentation to the Ombudsman.

• The tariff rates and the Schedule of Charges areunder the purview of the ERC. It is the commission,which fixes the tariffs. This has also been clearlybeen stated by Regulation 38 which mentionsexplicitly that that the authority to fix the tariff

rates should not be in the hands of either theproducers or distributors of electricity under anycircumstances. Only the ERC has got the authorityto determine the tariff rates and issue the tariffschedule

• To check the correctness of meter, the regulationshave provided for some instructions andprinciples:

Consumers can purchase the meter from the electricitydistribution company or any supplier of meters asper the specifications of the Central ElectricityAuthority.

Consumers have the right to get the meter tested foraccuracy upon making a request to the electricitydistribution company and paying testing charges aswell as receive a copy of the test report which has tobe provided within two months of the request fortesting.

• Finally, the Open Access Mechanism, to bebrought in force from 2009, will grant theconsumers of electricity the choice of choosingtheir distributors and suppliers of electricity. Suchchoice is provided by Regulations 30 and 35. Thereare certain rules and regulations which theconsumers will have to refer to while selecting analternative supplier.

.


The Redressal MechanismIn order to protect consumer interest, the Commissiontook action as per Electricity Act 2003. The relatedregulations came into force with effect from October08, 2003 and specified the manner in whichgrievances of the public should be redressed at threesuccessive tiers within the organisational structuresof the licensees. The licensees were required to putsuch mechanisms in place within 6 months of theappointed date (June 10, 2003).

Thereafter, the aforesaid Regulations have since beenreplaced by West Bengal Electricity RegulatoryCommission (Guidelines for Establishment of Forumfor Redressal of Grievances of Consumers and Timeand Manner of Dealing with such Grievances by theOmbudsman) Regulations, 2006.

The customers need to submit their grievances to theGrievance Officers at the lower level, in writing. Theofficers are then required to take up the complaintand take suitable action for its redressal. The officersmight request inspection by experts, etc, consult theauthorities concerned regarding alleged deficiencyin services, and communicate the results of theiractions to the petitioners. The grievance officers alsocollect relevant information regarding the records anddocuments relating to the individual’s complaint.The final disposal of a consumer’s grievance is in thehands of the Ombudsman.

The details pertaining to grievance redressal forumsand officers are communicated to customers byprominently displaying these on billing statements,near the main entrances of offices and sub-offices,and on the website.

Working Procedure for the Grievance RedressalOfficers

An aggrieved consumer may approach the GrievanceRedressal Officer of his area only through a written

petition, submitting in the same as much concreteand detailed information about the grievance aspossible. If his grievance is the subject matter of anycourt case, he should furnish a copy of his plaint andindicate the status of the court case; in case, the courtcase has already resulted in an order, he shouldsubmit a copy of that order.

The customer should receive the writtenacknowledgment of filing of the complaint from thegrievance officers within seven working days. Everycomplaint is given a plaint number which should becommunicated to the petitioner.

If the complaint does not require consultation with atechnical expert, the petitioner can expect hiscomplaint to be redressed within 21 working days.However, if inspection or decision from an expert isrequired, the redressal procedure can last for 45working days

If the complainant is dissatisfied with the redressaldecision, he is at liberty to approach the Ombudsman,who has the final authority to dispose off thegrievance.

A consumer must approach at least one GrievanceRedressal Officer or one Central Grievance RedressalOfficer before representing his case to theOmbudsman. If a consumer is not satisfied with theorder of a Grievance Redressal Officer or if he doesnot receive an order from the Grievance RedressalOfficer approached by him for redressal of hisgrievance (s) within 60 days from the date of lodgingof his grievance, he may submit a writtenrepresentation to the Ombudsman.

A consumer can at will move to any other authorityor a court of law or a consumer forum for redressal ofhis grievances. However, after doing so, he shoulddisclose the same with all necessary details whilefiling a representation to the Ombudsman.

Annexure B


Chapter 4

Power Sector Reformsin Nepal

1. Electricity Reforms in Nepal

1.1 Introduction

Energy is considered as a vital input in the process ofeconomic and social development of a nation. Itsconsumption reflects the level of economicdevelopment. In Nepal, energy demand is met fortraditional, commercial and renewable sources.According to the Economic Survey 2006/07, thetraditional source meets the bulk of total energyconsumption with an 85.5 percent share, followedby commercial and renewable energy sources at 13.5percent and 0.6 percent, respectively. Fuel wood,agriculture residue and animal residue provide 88.7percent, 4.8 percent and 6.5 percent of the totaltraditional energy consumption, respectively. As faras consumption of commercial energy is concerned,petroleum products have a predominant share (58.5percent), followed by coal (22.7 percent) andelectricity (18.8 percent). This shows high dependenceof the Nepalese economy on traditional sources ofenergy, with electricity consumption at a minimumlevel.

However, the hydropower generation potential ofNepal is estimated at 83,000 Mega Watts (MW) andthe commercially viable capacity is estimated to be42,000 MW. Nepal presently utilises a mere 0.7percent (i.e., 556.4 MW) of its total generation capacityand only one percent of commercially viable capacity.Electricity is also generated from thermal powerplants and solar plants, which presently produce55.028 MW and 100 KW, respectively. This takes thetotal electricity generation in Nepal to 611 MW.

Based on government data for 2007, only 45 percentof Nepali households have access to electricity. Thisis in spite of the huge electricity production potentialof Nepal. The prevailing irregularities andmalpractices like those that come to the surface

during power purchase agreements and governmentprocurements are often held responsible for thesluggish development of Nepal’s power sector. Largepower losses and unreliability of the systemcharacterise Nepal’s power sector. The investmentrequired for expanding electricity services is beyondgovernment’s resources. International lendingagencies urge private sector involvement in thebusiness. Such a situation calls for sweeping reformsin the electricity sector.

1.2 Regulatory Framework Governing Power SectorThe Department of Electricity Development (DoED)under the Ministry of Water Resources regulates theelectricity sector in Nepal. Apart from other functions,it also facilitates and promotes private sectorinvolvement in power development. In addition, itprovides technical support for developing powerplants. The Electricity Tariff Fixation Commission(ETFC) reviews and approves retail electricity tariffstructures. The ETFC is constituted as a six-membercommission with the Director General of the DoEDserving as Secretary to the Commission, as per theElectricity Tariff Fixation Regulation, 1993. The ETFCis envisioned as an independent agency under thechairmanship of a full-time chairman with themembers representing the line ministry, privatesector, regulated entities, industry and consumers.The function of the Commission is to review andapprove retail electricity tariff rates and other charges.The regulation provides the basis for tariff fixation.The Nepal Electricity Authority (NEA), a government-owned and controlled utility, dominates Nepal’selectricity sector. NEA is the sole actor intransmission, distributes about 99 percent andgenerates about 75 percent of the public power supplyin Nepal. There are also 38 private sector independentpower producers (IPPs) that generate about 25 percentand distribute about one percent of Nepal’s publicpower supply.


1.3 Power Sector ReformsPower-sector restructuring is underway in most ofthe countries around the world. The basic objectiveof the reforms is to eliminate monopoly power of theutility and introduce competition through privatesector participation. Competition in the power sectoris expected to enhance the quality of service and leadto significant cuts in tariff rates. The reforms andconsequent restructuring being attempted in thepower sector is itself a sequel to globalisation andliberalisation of the economy. Restructuring isresulting in independent power production andcompetition in generation; decentralisation,privatisation and unbundling of generation andtransmission; and even competition in distribution.A broad variety of new institutional and contractualforms within the power sector have evolved alongwith these changes.

To implement the power sector reforms and create acompetitive electricity market, where none existedbefore, the country needs to implement a wide rangeof structural and regulatory reforms along withenabling legislation. Such reforms are aimed atprotecting the interests of the consumer, investor,government, and other stakeholders. The challengeis to balance the interest of the stakeholders in amanner where the utility’s rights can be protectedwhile also protecting the interest of the consumers.

1.3.1 The InitiativeNepal’s power sector is undergoing reforms throughdifferent policy and legal measures. The reformprocess in Nepal started in 1992 when a newly electeddemocratic government paved the way for the privatesector’s entry into electricity generation, transmissionand distribution. The government introduced policyinstruments such as the Hydropower DevelopmentPolicy (HDP), 1992 and legislations such as theElectricity Act, 1992 and the Water Resources Act,1992.

The widely sought reform process was acceleratedby the introduction of the HDP, 2001, replacing theone introduced in 1992. The policy envisions, interalia, restructuring the power sector throughestablishment of a regulatory commission to regulatethe purchase and supply of power, oversee tariffrationalisation, and issue and approve licences. Thepolicy has paved way for the promotion ofcompetitiveness and efficiency in the electricity sectorthrough environmentally sound power sectordevelopment.

1.3.2 The NeedDespite the reform initiatives, Nepal’s power sectorlacked effective competition due to low level of privatesector participation. Factors such as lack of conduciveenvironment owing to the prolonged politicalinstability and conflicting motives among politicalactors are impeding private sector participation inthe sector. Inconsistencies in legal and regulatoryframeworks coupled with lack of transparency andaccountability in the licensing process causesdifficulties for the private sector. The lack oftransparency of buy-back rates for hydropowerprojects and inadequate transmission anddistribution networks make the sector non-lucrativefor the private players. Hence, the legal and technicalmonopoly of NEA continues although the ability ofNEA to supply adequate and cost-effective electricityhas long been questioned.

Against this backdrop, Nepal’s power sector is indire need of effective reforms. Reforms are neededbasically to:• establish a strong, independent and well-

resourced regulatory framework;• create market structures and rules supporting the

emergence of efficient wholesale and retailmarkets;

• create a conducive environment for timely andefficient new investment;

• attract more production and distributingcompanies;

• put an end to the legal and technical monopoly ofNEA;

• safeguard consumer rights by includingconsumers in the regulatory mechanism; and

• facilitate competition.

The need for a strong and well-resourced regulatorymechanism to improve Nepal’s under-developedpower sector has been stressed. Such a regulatorybody is sought to:• coordinate and integrate the production,

transmission and distribution functions whilechecking the prevailing malpractices;

• formulate policies and set out priorities to balancethe demand for and supply of electricity in thedomestic market;

• regulate the electricity tariff rate and reduce itthrough competitive market practices; and

• reliable, good quality and safe electricity supplythat is accessible to all.


1.3.3 Legislative UndertakingsGovernment’s initiative in the reform process led todrafting of two electricity bills with the objective ofconsolidating laws relating to generation,transmission and distribution of electricity. TheElectricity Development and Management Billcontains measures conducive for the development ofthe electricity industry and promotion of competitionthrough active private sector participation. The billhas provisions for electricity tariff rationalisation.Provisions for acquisition, compensation andresettlement are particularly aimed at protecting theinterests of consumers. The proposed law alsocontains provisions for rural electrificationprogrammes. Its thrust on expanding ruralelectrification and provisions for management of ruraldistribution by cooperatives and non-governmentalorganisations (NGOs) are consumer-friendly. Thepromotion of the private sector and formation ofpublic-private partnerships in generation as well asdistribution is a noteworthy reform agenda item. Thebill particularly focuses on ensuring quality andregularity of electricity supply, and consumer safety.

The National Electricity Regulatory CommissionEstablishment and Management Bill aims to establishan independent regulatory body. The provision forunbundling NEA with time-bound reforms is itssalient feature. The bill envisages that restructuringof NEA will take effect only after two years ofpreparatory work initiated after the enforcement ofthe Act. The perceived set up consists of separatepublic companies for generation, transmission anddistribution. The government after furtherconsultation may initially opt to have a singledistribution company or may choose to havedistribution companies statewise.

A single buyer market model in which a transmissioncompany acts as a buyer or a multi-buyer-multi-sellermodel or any other suitable modification shall beadopted. The trading of electricity shall be permittedthrough ‘Trading License’. Provision of non-discriminatory open access to the nationaltransmission grid subject to available capacity athand will be facilitated. Similar access shall beprovided by the distribution companies as required,given the free play of competitive forces. It isnoteworthy that a study has been completed in thisregard for setting up a transmission company to ownand operate the national transmission grid throughtechnical assistance from the Asian DevelopmentBank’s (ADB).

1.3.4 Government’s PriorityThe latest of the five-year periodic plans – Three YearInterim Plan (2007-10) – addresses the hydropowerpolicy with due recognition of private sectorparticipation, cooperatives, and local bodies in thegeneration, consumption and export of electricity. Itaims at affordable tariffs for agriculture andproductive sectors. The plan envisions integration ofNepal’s power system with the regional power grid/networks.

Following the recent political changes in the country,the need for high and sustainable economic growthhas been emphasised by major political parties andthe business community. The development of powersector remains instrumental in realising this goal.Given Nepal’s compulsion to import all its fossil fuelneeds, the country’s potential in electricity generationis the best available option for meeting the increaseddemand for energy required to fuel rapid economicgrowth. This requires that the changed politicalregime gives top priority to reforming the institutionaland legal framework that governs Nepal’s powersector.

1.4 Proposed Regulatory Framework

1.4.1 Regulatory Framework Envisioned by HDPThe HDP, 2001 identified the following institutions– existing and new – as responsible for regulatingthe power sector in Nepal:

• ETFC to act as the apex regulatory body with awider authority;

• Water and Energy Commission to be responsiblefor load forecasting, system planning, andpreliminary study of projects;

• Energy Management Institution to be responsiblefor training and research in the fields ofmanagement, technical, and environmental issuesrelated to electricity; and

• DoED assigned with the functions of issuinglicences on a competitive basis, providing servicesconveniently to stimulate private sectordevelopment of hydropower and undertakinghydropower project feasibility studies and studiesof multi-purpose projects.

The institutional set up for regulating the Nepalpower sector as envisioned by the HDP, 2001 is yet to


materialise. Absence of political will for effectiveimplementation of HDP, 2001 is one of the key reasons.

1.4.2 Provisions in the Proposed Electricity LawThe National Electricity Regulatory CommissionEstablishment and Management Bill has a provisionfor establishment of a robust and autonomouscommission for overall regulation of the electricitysector. The commission shall be responsible forregulation and monitoring of technical management,fixation of price and tariff competition, and consumerrights protection. The commission shall also beresponsible for monitoring the licensees and forenhancement of their organisational capabilities. Thecommission is also vested with the right to settledisputes related to the electricity sector.

1.5 Involvement of Consumer

Electricity Act, 1992 defines consumer as a personwho obtains electricity from the licencee. TheElectricity Development and Management Billidentifies consumer as a person or institution thatconsumes electricity. Consumer involvement ismandatory for ensuring good governance, andintroducing checks and balances into the system.However, electricity is a little talked-about issueamong civil society organisations (CSOs), academiaand the general public in Nepal. People at large donot pay much attention to electricity sector reformand they have had little or no involvement in it. Theonly issue in the electricity sector that draws publicattention is that of persistent load shedding.Consumer rights related to the electricity sector arealmost unrecognised in Nepal.

The organisational structure at the policy-makinglevel indicates little consumer participation. Of thesix members of ETFC, one is supposed to be aconsumer representative. However, a consumerrepresentative is rarely nominated. Devoid of officials,the commission itself is non-functional at present.Likewise, although the Board of Directors of NEAhave four independent members, they are notconsumer representatives per se. Policymaking in theelectricity sector is a top-down process, withgovernment taking all the decisions without seekinginputs from consumers.

Protection of consumer interest is new to Nepal. Itwas since 1990, only after the restoration ofdemocracy in 1990 that the consumer movement

gained momentum. Democratic constitution of Nepaland laws related to consumer protection have beenguaranteeing the rights outlined by the UnitedNations (UN) guidelines for consumer protection.Consumer Protection Act (1998) has been legislatedas an umbrella act using all the consumer protectionacts. But the Act does not explicitly define consumerrights regarding electricity service. However, it doesprovide for quality control and checking improperpractices in the sector in general.

Notwithstanding the lack of consumer participationin decision-making process, it is the responsibility ofconsumers to assert their rights and discharge theirresponsibilities.

2. Baseline Consumer Survey:Methodology and Findings

2.1 Scope

A baseline consumer survey was undertaken in tenselect districts: Ilam, Parsa, Morang, Sunsari,Kathmandu, Lalitpur, Palpa, Rupandehi, Banke andDailekh to gauge the level of understanding andawareness of consumers regarding the scope for theirengagement in the process of electricity reforms. Asample size of 700 respondents was surveyed.

2.2 MethodologyThe survey was carried out in five to ten wards inevery district and it was also evident that the localCSOs did not have much outreach to cover their wholedistrict. So it was decided that these CSOs wouldcover at least 60 percent of the total wards of theirhome districts.

One person, preferably head of the family or someother adult member in case of non-availability of thehead of the family was interviewed from eachhousehold.

The survey was supervised by the nodal person whoperiodically met the survey teams and crosscheckedthe filled-up questionnaires. The filled upquestionnaires were finalised only after the nodalperson was satisfied.

In order to identify and address specific genderconcerns, attempts were made to ensure maximumfemale representation not only among therespondents but in the survey team.


2.3 Findings

2.3.1 Education Level of RespondentsOut of a sample of 700 respondents, 27 percent weregraduates; 44 percent were high school pass outs butnot graduates; 12 percent were primary school passouts and the rest 17 percent had even lower education(Figure 61). The survey covered a wide range ofrespondents in terms of education level. Overall, theeducation levels in the select districts was quitesatisfactory and therefore adequate for ensuringeffective participation in grassroot interfacemeetings.

Out of the four percent non-electricity consumers, 33percent mentioned that electricity was too expensivefor them to afford. Non-availability of infrastructurewas cited by 57 percent as an impediment toelectricity access. Furthermore, 10 percent of theelectricity non-users cited other reasons such asaccess difficulties in managing infrastructure, lackof time and resources for managing electricity lines,remoteness of residential locations and governmentapathy for not having access to electricity.

2.3.3 Common Consumer ProblemsIn order to understand the experiences of electricityconsumers in project areas, consumers were askedabout the common problems that they came across inthe previous year. 96 percent consumers cited lengthypower cuts as the most pressing problem. Power theft,cited by 94 percent, is seen as another major problemfor the consumers. For 89 percent of consumers, poorquality of supply with frequent voltage fluctuationswas another major problem. Likewise, 87 percent ofconsumers perceived tariff to be too high and one ofthe key problems (Figure 63).

69 percent considered poor metering and billing as aproblem. Three percent of consumers also citedproblems such as lack of protection from electricity-induced hazards, low rate of electrification, highdeposit amount, and high minimum unit ceiling.

Despite so many problems, it was found that only 12percent of the consumers had ever registered acomplaint. The reasons for not registering anycomplaints ever: 55 percent cited lack of hope in

Below Primary

17%

High School

44%

Primary

12%

Graduate &

above

27%

Figure 61: Education Levels of Respondents:Sample Shares

Domestic

50%

Agricultural

10%

Industrial

18%

Commercial

21%

Other

1%

Figure 62: Categories of Respondents:Sample Shares

2.3.2 Electricity ConsumersOut of all consumers interviewed (700), 21 percentbelonged to the commercial sector whereas 18, 10 and50 percent belonged to the industrial, agricultural anddomestic sectors respectively (Figure 62).

Figure 63: Problems of Electricity Consumers


regard to getting complaints redressed, 22 percentattributed non-registration to the large amount of timeinvolved in registering and then following up on acomplaint, while seven percent gave some otherreasons. Surprisingly, 34 percent gave no reasons forregistering their complaints.

2.3.4 Awareness on the Ongoing Electricity ReformProcessAs mentioned at the beginning of this paper, thereform process in Nepal started in 1992 when a newlyelected democratic government paved way for theprivate sector’s entry into electricity generation,transmission and distribution. However, not manyrespondents were aware of the ongoing reformprocess. Out of 700 respondents, only 11 percent wereaware of the reform process while 89 percent of therespondents were unaware about it (Figure 64).

Similarly, very few respondents (2 percent) wereaware of the electricity regulatory commission’sresponsibilities and functions (Figure 65).

2.3.5 Consumer AwarenessThe universal perception was that consumers werenot adequately aware about the reform process. Thus,they expressed a desire to be informed aboutimportant issues related to the electricity sector andthe reform agenda (Figure 66).

An important objective of this study was not only togauge the level of awareness of the electricityconsumers about their rights but also to capture theirviews on effective ways of information dissemination.

In order to enhance awareness among consumers atlarge, 75 percent suggested the use of mass medialike radio, television and street plays, 70 percentsuggested holding grassroots meetings and 47 percentsuggested organising workshops/seminars.Similarly, 34 percent of the respondents suggestedpublication of newspaper articles while 22 percentsuggested circulation of handouts/small booklets.Two percent of the respondents also suggested otherways of raising awareness, such as by NEA itself, bydelivering public lectures on electricity reform issues,providing training to local organisations, postingpamphlets and forming electricity user groups(Figure 67).

2.3.6 Consultation with Consumers98 percent respondents were of the opinion thatconsumers should be consulted by thegovernment or the electricity regulatory bodyin the process of framing laws and policies,tariff-fixation and formation of otherregulations.

The respondents identified different areas forconsultation with consumers by thegovernment or regulatory body: 82 percentsuggested consumer consultation in fixing

Figure 66: Percentage Incidence of Consumer Awareness

Yes

2%

No

98%

Yes

11%

No

89%

Figure 64: Awareness Regarding OngoingElectricity Reform Process

Figure 65: Awareness About the Existence of theElectricity/Energy Regulatory Commission


tariffs, 70 percent suggested consumerconsultation in the process of enforcement ofelectricity-related laws – potential and useful,65 percent suggested such consultation whileissuing policy guidelines, 49 percent suggestedconsumer consultation while formulatingrules to govern the way electricity companiesbehave, while 46 percent suggestedconsultations while issuing licences to public/private companies. One percent of consumersidentified the need for consultation with themin other areas such as exploring mechanismsfor consumer participation and, moreimportantly, all matters related to electricityreform besides technical ones (Figure 68).

Having identified important areas for publicconsultation, the next objective of the surveywas to identify effective mechanism/s forconsumer consultation as viewed by theelectricity consumers themselves. 86 percentexpressed support for public hearings while48 percent were in favour of nominatingconsumer representatives to advisorycommittees/bodies. 41 percent recommendedinviting written comments from consumers onproposed reforms, and 29 percent suggestedappointing consumer advocates togovernment/regulatory bodies. Three percentof them suggested other methods of consumerconsultation such as television/radioprogrammes (Figure 69).

The survey revealed that only one percent ofthe respondents had ever participated in policyand regulatory decision-making processes inthe electricity sector. 92 percent of therespondents were keen to attend a trainingprogramme on electricity reform issues.

2.4 Recommendations

The survey findings indicate that Nepal’selectricity sector needs reforms.Consumers are facing a wide range ofproblems, including power theft, poormetering and billing, poor service quality,high tariff and power inadequacy.However, their voice goes unheard bypolicymakers. The majority of consumersare unaware of the reforms under way inthe electricity sector. In general, people donot pay attention to the electricity sectorand the government does not take anystep to disseminate information on thereform process. The involvement of NGO's

Figure 67: Suggestions to Enhance Consumer AwarenessLevel: Percentage Support for Sampled Consumers

Figure 68: Important Areas for Consumer Consultation:Percentage Support for Sampled Consumers

Figure 69: Desirable Methods for Public Consultation:Percentage Support for Sampled Consumers

75%


in making consumers aware of the electricity reformprocess and the role of consumers in it is almostabsent. Even well-educated consumers are unfamiliarwith the overall energy sector reform process. Peopleseldom register any complaint despite facing aplethora of problems. To summarise, consumerawareness regarding electricity-related issues has notbeen given due priority by the public at large. Further,effective legal provision for consumer participationin decision-making level is lacking, thus impedingconsumer participation in the electricity sector reformprocess.

On the positive side, consumers are keen onparticipating in the reform process as revealed in thebaseline consumer survey. They feel that they needmore knowledge towards that end. There is a need toenhance consumers’ understanding of electricity-related issues so as to enable them to participate inthe electricity sector reform process. As anoverwhelming majority of consumers are notadequately aware of electricity reform issues,mobilising the mass media and holding grassrootsmeetings, among other measures, can help raiseconsumer awareness. There is also a need forconstituting an effective and efficient complaint-handling mechanism within the institutional set upof the electricity sector.

3. Consumer Participation and their Rolein Regulatory Decision Making

3.1 Present Status of Consumer Participation

Three institutions – DoED, ETFC and NEA – areinvolved in regulatory decision making in Nepal’selectricity sector. DoED, under the Ministry of WaterResources, stands out as the major regulatory bodyin that it issues licences to power projects. Its decision-making process lacks consumer participation. Asregards ETFC, a consumer representative is rarelynominated to the commission despite a provision forit. Similarly, although the Board of Directors of NEAhas four independent members, none of them areconsumer representatives per se. This shows thatconsumer consultation in the decision-makingprocess is almost non-existent.

3.2 Grievance Redressal MechanismAt the central level, NEA has a Public Relation andGrievance Handling Department led by themanaging director. Besides, NEA has technical,administrative and financial sections in each of itsoffices in 75 districts. As most of the complaints areregarding short circuits, voltage fluctuations and thelike, the technical section handles most of theconsumer complaints while complaints of a non-

technical nature are handled by the administrativesection.

3.3 Consumer-friendly Provisions in the ProposedElectricity Law

The proposed electricity law has a number ofconsumer-friendly provisions. The regulatory body,while issuing licence, is obliged to ask localstakeholders to submit in writing their concernsregarding the expected impacts during generation,transmission or distribution of electricity. There arealso provisions for compensation and rehabilitationof people whose land is used for power generation,transmission or distribution. The proposed lawdelegates the responsibility of operation andmaintenance of the generation plants to localcooperative organisations in areas not connected tothe national grid.

3.4 Role of Consumers in Regulatory DecisionMaking

3.4.1 The NeedNepal’s power sector is characterised by lack oftransparency in power purchase agreements andfixation of tariff rates, political interference in theaward of licences, imposition of conditions bydonors, rampant corruption, and resistance by NEAto reforms, including the sector’s unbundling. As aresult, electricity consumers face a wide range ofproblems, as indicated in the outcomes of the survey,including high tariffs, power theft, inadequacy andpoor quality of power supply. In the absence ofconsumer awareness and participation in thedecision-making process as also an effectiveregulatory mechanism, these problems persist. Hence,there is huge scope for enhanced consumerparticipation in regulatory decision making.

3.4.2 The RoleA majority of consumers are not aware of their basicrights and obligations as consumers. Goods andservice providers take advantage of this ignorance tomake undue profit. Anti-competitive practices likecartelisation, artificial shortage and unjustifiablyhigh prices are common in Nepal. The electricitysector is also characterised by sub-standard qualityof service and high tariff rates as well as otherpractices that adversely impact consumer interests.The principal reason for the continuation of suchpractices despite the existence of laws prohibitingthem is the dismal state of consumer awareness andthe lack of consumers to take initiatives to protecttheir rights. This very lack of awareness is responsiblefor the weak enforcement of laws aimed at protectingconsumer interest.


Consumers, therefore, need to take initiatives on theirown to safeguard their rights. The onus is on them tofile complaints whenever they encounter anyproblem, follow up on their complaints withdetermination, explore available legal options forredressal, and keep themselves abreast of the issuesin the electricity sector, including reforms. Anotherviable option is to voice their grievances and concernsin the mass media.

Lack of unity among consumers in Nepal hasprevented them from voicing their concerns andgrievances strongly. They must form a pressure groupwith the assistance of CSOs, to push for regulatoryreforms in the electricity sector. By joining forces, theycan serve as a watchdog to end the prevailingmalpractices in the sector.

3.5 Ways to Ensure Consumer Participation inRegulatory Decision Making

Given that real consumer representatives are not beingnominated for decision-making bodies even whenthere are clear provisions for the same, nominatingthem would be the first step towards ensuringconsumer participation. This should be followed byexpanding and deepening consumer representationand participation in such bodies. The existing top-down approach to decision making process shouldbe changed into a bottom-up approach involving widestakeholder consultations. It is worth noting that suchconsultation should be ex-ante in nature, so thatdecisions having a bearing on consumers are takenonly after receiving inputs from consumersthemselves, and consultations are not turned intoexercises for securing support for decisions alreadytaken.

Public hearings also contribute to enhancing the roleof consumers in regulatory decision making. Theyare an effective means for getting the views, concernsand grievances of consumers across to policy makersand decision makers.

4. Rights and Responsibilities ofConsumersThe universal principle of the rule of law states thatit is the right of an individual to participate in theformulation of laws that affect him/her. The basicconsumer rights included in the UN guidelines forconsumer protection, adopted by the UN GeneralAssembly in April 1985, and updated in 1999 areparticularly important in protecting the rights of theconsumers. They are as follows:

i. The Right to be InformedThis right stresses provision of facts needed for aninformed choice, and protection against dishonest ormisleading advertising or labelling. In this context,consumers in Nepal frequently face power cutswithout prior notice, i.e. they are not provided thefull benefit of this right.

ii. The Right to ChooseGiven that the NEA exists as the sole provider ofelectricity in Nepal, consumers cannot make use ofthis right which allows consumers to be able to selectfrom a range of products and/or services offered atcompetitive prices with an assurance of satisfactoryquality.

iii. The Right to be HeardThis right to have consumer interests represented inthe making and execution of government policy, andin the development of products and/or services isalso not implemented in Nepal’s case despite legalprovisions.

iv. The Right to RedressThis right ensures that consumers receive fairsettlement of their claims, including compensationfor mis-representation, shoddy goods orunsatisfactory services. As with other rights itsenforcement in Nepal is also poor.

v. The Right to Consumer EducationThis right empowers consumers to acquire knowledgeand skills needed to make informed, correct andconfident choices about goods and services whilebeing aware of basic consumer rights andresponsibilities and act on them. However, consumereducation is seldom provided in Nepal. Electricitysector is no exception.

In addition, Nepal’s Consumer Protection Act doesnot explicitly define consumer rights regardingelectricity service. However, it does provide for qualitycontrol and checks against improper practices in theservice sector in general.

Consumers have the following responsibilities:• Lodging complaints when they face problems in

the supply of electricity and seeking all possiblelegal remedies.

• Updating themselves on the issues related to theelectricity sector, such as cost of generation, powerpurchase agreements and pricing, and thesituation in other countries.


• Serving as a watchdog and making policies anddecision makers transparent and accountable.

• Cooperating with the service provider by agreeingto provide land for putting up transmission lines1.

• Uniting to strengthen bargaining power so as topressurise the authorities to address theirconcerns more effectively.

• Reporting malpractices such as power theft to theauthorities concerned2.

• Using energy-efficient appliances and refrainingfrom wasting energy.

Role of CSOs

CSOs have an important role in informing consumersabout their rights, roles and responsibilities in regardto the electricity sector.

• Raising awareness of consumers on various issuesin the electricity sector, including theirresponsibility to check power theft.

• Bringing together consumers by, holding publichearings and forming consumer groups so thatthey can voice their concerns and grievances.

• Providing free counselling services to consumersregarding their rights as electricity consumers andthe procedures for redressing their problems3.

• Serving as a bridge between consumers andauthorities.

• Advocating consumer rights, includingparticipation in the decision-making process, andlobbying lawmakers and policymakers on behalfof consumers.

• Suggesting and pressurising the government toset up an office of the Electricity ConsumerAdvocate that can give voice to the concerns ofelectricity consumers and protect their interests,provide grievance redressal and represent themwherever the need arises.

• Given the limitations of means and resources,assist the government in training and capacitydevelopment of policymakers and lawmakers.

5. Conclusion and RecommendationsOn the basis of the baseline consumer survey and anassessment of the existing regulatory mechanism ofthe electricity sector, it can be concluded that the levelof consumer awareness is dismal and consumerparticipation in the regulatory decision-makingprocess is almost non-existent. Though there areprovisions for consumer representation in the

policymaking process and in the structure of theregulatory bodies, consumer representatives have notyet been nominated to relevant bodies.

It was also found that consumers, despite facing ahost of problems such as power theft, poor meteringand billing, high tariff, lengthy power cuts, andquality of service of seldom seek legal remedy bylodging complaints. There is, therefore, an urgentneed to raise consumer awareness.

Consumers want to be consulted on various issuesin the electricity sector that have a bearing on them:tariff fixation, enforcement of electricity-related laws,issuance of policy guidelines and formulation of lawsgoverning the way electricity companies behave. Theauthorities concerned should start consultingconsumers in these areas.

As an overwhelming majority of consumers considerpublic hearings to be an effective means ofconsultation, such hearings should be held. Otherways of ensuring consumer participation arenominating consumer representatives to advisorycommittees/bodies, inviting written comments fromconsumers on proposed reforms, and appointingconsumer advocates to government/regulatorybodies. Last but not least, there is a need forconstituting an effective and efficient complaint-handling mechanism within the institutional set up.

CSOs have an important role to play in raisingconsumer awareness and increasing consumerparticipation in the regulatory decision-makingprocess in the electricity sector. Likewise, the proposedelectricity law containing consumer friendlyprovisions should be enacted and enforced at theearliest.

In this context, the RESA project is a timelyendeavour. Given the dismal consumer awarenesslevel and sluggish reform process in Nepal, theproject is expected to contribute to changing the statusquo. It will help raise consumer awareness about theirrights, roles and responsibilities, and exert pressureon the concerned authorities and relevant decisionand policy makers to consult consumers whilereforming the power sector and then will provideimproved quality of services. It will also bring togetherconsumers and enable them to articulate theirconcerns and grievances.

1. The state should increase relevant compensation to a reasonable level. The proposed electricity law is expected toaddress this problem.

2. This requires awareness and unity among consumers at the ward level.3. They can encourage consumers to lodge complaints and seek legal redressal of their problems.


Reflections on the Project

“Everyone knows that sustainable development in South Asia requires major reform of the powersector. Too often, however, reform has failed to take into account the needs and views of ordinaryconsumers nor has it provided skills and opportunities for community workers or academics toplay a role. The RESA project is an outstanding exception. From the beginning grassroots capacitybuilding and active involvement of consumer advocates has been blended with best practices fromother countries. Baseline surveys have allowed clear measurement of what has been achieved whiletraining and feedback will ensure ensuring capacity. RESA is a great model for other projects”.

Allan AsherChief Executive Officer, Australian Communications Consumer Action Network

“Consumer participation in regulatory process is the key to protect their interests and making theprocess accountable and transparent. The initiative taken by CUTS under RESA Project to build thecapacity of consumers/CSOs to enable them to effectively participate in the regulatory process isindeed a commendable step. Considering the commitment and involvement of CUTS in protectingand furthering consumers interest, a representative of this organisation has been inducted as amember of the State Advisory Committee of the Commission”.

D C SamantChairman, Rajasthan Electricity Regulatory Commission

“The RESA Project undertaken by CUTS along with its project partners in Nepal and Bangladeshadds significant value to the body of knowledge currently available on consumer issues in theregulatory and policy issues in the electricity sector. The findings reflect that consumers are keen toget involved in the process and this should be noted by the concerned organizations as an immediateaction point. I hope that the Policymakers will utilise this Report in improving the electricity regulatoryscenario in India”.

J L BajajDistinguished Fellow, The Energy and Resources Institute, India

“CUTS International has undertaken a pilot project for Capacity Building on Power Sector Reformin Bangladesh, India and Nepal. The Power Sector Reform Programme in Bangladesh is unplannedand non-transparent. Besides, in absence of government investment, reform activities have beenseriously suffering with lack of coordination and consistency. Under these circumstances, RESAproject undoubtedly is significant and valuable in context of capacity building on the power sectorreform in Bangladesh”.

M. Shamsul AlamProfessor, Electrical & Electronic Engineering Department

Chittagong University of Engineering & TechnologyBangladesh

“The RESA project implemented by CUTS is a unique effort to build the capacity of electricityconsumers in Rajasthan. Infact, CUTS has been active in Rajasthan in the area of electricity sincemany years and I happened to be a witness of few such programmes, when I was Supdtt. and ChiefEngineer in the erstwhile RSEB. Like always, the efforts through RESA has not only contributed inraising the consumer awareness level on rights but also their responsibilities and it has been able toprovide a better platform to improve relations among consumers and utilities”.

R.G. GuptaChairman and Managing Director, Ajmer, Jaipur and Jodhpur Discoms, Rajasthan


“...a valuable study produced by CUTS International on electricity reforms and regulation in Nepal,Bangladesh and two states of India. It makes a point that around 50 percent of their populationhave no access to electricity due to rampant theft, poor metering, billing and collection, unaffordabletariffs, poor quality of electricity service and frequent shortages. To overcome this situation, one ofthe solutions is to induce the private sector to enter the sector and for that policies have to change.These lessons come clearly from this study”.

S L RaoChairman, Institute for Social and Economic Change, India

“The Regulatory Reforms in South Asia (RESA) project being carried out under the direction ofCUTS is an ambitious and important project. The past two decades have seen dramatictransformations in the electricity industry, including privatisation, introduction of competitionand use of new forms of regulation. Too often the people that have suffered as countries ‘experiment’to find workable structures are the poorest, most vulnerable consumers. The value of this project isthat it seeks to build capacity in the vulnerable groups so that they have a voice in the process andcan ensure that their interests are represented throughout the process”.

Steve ThomasSenior Research Fellow, Public Services International Research Unit

“I have observed and actively participated in events organised as part of RESA project in Nepal,which brought together consumers, service providers and other key stakeholders. This interactionhas definitely helped improve the service and the relationship between the utility and its consumers.The project has been successful in creating short-term linkages among key stakeholders, such asservice providers, consumers, lawmakers, special interest groups and pressure groups. I wish thatSAWTEE and CUTS International will continue with the project, which deserves appreciation andcompliments”.

Sher Singh BhatDirector System Operation, Nepal Electricity Authority

“Electricity Act 2003, opened up the avenues for Reform and Restructure of Power Sector to make itan efficient and self-propelling vehicle for economic advancement. One of the biggest stakeholdersin the electricity market are the consumers. So it is essential that this section of stakeholders have aproper clarity about the electricity market. CUTS International has contributed reasonably in raisingconsumer awareness about reforms in electricity sector – thus making it effective. I have had theprivelege of attending some workshops, seminars and conferences of the RESA Project conductedby CUTS for the state of West Bengal. I am sure that such efforts will help in developing a maturedelectricity market which will offer greater transparency for all stakeholders including consumers.Efforts such as RESA project need to be encouraged and continued”.

Prititosh RayFormer Member, West Bengal Electricity Regulatory Commission.

“I had the opportunity to associate with the operation of the RESA project in West Bengal duringmy tenure as the State Power Secretary over 2005-09. During this period, I was involved intensively,in conceptualising and design of programme for restructuring the state-owned power sector toachieve alignment with the requirements of the Electricity Act, 2003.The RESA project offered awelcome initiative to allow the proactive participation of electricity consumers in the complex butcritical reform process through a holistic understanding of its different dimensions commencingwith the requirements and process of its regulation to the nuances of its delivery to the homes ofindividual consumers. The project was, therefore, supported in all its spherers by the state-ownedpower companies that succeeded the erstwhile West Bengal State Electricity Board from April 2007.It was my experience that the efforts invested by CUTS were commendable. I believe that the increasedawareness that this project has generated will allow civil society and other electricity consumers’fora to contribute meaningfully in improving the delivery levels of electricity – a vital component forsustaining economic growth in the State of West Bengal”.

Sunil MitraRevenue Secretary

consumer empowerment in electricity reforms - … empowerment in electricity reforms ... published...

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