Why states indulge in grid indiscipline

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Part I: Darkness in economic noon

At the state level are electricity boards and private companies that have their own generating plants, and at some places even transmission and distribution apparatus.

In the post-1991 phase, independent power producers were allowed to operate in India. However, more often than not, demand outstrips supply at the state level.

This is where the federal power utilities like National Thermal Power Corporation and National Hydroelectric Power Corporation acquire significance. They have power generation plants all over India.

The public sector units, with a certain installed capacity, sell power to states. The government stipulates quotas for states, after ascertaining variables like demand, real necessity, etc. This is to ensure that no state gains at the expense of other states.

The Power Grid Corporation of India Limited is the transmission agent that evacuates power from national utilities to the states. It has interconnected regional grids which are linked to the state grids.

In theory, power generated in one part of India can be supplied to any other part on the supergrid (comprising national and provincial grids). Generally, power is generated and distributed region-wise.

At any given moment, the load on PowerGrid's transmission apparatus is a function of the power generated at plants. Power generation is itself a function of variables like fuel availability, etc, and so may vary from day to day.

Although states are entitled to the stipulated quotas, in reality they have to draw electricity as per PowerGrid's day-to-day directives.

For example, if the total capacity of national utilities is 100 megawatts, and a state is entitled to 5 per cent, it can draw 5 MW from PowerGrid. But if generation falls, for whatever reason, to, say, 75 MW, then the state is expected to draw 5 per cent of 75 MW or 3.75 MW.

Accordingly, the state is expected to cut down consumption to that extent. This would mean the state may have to either ask its power consumers to lower their consumption, or enforce it by way of power-cuts and other measures. This is called load-shedding. The adherence to stipulations is called grid discipline.

The CERC is the agency entrusted to enforce the discipline by way of a grid code.

However, in reality, states seldom maintain grid discipline. Problems arise when, in the above example, a state draws up to 5 MW (the official quota) instead of 3.75 MW.

When several states turn errant, the apparatus is strained to the limit, leading to systems breakdown. The 'limit' is 47.5Hz frequency (47.5 cycles per second) whereas the desirable figure is 50Hz. If the frequency hovers between these figures, it would mean poor quality of power, a common problem in India.

The CERC first sought to implement the grid code in January 2000 but a court stay order put paid to the plan. The grid code will become operational only when the availability-based tariff is introduced in different regions, starting with south. The rest of India will see a staggered implementation in 2001.

Why states turn 'errant' is a subject in itself. The reasons range from political expediency (appeasement of 'power'-hungry farming community or industry lobbies who double up as vote banks and financiers, respectively) to mismanagement of state electricity boards to pilferage to sudden rise in demand due to cold weather conditions.

That they can get away with grid indiscipline further emboldened the states. Even if they overdrew, they paid normal rates. There was no deterrent. "There was no inducement not to overdraw," says Bhanubhushan, director (operations), PowerGrid.

But under the availability-based tariff structure, power utilities will have to pay at a higher rate if they overdraw. Authorities think this will put the erring states on guard. "The framework for streamlined operations of the regional grids will also fall in place with the availability-based tariff. Financial incentives for scrupulous performance will hopefully reform SEBs," says Bhanubhushan.

Overdrawal by states, however, is not the only reason why grids fail.

PowerGrid's countrywide supply points (load dispatch centres) determine demand and load factors and advise plants (some of which are owned by states) to generate power accordingly. However, if such instructions are not heeded to, grids may break down.

When load is excessive and power generation less, systems trip. Since hydroelectric power is a substantial chunk (30 per cent) of overall electricity generated in India, generation may dip due to low levels of water in reservoirs, again a common problem in India where rainfall is a function of erratic monsoons. Adverse weather (lightning) can also spark a crisis. When grids fail, plants connected to them stop power generation. It is a vicious cycle.

Grids may fail due to purely technical reasons (faulty equipment) or when transmission lines are disrupted.

SEBs do not function as purely business entities. Often, they offer power at subsidised rates for political reasons. Thus cash-strapped, SEBs are unable to expand their own capacities. Economist and power industry observer Dr Kirit Parikh, director, Indira Gandhi Institute of Development Research, Bombay, says SEBs are driven merely by the desire to meet the demand and buy public peace, without being profit-oriented.

So they turn to national utilities to meet the growing power demand. The selfsame states that frequently overstep their limits, seldom pay their power bills promptly. Consequently, the national utilities face financial crunch; this affects their maintenance, upgradation and modernisation plans. This would mean an economy powered by vulnerable power stations. "This is not to say that India's power equipment is substandard. But it is not top class either," says a Tata Electric official.

"Grid failures are accidents. It is not possible to control them. These happen in milliseconds and have a cascading effect. One can compare this with blood pressure problems of humans. You can control BP, maintain good health, but there is no way you can control accidents," says a senior official of PowerGrid. Agrees WREB's Velayuthan. "Breakdowns can happen anywhere, anytime."

Grids have in-built mechanisms and back-up systems to ensure that the cascading effect of a failure is minimal. The grid's design is such that it splits into 'islands' automatically in the event of a failure. Bombay is one such island. Delhi is another.

A senior official at Tata Electric Companies, who has frequent interactions with PowerGrid and SEBs, says there is no dearth of intellect in the workforce. "They have a sound understanding of the systems, the problems and the solutions. Only, there is too much of political interference in the day-to-day operations. One more basic problem is generation is short of demand, even though the installed capacity is adequate."

IGIDR director Parekh says there are fundamental problems in the way power is generated and used in India. The southern grid, he says, is unduly dependent on hydropower whereas Maharashtra is more suited to use it. He also blames the states that "don't trust their neighbours and wish to maximise their own profit, little caring for the grid's profit".

Part III: How to overcome power breakdowns in India


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How to overcome power breakdowns in India
Part I: Darkness at economic noon
Part II: Why states indulge in grid indiscipline
A slew of solutions are being suggested by experts. Tata Electric's officials feel availability-based tariff is mandatory for power utilities.
Parekh says that badly behaving SEBs can be checked in two ways. One is a technical solution. Put in place systems that trip if a state drags more power. Two, introduce incentive compatible pricing where the price of power is a function of the grid's frequency and time of the day.
In other words, if a state draws more power even when the grid frequency is vulnerable, make it pay for its indiscretion.
A senior power ministry official says that the devil-may-care style of public sector functioning will hopefully change with stricter controls. "If the central government makes it clear that power breakdowns will be seriously dealt with, everyone will behave."
Parekh however says transmission being a public sector activity has nothing to do with the problem. Wholesale privatisation is not the answer. "You cannot separate generation, transmission and distribution too much. Power is a strategic sector. A certain degree of regulation is necessary. I'd prefer one common owner of transmission facility for large economies of scale."
Power Minister Suresh Prabhu says a long-term perspective is necessary. "I've ordered close monitoring of load dispatch centres. The power sector reforms have to be put on fast track. Breakdowns are a symptom; the malaise is somewhere else. There is not enough investment in transmission and distribution. The solution is three-fold: legal, organisational, and technological.
"Experts may debate strong measures, but I've gone ahead and issued directions that punitive action be initiated against those responsible for breakdowns. If states and SEBs don't fall in line, we will cut off power supply. Thankfully, the World Bank, which is acting as a catalyst in the reform of SEBs, is in agreement with my perception."
CERC member Sinha says that the real challenge is to make the various offenders realise their responsibility and to educate them on why grid discipline is important for all. "We do not want to be seen as a harsh organisation.
"We are all the time talking of grid management but the right thing to discuss would be greed management. Both the suppliers and the beneficiaries are greedy. The suppliers want to generate more power so that they can claim improved performance while those who buy power want more and more of it to maximise their profits."
The CERC has invited SEBs and the Central Electricity Authority for a public hearing on January 15 to discuss the issue threadbare.
EXTERNAL LINKS
How Power Distribution Grids Work
Meeting India's Future Power Needs
Indian Power Sector: Change of Gear
Overview of India's power sector
Union Ministry of Power
Power sector in Ninth Five Year Plan

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