BOOK REVIEW. Charged account

Reams have been written on the subject of electricity reform in India, but few provide lasting light, lucidity and perspective on the subject. Many Sparks But Little Light: The Rhetoric and Practice of Electricity Sector Reforms in India (Prayas Energy Group), however, is an exception. It covers virtually all aspects of a quarter century of India’s electricity sector reforms, unsparing in detail, and rigorous in its analyses. For analysts, policymakers and environmentalists concerned with India’s power sector, Prayas Energy Group’s work is an indispensable volume.

PEG, which was at the forefront of the campaign against Enron, shows how the transition from an era of dubious power purchase agreements, based on high cost, imported fuel (backed by government counter- guarantees promising extraordinarily high rates of return on investment to private producers, in case the electricity boards did not pay up) to one of competitive bidding has been quite a noteworthy one.

From the shenanigans of Enron to the denial of cost pass-through by the Supreme Court this April, sought by Ultra Mega Power Projects of Tata Power and Adani Power, the journey suggests the development of some sort of institutional capacity. While energy conglomerates still wield extraordinary political influence in shaping policy, the emergence of renewables could lead to a subtle political economy shift away from coal and oil majors. The challenge today is to negotiate the opportunities and challenges thrown up by the exponential growth of the solar sector in particular, where bidding has made it competitive with respect to coal. However, it is as yet not clear whether these remarkably impressive bids are as good as they seem.

Renewables account for 6 per cent of the electricity generation mix and about 13 per cent of India’s installed generation capacity of about 290 GW. Transmission companies need to work on their grids, and Discoms need to alter their 'renewable purchase obligations', now based on a cost-plus, feed-in tariff system. Those which have entered into contracts to buy solar power at over, say, ₹7 a unit could well want to scrap the deal, in view of falling costs. Policy intervention could prevent litigation. Given the social and environmental problems of going hydel or nuclear, the question is whether wind and solar can replace hydel in meeting peak-load power in the short run and eventually, with the evolution of storage technologies, become a viable base load option. The book could have explored this aspect further.

On the repeated efforts to clean up the finances of discoms, the book makes an insightful observation: “Over-procurement of capacity and lack of scientific demand estimation has led to many generating plants not being run...Discoms pay these idle plants for the fixed costs incurred...” This goes beyond the usual 'mismanagement', 'political interference' debate. The book avoids stereotypes such as singling out subsidised power to agriculture as the villain of the piece, explaining that power theft confused with agriculture use.

While agreeing that electricity tariffs for industrial users are more than elsewhere, it points to improved institutional climate and an emphasis on demand-side measures as efficiency-enhancing measures. While the political economy of electricity is an undercurrent in this comprehensive account, the stark issue here is whether high-end consumers, such as malls, should be paying the same price as the aam aadmi .

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