Excerpts from IEEE (USA) on Power Sector Reforms, February 2000

Voice of Electricity Workers

July - September 2001

NATIONAL CO-ORDINATION COMMITTEE OF ELECTRICITY EMPLOYEES & ENGINEERS

6, TALKATORA ROAD, NEW DELHI – 110 001.

Tel: 3317141, E- mail eefi@id.eth.net Fax: 3753149

Attention: Shri. Ajay shanker Date: 31^st July 2001

Jt. Secy. (Power)
Fax 3715378

ON POWER SECTOR REFORMS
Excerpts from IEEE (USA) on Power Sector Reforms, February 2000

Special Issue on the Technology of Power System Competition

Competition has been introduced in power systems around the world based on the premise that it will increase the efficiency of this industrial sector and reduce the cost of electrical energy for all consumers. Genuine competition is not possible without unbundling the generation, transmission, distribution, and retail activities that were traditionally carried out by vertically integrated utilities. From am economist’s perspective, unbundling and competition have undeniable advantages: greater transparency in prices that discourages cross-subsidies and uneconomic policies , exposure to market discipline that rewards good management and punishes inefficient organisations, greater opportunities for innovation, and more incentives to respond to consumer needs.

Electrical energy is not, however, a simple commodity. Unlike other forms of energy it cannot easily be stored in large quantities. Continuity of supply thus has a value that can be much higher than the cost of the energy consumed. Furthermore, from an engineer’s perspective, separating generation from transmission is a sweet fiction. Any limitation in the transmission system will distort the generation market and operating the transmission system without the assistance of the generating plants is unreasonably costly.

Widely different structures have been adopted for electricity markets in different regions. It seems fair to say that none of these structures offers completely satisfactory answers to the following questions.

How can the economic aspirations of consumers (lower prices) and suppliers (high profits be balanced against the reliability expectations of these same consumers? In other words, how low can the prices go before the lights start flickering off too often?
How can the transmission system be managed to promote fair and efficient markets?
How can an unbundled industry structure deliver the reliability and quality of supply that customers want? Can such an industry structure provide different reliability and quality levels depending on the needs of some customers or groups of customers?
Power system stability depends on the state of the whole system and can be maintained in the face of unpredictable events only through coordinated action by all parties. How should standards be set, information exchanged, responsibilities shared, and corrective actions taken to keep the portability of system collapse at an acceptably low level without unduly hampering competition?

Courtesy: IEEE ( USA)

B.S. MEEL

(On behalf of NCCOEEE)


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