Power ministry sets up regulatory compliance division for monitoring

The Union power ministry said on Thursday that it has set up a regulatory compliance division to monitor the adherence of regulatory parameters by the state-run electricity distribution companies (discoms) and state electricity regulators. Key issues such as timely and adequate tariff revisions, limiting cross-subsidies to acceptable levels and ensuring renewable purchase obligations (RPO) by discoms come under the purview of state regulators, and these regulations not getting implemented uniformly across the country causes disruptions throughout the power sector value chain.

Irregular tariff revisions limit the discoms’ ability to become financially viable, which in turn, leads to delayed payment to power generators and makes it difficult to maintain and upgrade their own network and systems. The Centre has already asked the states to restrict the creation of fresh “regulatory assets” — a jargon for recoverable discom expenses which regulators acknowledge as pass-through costs, but are not immediately built into tariffs — and clear the existing regulatory assets soon. Raising charges for open access and denying open access approvals have also been cited by the industry as a few regulatory constraints impacting the faster adoption of renewable energy.