Technically speaking

CAG raps TNERC’s lack of monitoring of TANGEDCO’s competitive bidding process in implementation of the TN Solar Policy 


The Tamil Nadu Electricity Regulatory Commission (TNERC), in December 2012, issued a Consultative Paper on ‘Orders on Issues Related to Tamil Nadu Solar Energy Policy 2012’. The Citizen consumer and civic Action Group (CAG) which has been actively advocating and campaigning for transparency and accountability in the power sector of Tamil Nadu, has submitted its objections against the competitive bidding organized by TANGEDCO and henceforth presented its views to the TNERC in response to the call for comments for the Consultative Paper. 

These comments have to be seen in light of the TN Solar Policy 2012 given by the Tamil Nadu Government in November 2012. This Consultative paper appears to have come at a time when TANGEDCO seems to be in a haste to start the bidding process (substantiate), which - according to news reports- has created disagreement between potential developers and TANGEDCO in terms of transmission , wheeling issues and other aspects. In response to the Consultative paper, we have sought TNERC’s intervention to rectify the same before it turns into a fiasco. We have also posed questions to TNERC highlighting the need for their intervention. Our fears about the hasty approach to this issue were proved right. News reports in early January suggested that there were doubts in the minds of potential developers about the competitive bidding process, technical issues, the Power Purchase Agreement (PPA) and the time frame allotted to them to implement the project. The projects have to be unveiled at a punishing pace: companies have to acquire land, line up financing, build the solar farms and switch on the power by the end of this year. Reports indicated that there were two doubts in the minds of developers — (a) payment security given the fact that the buyer of the power, TANGEDCO, is almost bankrupt (b) availability of grid, because wind power people in the recent past have been unable to sell their power because the grid was not made available to them. But neither issue has been addressed adequately by TANGEDCO so far. This has resulted in bidders cumulatively accounting for solar power projects with an aggregate capacity of 500 megawatts, as against the call for projects with 1000 mega watts as the target. News reports now indicate that TANGEDCO might soon call for another round of bidding. 

In the draft consultative paper, TNERC has pointed out that Sec 108 of the Electricity Act, 2003, states that all the policies given by the state government have to be guided by the state regulator. But, Sections 61 and 62 of the Act state that the TNERC should determine the tariff and other aspects so as to balance the interests of the utility in terms of cost recovery as well as protect consumer interests to prevent exorbitant prices being thrust on them. Further, Section 63 of the Act states that TNERC shall adopt the tariff only if the competitive bidding process is transparent. From the above, it is seen that competitive bidding process has anything but transparent; the whole process has been shoddy, opaque and rife with discontent among the solar promoters. These are CAG’s concerns about the issue, which formed a part of our response to the draft consultative paper: 

Firstly, has the TNERC been monitoring the competitive bidding process of TANGEDCO? 

Secondly, in terms of price discovery by way of competitive bidding or reverse auction, has the TANGEDCO come up with a reserve price whereby they cannot afford to pay above that price as it will unnecessarily burden the consumers? If so, what is the rationale for arriving at the reserve price? 

Thirdly, what has the TNERC been doing in order to ensure that the competitive bidding process is ‘transparent’ - mandated according to the Act? It is the duty of the state regulatory commission to ensure transparency, according to the Act, as a non-transparent or opaque bidding process will result in collusion and price rigging leading to higher prices. 

Fourthly, what is the TNERC doing to prevent the adverse effects of competition? In essence, the key questions are: How to balance incentives to investors with protection of the interests of consumers for affordable electricity? What will be the impact of solar tariff on Annual Revenue Requirement of licensees? 

Fifthly, what is the status of the draft PPAs? Karnataka SERC has made it a point to develop a draft PPA which is easily accessible on their website. Maybe the TNERC should develop a template PPA for Solar Power. This will clarify numerous doubts and act as a neutral document. 


Grievances of farmers in Tamil Nadu and CAG's observations

On May 30th 2013, Citizen consumer and civic Action Group (CAG) and ‘Siruthuli’, which is a part of the TEGI Net¬work, organised an meeting to bring to light the problems faced by farmers with regards to supply and distribution of electricity and to come up with feasible solutions. Letter to the Energy Secretary was sent on the same. Given below are the problems faced by the farmers along with their solutions and CAG’s observations.

• Erratic Electricity Supply Affecting Farm Operations: When asked how the supply of electricity affected the functioning of the farms, the farmers said that there was no continuous supply of electricity (irregular) and there were spikes in the supply resulting in no proper availability of water. This has had a two-fold negative effect- a) get¬ting labour is difficult and expensive and b) even perennial crops were getting affected.

• Open to introducing feeder level meters: To a suggestion that introduction of metering of pump sets would quantify the actual supply and thus lead to greater accountability, the farmers unanimously rejected it. They feared that metering would lead to stoppage of free electricity supply which they were now getting for pumping water from great depths. However, they were open to the proposal of dedicated agricultural feeders and metering of these feeders.

• Mismanagement of Subsidies: Asked about subsidies for energy efficient pump sets, the farmers said that pro¬curing these pump sets was a very tedious process. They also claimed that when subsidies were announced, deal¬ers raised the cost of the pumps resulting with no actual benefit to the farmers. They said that they should be al¬lowed to purchase the pumps directly and should be entitled for direct reimbursement from the government.

• Red Tape in Procuring New or Shifting Electricity Connection: With regard to new connections, farmers said that getting a new connection was a major problem and unless one knew someone who was influential, it was very difficult to get a connection. Even relocating connections based on shifting water sources – a standard opera¬tion in agriculture - was very cumbersome and time consuming.

• Uses of pumped water: There is confusion among the farmers and TANGEDCO on the uses of water pumped. For example, the farmers stated that keeping cattle was part of a sustainable agricultural process. However, the TANGEDCO imposed penalties for water used for washing milk containers. TNEB officers came without notice, cut off supply or levied huge penalties without giving them an opportunity to voice their problems/views. The problem of corruption was also rampant, they said.

Solutions proposed by Farmers:

• Solar Energy: Farming required continuous electricity of good quality. They proposed that solar energy could be used for energy for domestic purposes as also advertising and street lighting. The percentage of electricity thus saved should be used for agriculture. Efficient implementation and maintenance should be done to make it viable. Planning for Solar power: Standalone solar power generation units should be connected to grids and that power should be used for pump sets;

• Predetermine New Connections: The solution suggested was that new connections to be given to each district and should be planned & pre-determined and not ad-hoc as currently being done.

• Feeder Level Metering: Provide for separate transmission lines and meters at the feeder level for agriculture.

CAG’s Observations

• It is submitted that Energy Department take into account the critical energy - water - agriculture link in planning and implementation. There is an urgent need to inform, interact with and educate the public, especially farmers. There is a lack of coordination between agriculture, energy and water resources departments. It is highlighted that free but erratic and interrupted power is leading to wastage of water and ground water depletion. The farmers spoke of varying heights of 900, 700, 1000 feet of seasonal water availability necessitating the usage of high ca¬pacity motors. There is an urgent need for best irrigation practices to be demonstrated to farmers to promote energy conservation and water conservation. The Agriculture Department in coordination with Energy Department should look into the pro¬moting best irrigation practices by farmers with regard to water usage. It was highlighted that good irrigation practices can minimize the use of pumps (saving electricity) and conserve water.

• The inefficacy of solar pumps in Coimbatore is due to low water tables. During the workshop, it was pointed out that that pumps using solar energy did not have the ability to pump water as efficiently in low groundwater areas as intensity of solar days was a limiting factor in using these pumps. E.g. Pumps were found to be efficient only when there is peak sunshine and its efficiency declined in the evening.

• Free power is vital for farmers but they are also open to some level of payment of payment for continuous and quality power.

• Energy department should look into subsidy mismanagement by those dealers who hike up the rates of the pumps and earn illegal profits from farmers. Subsidies have no effect on the price of the product.

• A single stop coordination point should be setup in all electricity distribution circles to look into farmer griev¬ances and to facilitate necessary clearances for their routine agricultural practices.