Consumer Activism Vs Energy Economissm ?
Ganga Prasad G. Rao
Ever so often, we come across those occasions
when our professional prudence is extended and challenged by ethical dilemmas.
Physicians weighing the pros and cons of referring a patient for a procedure or
to a specialist not unaware of the gain to their practice; an HoD extending the
PhD program of a candidate to squeeze out a couple more semesters of teaching
to avoid a costly faculty recruitment; even policymakers and bankers winking
lagged-asynchronously with the RBI when it comes to monetary moves that shake
up the bourses. But would it be 'harakiri' of an Energy Economist to break the
bounds of his discipline, tear the fence of professional decency and question
the logic of revised power tariffs -
self-interest or otherwise?
Just the past month, the Chief Minister of TN
proposed the revised power tariffs applicable for various classes of TANGEDCO
customers. Surprise, surprise....No surprise! The tariffs were merely an
escalation of rates for various slabs - more taxing of the Conspicuous
Consumer than of the 'Cave dwellers'. My angst at the revised tariffs stems not
as much from the hike; the hikes are significant and perhaps necessary; it is
about all the other factors that go in to the price of power, but are taken for
granted by the authorities, and sadly, forgotten by the consumer.
I am no Buddha, the Enlightened, but yes, the
tariffs announced are meant for supply of power at 220 volts. But in India,
where discounts are a way of life, would you really blame the TANGEDCO for
delivering power discounted of its voltage? If I were the devil himself, my
repartee would be: Doesn't the refrigerator chill your beer at 200 V? And
aren't your TV images even more sinuous at 180V? Then why the sermon? Just play
along and pray while the reaper reaps the guaranteed return on the expanded
asset base necessary to fulfill the incremental demand of them power thievers!
Correct me if I stray from truth, but a tariff
hike is meant to garner additional revenues, and alleviate the recurrence of extended power-cuts. And yet, the hike in tariff has had
virtually no impact upon the hours of power interruptions that consumers suffer
in the State. A 50% increase in tariff rate in certain slabs has no supply
response? Incredible? Or, has TANGEDCO found it expedient to exploit the
habit-formation around the routine power cuts to hawk within-state power
generation and its quota from neighboring states at Rs12 a unit and get away
with the excuse the loot covers for past subsidies (which in reality have since
been 'capitalized' in asset reconstruction involving replacement/expansion of generation
capacity)? If uninterrupted power were supplied at Rs5 a unit, I wouldn't be
the fool for paying the same tariff with 60 hours of scheduled monthly
interruptions and, lord be kind, as many number of unscheduled interruptions at
various times of the day in peak summer? Would I be? Perhaps the tariffs are a
package deal for consumers with implicit 'peak utility reduction'? Know what I
mean, Consumer Economists?
True, prices are determined by supply and demand
(indeed, water sells at a premium to gasoline), but shouldn't a socialized
power sector feeding off public sector coal companies, pass on to consumers the
cost-savings from new generation and transmission technology, from scale
economies, and from efficiency gains from tapping the expanded national power
grid, not to mention the gains from competition consequent the entry of new
firms and the advent of new generation, transmission and distribution
technologies? Instead, and to the contrary, I fear our power regulators are dancing
the tango with political bigwigs to delay new investment in carbon- and
non-carbon-based generation in line with a FII-dictated tariff and stock price
'expectations' (For those of you economists, 'rational expectations' indeed !)?
Power may be a commodity on the grid and at the power exchange, but it sure
turns a luxury closer to your home!
So, wise guy, where are we going with all this?
Preach not, if thy hath not the cure. The cure, hallowed be thy name, is almost
divinely simple. Thanks to the fore-sighted engineers of past decades, we boast
of a widespread, almost universal prevalence of 3-phase power connections to
end users. Let's leverage the same to switch over to a '3 phase - 3
distributor' configuration and introduce competition among power distributors
at the consumer end of the network. With suitable hardware and software
enhancements, including and in particular, a 'multi-supplier' digital power
consumption meter with memory and 2-way interactivity, each power consumer -
whether residential, institutional, commercial or industrial - would, by way of
their 3-phase connection, have the option to put on tap one of three
distribution companies for any one tariff period: the local SEB supplying power
on a conventional, subsidized, slab-tariff basis; a nationally-competitive
power supply firm, that drawing upon its wide reach thru the power grid, offers
power on a 'Time of Day' basis; and an internationally competitive 'Full-cost
Green Power' that exploits natural, geographical, and seasonal advantage to
offer power on a 'day ahead prices' basis. Consumers, with the option to switch
between the 3 phases (which now double up for 3 distribution firms) would have
the choice to exploit state subsidy, national competition in power generation,
and, even nature's bounty! All that it'd take for consumers would be to verify the day-ahead
'Green offer' on their 'multi-supply' meter, evaluate its competitiveness vis-a-vis, on
one hand with the time-invariant tariff slabs for SEB power, and on the other
with expected National ToD prices, and, with a flip of the phase-switcher, lock
their choice for the 'morrow. The ensuing competition from the recurrent household, commercial and industrial choices, would resolve many
ills that plague the current system: lack of competition in power supply, lack
of consumer choice, the tyranny of 'scheduled' power cuts, the nasty surprises that
unscheduled interruptions are, and even voltage woes. Power generators and
distributors too would receive signals from the various classes of power users
and attune their fuel, generation and pricing strategies. All stakeholders -
generators, transmission firms, distributors and end users - stand to benefit
from efficiency gains, which in turn behooves well for the financial and
environmental sustainability of the power sector (consistent with income and preferences of end users).
Here, let's raise a toast to competition and
choice in power supply, rational tariffs...Yikes!, A power cut, again.
Yet again?....You mean no candle-light dinner? Yup, got that
right! No...wait, ...Yes...No...No....Yes !!
