RESTRUCTURING OF ELECTRICITY MARKET IN INDIA: UNBUNDLING OF STATE DISCOM’S AND SEGREGATION OF CARRIAGE AND CONTENT

Abstract

The retail side of electricity involves sale of power from an electricity provider to an end-use consumer, like any other FMCG product. This have led to evolution of competitive retail markets in electricity too, which is creating new opportunities and pressures for innovative ways of delivering value to electricity end users. Greater product differentiation is more possible now than ever before, and consumers are becoming more engaged, looking for ways to get more out of their relationship with their retail supplier. Those retailers who evolve to meet customer demands will thrive, while others will see their market share wither. Energy as a sector is backbone of any economy and the sector cannot be liberalized completely in a day. India have been restructuring the sector in phases, like unbundling of State Electricity Boards (SEBs) into Generation, Transmission and Distribution with privatization in almost every facets of the sectors (Generation, Transmission & Distribution) leading to good results in terms of investments and operational efficiencies. There are more than one suppliers to many players in various States leading to competitiveness of reliability & price. We are further seeing discussion for separation of Carriage and Contents (i.e. wire owner and power supplier through those wires), so that the power cost decreases to the lowest possible with reliability of supply. It is something like bringing Transmission at a micro level, i.e. at street level. For making this stage of transformation, there is requirement of willingness and various hurdles to be worked out to make the concept successful, especially in a scenario, wherein unbundled identities are not clear that how to manage various concerns and few States have not even unbundled SEB. Reforms in the sector are very important and it always comes with cost and has to face the phase of evolution to be finally adopted with modifications and customization. If the restructuring is done right, the benefits can significantly outweigh the costs, the same concept/phase is discussed in the paper with 3600 analysis of restructuring from unbundling of SEBs to further segregation of Carriage, and Content of a DISCOM is discussed.