The Energy Regulation and Markets Review - Stikeman Elliott

India
There are, however, proposals of unbundling of transportation activity from that of
distribution or marketing. In fact, regulations that authorise carrying out of transportation
activity, clearly stipulate that the authorised entity shall adhere to the requirements of
unbundling of transportation from distribution or marketing as and when so decided
by the PNGRB.
ii Transmission/transportation and distribution access
In the electricity sector, transmission licensees must provide non-discriminatory
open access to its transmission system for use by other persons (including electricity
distributors, traders and generating companies). Open access to distribution networks
is also granted to bulk power consumers (i.e., consumers of above 1MW), to procure
electricity at unregulated prices from entities other than the area distribution licensee.
Recently, the Ministry of Power issued a direction to the CERC to take all necessary steps
to implement provisions on open access as contained in the Electricity Act, to the effect
that SERCs do not continue to regulate the tariff for electricity supply to bulk power
consumers.
Natural gas transporters must declare capacity available for common carriage
on a monthly basis. For petroleum pipelines, draft guidelines for declaring pipelines
transporting petroleum and petroleum products as common carriers are currently
pending finalisation. For CGD networks, the PNGRB has the discretionary powers to
allow exclusivity for laying, building or expanding CGD network for the duration of the
economic life of the project (about 25 years). Exclusivity exempting common carriage
may also be provided for the first five years for CGD networks.
iii Rates
Under the Electricity Act, transmission schemes are implemented either through the
tariff-based competitive bidding process or under a cost-plus mechanism where a
regulated tariff is determined by the relevant electricity commission. CERC has adopted
a new interstate power transmission charge regime in 2011, with a ‘point of connection’
method for calculating interstate transmission charges and losses. The new regulations
aim at developing a uniform transmission charge-sharing mechanism among grid
constituents. Tariff for electricity distribution, comprising wheeling charges and cost of
supply, is levelled and determined on a cost-plus basis by the relevant SERC. Generally,
the tariff paid by low-income households for electricity is lower and is cross-subsidised
by high-end industrial and commercial consumers.
The PNGRB has enacted regulations for determination of transportation tariff
for petroleum and petroleum products; natural gas pipelines; and CGD network. The
tariff for such pipelines will be determined taking into consideration a reasonable rate
of return on the normative level of capital employed plus a normative level of operating
expenses in the relevant pipeline.
iv Security and technology restrictions
Cyber security of energy infrastructure
With sophisticated energy infrastructure and now smartgrids being proposed, cybersecurity
concerns are paramount. The Information Technology Act 2000 addresses
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