For the past 15 years, during every summer, Prime Ministers woke to the crisis in electricity supplies. They do not recognise that this crisis is the product of bureaucrats, politicians and the public enterprises that dominate the power sector. Laws are not implemented and regulators are appointed not for their being in sync with policy as enshrined in the law but for providing a sinecure for a retiring secretary or electricity official for their willingness to be subservient to government. The problems are of poor understanding and co-ordination, ineptitude at all levels, corruption and poor implementation.
Power generation capacity has grown impressively since independence as have transmission and distribution. But so have the losses of the sector, only in the State Electricity Boards (SEB), not central or private undertakings.
SEB’s supply electricity to many customers at or below cost. Many others steal it. This theft has to be borne by the remaining customers by higher tariffs, by the SEBs and their owners the state governments, and non-payment of dues to central undertakings like railways and NTPC. The Montek Ahluwalia Committee “securitised” the accumulated losses of SEBs of over Rs 40,000 crore four years ago. SEBs were directed thereafter to cover costs, and over time buy back the securities through their better performance. This has not happened with many SEBs and more losses have accumulated.
Government employees run all transmission and distribution, and the bulk of the country’s generation. Their background and training is neither commercial nor entrepreneurial. It is administrative and procedural, leading to inefficiencies, poor maintenance, staff indiscipline and employees colluding with consumers in thefts.
Politicians and well-placed bureaucrats condone electricity thefts and have interfered to stop police action against thieves. Investments in fresh generation and transmission capacity and in distribution are inadequate. Private enterprise is discouraged. The law requires open access to private generators of state owned transmission lines and stimulus to renewable energy. In many states including Karnataka this has not happened.
In 1991, when electricity generation was opened to private investment, only two firms came to invest, Cogentrix to Karnataka and Enron to Maharashtra. Cogentrix was so harassed by “environmentalists” and regulations that they gave up. Enron padded costs heavily, making the electricity unaffordable and had to shut down. Enron investment in Dhabhol was bought at high cost by GAIL and other public enterprises that are now generating high cost power from it.
The 1998 amendment allowing private investment in transmission and distribution was not allowed to be implemented by Power Grid Corporation, the central government monopoly company for interstate transmission. The owners, central and state governments, did not compel their enterprises to implement the law.
The inefficient and loss making SEB monopolies continue in distribution under government ownership except in Orissa and Delhi. Private investors avoid new generation investments because of payment uncertainties for electricity supplies. Orissa privatisation was sloppy and enabled government to make a windfall profit from privatisation, the profits not being used in the power system.
Before privatisation, Delhi suffered from huge losses and massive thefts, because the staff were undisciplined and they colluded in the theft of electricity. All this has improved greatly after privatisation. Delhi government retains monopoly over investment in generation, with growing shortages. New tamper proof electronic meters read all consumption. Delhi citizenry protested the consequent higher bills, and privatisation. Central government or Congress functionaries did not vocally support the Delhi government. This stopped distribution privatisation in states like U P and Gujarat that were ready for it.
The Electricity Regulatory Commissions should implement reforms in the sector in an independent, transparent and consultative manner. With Chairmen and members retired government servants and staff mostly deputed from government, the mindset is conformist and subservient to government. There have been few innovative or commercial ideas, no base line data collected on transmission and distribution losses, and no monitoring and follow-up to implement orders. Open access to state-owned transmission lines for private generating companies is halted due to high surcharges imposed by State Commissions.
Orders of commissions on many issues have been contradictory and inconsistent. Confined to electricity price regulation, with no powers to examine the major cost which is the fuel, (coal-domestic or imported, gas or naphtha), and subject to government and public pressures to keep tariffs low, regulators have refused electricity tariff increases. This has added to the SEB losses.
State governments do not have enough funds. Electricity administrations are inefficient and cannot forecast demand correctly. Quality voltage and supplies are unreliable. Thefts are poorly controlled. States do not take advantage of ample central government funds available through innovative schemes like the Accelerated Power Reform and Development Programme (APRDP) that reward performance. At times, as in Karnataka, orders of regulators are not obeyed and violations not punished.
The crisis in power sector is the result of poor implementation of adequate laws and schemes by state governments and the Centre. Karnataka is no different from  others.