Towards a competitive market for electricity and consumer choice in the Indian power sector

The initial phase of reforms in the Indian power sector was primarily aimed at bringing regulatory reforms and unbundling of the vertically integrated State Electricity Boards (SEBs). Enactment of the Electricity Act 2003 led to deepening of the reform process by dismantling this monopoly in the power sector. Primary issues emerging on account of transition from a single-buyer model to a multi-buyer multi-seller model include, among others, policy and regulatory initiatives related to open access, power exchanges, and transmission allocation and its pricing. The paper provides an overview of the status of competition in various segments of the power sector. It also reviews the phased program for open access outlined by various State Electricity Regulatory Commissions, including their status and impact on competition. The paper highlights a number of residual issues for the wholesale and retail competition, and also discusses the approach to address the same. These include liberalization of fuel markets, market monitoring, unbundling of retail tariffs, universal service obligation, supplier of last resort and demand response.