 Prayas Primer Chapter 1, specifically Sections 1.2 & 1.

3
 PPT 1: Relevance of Electricity Sector – Infrastructure Services (Sachin Warghade)

Section 01: Relevance of Electricity as

Infrastructure Service

🧩 What is Infrastructure?
 Infrastructure refers to essential systems and services that support life, economic
activity, and governance.
 Includes: roads, water supply, education, health, electricity, etc.
 Has public and private good characteristics:
o Public: Needed by all (like street lighting)
o Private: Individual use (like metered household power)

⚡ Electricity as a Core Infrastructure Service

Why Electricity is Special:

 It’s a secondary energy source, derived from coal, wind, water, sun, etc.
 Enables other sectors: hospitals, schools, industries, communication.
 Versatile: Can be used for heating, cooling, lighting, motion, communication.
 Transportable via grids and wires.
 Instant & clean at use point (no direct pollution).

“Electricity is the backbone of modern infrastructure.”

⚖️ Electricity: A Mixed Good

 Private good aspect:
o Metered, paid for as per consumption (kWh).
o Can be restricted or disconnected for non-payment.
 Public good aspect:
o Government mandates universal access.
o Subsidies and regulation aim to ensure equity.
💰 Economic Comparison: Cost of Energy Forms
Energy Source Estimated Cost per Unit (1 kWh)
Electricity ₹7
Kerosene ₹25
Human Labour ₹300

 Electricity is the cheapest and most efficient form of energy delivery.

 Promotes productivity and cost-saving across sectors.

📊 Role of Government
 Due to its importance, electricity provision is heavily regulated.
 Governments act as:
o Planners
o Financiers
o Regulators
o Service providers

✏️ Summary for Exam Answer

 Electricity is essential infrastructure—supports livelihoods and economic growth.
 It is both a private and public good.
 Due to high costs and social value, government plays a central role.
 Electricity is versatile, transportable, clean, and cost-effective.
Section 02: Understanding Power Systems –
Technical Overview

🔌 1. Power System – Main Components (Primer 2.1.2)

Electricity flows from generation to end-users through a structured system:

🔹 1. Generation (G)

 Power is produced in thermal (coal/gas), hydro, nuclear, or renewable plants.

 Operates in megawatts (MW) scale.

🔹 2. Transmission (T)

 Transports electricity over long distances using high voltage lines (220 kV, 400 kV).
 Managed by POWERGRID (PGCIL) nationally.

🔹 3. Distribution (D)

 Steps down the voltage for consumer-level use (240V, 415V).

 Managed by state-owned DISCOMs or private licensees.

Diagram for G–T–D system is highly recommended in your answers.

🛰️ 2. Grid and Control Centres (Primer 2.1.3)

📡 National and Regional Grids:

 India is connected through five regional grids (North, East, West, South, NE).
 Unified into a single National Grid in 2013.

🕹️ Load Dispatch Centres (LDCs):

 Monitor and balance real-time demand and supply.

Level Name Role

National NLDC Coordinates all grids
 Level Name Role
Regional RLDC 5 zones, monitor regionally
State SLDC Manages state-level grid

SLDC is frequently asked in exams – revise its monitoring and balancing role.

📦 3. Box 2.5: Inter-State Energy Flow Example

 Power is often generated in one state and consumed in another.
 Requires coordination between generators, transmission utilities, and grid operators.

Example: NTPC power station in Chhattisgarh supplying to Maharashtra DISCOM.

📏 4. Measuring Electricity (Primer 2.3)

Key Units:

Concept Unit Formula

Power Watt (W) Power = Voltage × Current (P = V × I)
Energy kWh Energy = Power × Time

 1 kilowatt-hour (kWh) = 1 unit of electricity

 Consumers are billed based on kWh consumption

Sample: A 1000W heater used for 1 hour = 1 kWh = 1 unit

🚰 5. Annex 2.1: Water Analogy for Electricity

To simplify understanding:

Water System Electrical Equivalent

Water Pressure Voltage (V)
Flow of Water Current (I)
Pipe Thickness Resistance (Ω)
Total Water Flow Power (W)
This analogy is often used in teaching basic electricity—great for short answers!

🧩 Summary for Exam Answer

 India's power system follows G-T-D structure.
 Electricity must be balanced in real time—no storage.
 Grid operation is done by LDCs (SLDCs, RLDCs, NLDC).
 Electricity is measured in units (kWh), billed accordingly.
 Use diagrams and water analogy for clarity in answers.

 Prayas Primer Chapter 3

 Focus on Table 3.1
 Skip Sections 3.1.4 to 3.1.9 as per professor's guidance
 Supported by points from PPT 2 & 3 (Technical + Stakeholders)

📘 Section 03: Electricity Generation and

Distribution

🔋 1. Electricity Generation in India

Electricity is produced using a mix of energy sources, classified as:

Source Type Examples Share (2020–21 est.) Key Features

Thermal Coal, gas, oil ~62% Dominant, polluting
Hydro Dams, rivers ~12% Renewable, but seasonal
Nuclear Uranium plants ~2% Clean, but limited
RES Solar, wind, biomass ~24% Rapidly growing, variable

Thermal (coal) is still dominant due to reliability and base load capacity.

📊 2. Table 3.1: Comparison of Generation Technologies

 Renewable
Criteria Thermal Hydro Nuclear
(Solar/Wind)
Capital Cost Moderate High Very High Decreasing
Medium–
Running Cost Low Medium Very Low
High
Emissions High CO₂ Low Low None
Reliability High Seasonal High Intermittent
Land/Water High (land, High (safety
Moderate Low–Moderate
Use submergence) buffer)

Key Insight: Renewables are growing due to policy push, but need storage or backup due to
intermittency.

⚙️ 3. Plant Load Factor (PLF) – A Key Metric

 PLF = (Actual output / Maximum possible output) × 100
 High PLF = Efficient use of plant capacity
 Low PLF = Wasted investment, losses, underutilized capacity

Year Central PLF State PLF Private PLF

2010 85% 71% 84%
2020 64% 50% 54%

Reasons for declining PLF: Low demand, renewable integration, coal shortages.

📉 4. Challenges in Generation Sector

 Fuel Availability: Coal shortages, gas pricing
 Environmental Norms: Pressure to reduce emissions
 Financial Issues: DISCOM payment delays affect generators
 Renewables Challenge: Grid balancing due to variable supply

⚡ 5. Electricity Distribution: The Last Mile

 Managed by DISCOMs (mostly state-owned)
 Connects homes, shops, factories with electricity supply
Common Issues:

 AT&C Losses: Technical (wire loss) + Commercial (billing issues)

 Power theft, unmetered supply, especially in agriculture
 Financial losses: Subsidies not reimbursed by governments

💸 Tariff and Cross-Subsidy

 Cross-subsidization: Commercial/industrial users pay higher rates to subsidize low-

income/agriculture users.
 Creates distortion, affects industrial competitiveness.

🧩 Summary for Exam Answer

 India uses a diverse mix for electricity generation.
 Coal remains dominant, but renewables are rising fast.
 Use Table 3.1 to compare technologies in short answers.
 PLF is a key metric for plant performance—falling in recent years.
 Distribution suffers due to losses, theft, poor billing, and subsidy issues.
Chapter 1: Relevance of Electricity (Focus: Sections 1.2 & 1.3)

1.2: Nature of Electricity – Benefits and Challenges

Electricity is a versatile and essential form of energy that is fundamental to modern life. It is a secondary
energy source, meaning it is generated by converting primary sources like coal, gas, wind, hydro, and
solar into electrical energy. However, despite its widespread use and benefits, electricity comes with its
own set of challenges that need to be carefully managed.

Benefits of Electricity:

1. Clean at Point of Use:

o Electricity, unlike fuels like coal, does not produce smoke, gases, or particulate matter
when used. This makes it a clean energy source at the point of consumption, leading to
better air quality and improved health outcomes for users.
2. Easily Transportable:
o One of the unique advantages of electricity is that it can be transported over long
distances through wires, allowing access to energy in remote or urban areas. This
flexibility is key to its widespread use across different sectors and geographies.
3. Instant and Versatile:
o Electricity can be turned on and off instantly, making it an incredibly versatile energy
source. It is used for a wide variety of applications, including:
 Lighting: Providing basic illumination in homes, streets, and public places.
 Heating: Used for heating spaces and water, both in residential and industrial
contexts.
 Communication: Electricity powers telecommunication systems, the internet,
and broadcasting services.
 Transport: Electric vehicles (EVs), trains, and other modes of transport are
powered by electricity, leading to a shift towards greener transport solutions.

Challenges of Electricity:

1. Cannot be Easily Stored at Scale:

o One of the significant challenges of electricity is that it is difficult and expensive to store
on a large scale. While technologies like batteries are improving, they still cannot match
the scale of electricity demand, especially for grid-scale storage.
2. Requires Real-Time Balancing of Demand and Supply:
o Unlike other forms of energy, electricity must be used as it is generated. There must be
a constant balance between supply (how much electricity is being produced) and
demand (how much electricity is being consumed) at all times. If supply exceeds
demand, there is a risk of wastage or grid instability. Conversely, if demand exceeds
supply, blackouts or shortages can occur.
3. Grid Instability Due to Fluctuations:
o Electricity grids are highly sensitive to fluctuations in demand and supply. Any major
imbalance can cause instability, leading to outages, damage to infrastructure, or even
large-scale blackouts. For instance, in regions with high renewable energy penetration
(e.g., wind and solar), fluctuations in energy generation can cause problems because
 renewable sources are intermittent (e.g., solar power is unavailable at night, and wind
energy can be inconsistent).
4. Infrastructure-Intensive:
o Building and maintaining the infrastructure to generate, transmit, and distribute
electricity requires significant capital investment. This includes power plants,
transmission lines, substations, and distribution networks. Additionally, the
infrastructure must be regularly upgraded to keep pace with growing demand,
technological advancements, and environmental considerations.

Example: Managing high levels of renewable energy sources like wind and solar can create grid
imbalances due to their intermittency. The wind doesn’t blow all the time, and the sun doesn’t shine at
night, making it difficult to predict and balance supply with demand in real-time. This requires advanced
grid management techniques, energy storage solutions, or flexible backup power sources like natural
gas plants to ensure a stable electricity supply.

1.3: Electricity as an Infrastructure Service

Electricity is not just an energy source; it is a foundational infrastructure service that underpins the
functioning of modern society. The provision of electricity is critical for various sectors, including
education, health, industry, and agriculture. It is so essential that it is often used as an indicator of
development.

Electricity as a Dual Good: Public and Private Aspects:

 Public Good: Electricity is a public good in the sense that it is essential for the well-being of
society as a whole. Governments often regulate electricity to ensure it is accessible, affordable,
and reliable for all segments of the population.
 Private Good: At the same time, electricity also has a private good aspect in that individuals and
businesses use it for their own benefit, often requiring private investment, consumption
choices, and usage strategies. For example, a private individual may install solar panels to
reduce electricity bills or contribute to green energy.

Key Features of Electricity as Infrastructure:

1. Essential for Livelihoods:

o Electricity is indispensable for everyday activities, such as cooking, lighting, and working.
It supports industries, agriculture, healthcare, and education, forming the backbone of
modern economies. Without access to reliable electricity, many aspects of daily life,
business operations, and technological advancements would be impossible.
2. Enabler of Development:
o The provision of electricity is one of the key indicators of development, especially in
rural areas. Access to electricity drives economic growth, improves quality of life, and
facilitates social progress. For example, electricity enables access to information,
healthcare services, and modern technology, thus contributing to societal well-being
and poverty reduction.
 3. Massive Investment and Long-Term Planning:
o Due to the infrastructure-intensive nature of electricity systems, providing electricity
requires massive investment. Building and maintaining power generation plants,
transmission grids, and distribution networks demand substantial capital and long-term
planning. Governments and utilities must make decisions that balance the current needs
with future demand, and they must invest in research and technology to meet
sustainability goals.
4. Role of Governments:
o Historically, governments have played a central role in the electricity sector by
regulating tariffs, ensuring universal access, and investing in infrastructure
development. In many countries, electricity is treated as a public service, with the
government stepping in to provide subsidies, manage tariffs, and oversee the expansion
of the electricity grid. This is especially true in regions where the market cannot provide
electricity equitably to all citizens.

Electricity as an "Enabler" Infrastructure:

 Quote: "Electricity enables other services – it is an enabler infrastructure."

o Electricity is often referred to as an enabler infrastructure, meaning that its provision is
necessary for the development of other sectors. It powers education, by enabling digital
learning tools; healthcare, by supporting hospitals and clinics with essential equipment;
industry, by fueling manufacturing and services; and communication, by connecting
people through the internet and telecommunication networks.

Summary of Key Points:

 Benefits of Electricity: Clean at the point of use, easily transportable, versatile in applications
like lighting, heating, and communication.
 Challenges: Storage is difficult, balancing supply and demand in real-time is complex, grid
instability, and infrastructure costs.
 Electricity as Infrastructure: It is vital for economic development and societal well-being, with
both public and private roles in its provision. It requires significant investment and long-term
planning, with governments historically playing a key role in its expansion and regulation.

Chapter 2: Understanding Power Systems

2.1.2: Components of Power System

A power system consists of several interconnected components that work together to generate,
transmit, and distribute electricity. Below are the main components of a typical power system:

1. Generation:
 o Power Generation is the first step in the power system. Electricity is produced
through various means:
 Coal: The most traditional and widely used method of generating
electricity in thermal plants.
 Hydropower: Generated by harnessing the energy of flowing water.
 Solar: Electricity generated through photovoltaic cells that convert
sunlight into electricity.
 Gas: Power plants use natural gas to generate electricity in a cleaner
manner compared to coal.
 Wind: Wind turbines convert the kinetic energy of wind into electrical
energy.
 Nuclear: Uses nuclear fission to produce electricity, though it has a
limited role in many countries.
2. Transmission:
o After electricity is generated, it needs to be transmitted over long distances. This
is done using high-voltage transmission lines. The high voltage allows for
efficient long-distance transmission by reducing energy loss.
o Transformers are used to step up the voltage for transmission and step it down
for distribution.
3. Distribution:
o The distribution system carries the electricity from the transmission network to
homes, businesses, and industries. This is done at low voltage to make it safe for
end consumers.
o Substations are used to reduce the voltage from transmission levels to the voltage
levels needed for distribution.
4. Meters and Control Rooms:
o Meters: These devices measure the amount of electricity consumed by the end
user for billing purposes.
o Load Dispatch Centres (LDCs): These are central control rooms that monitor
and manage the operation of the power system. They ensure that there is a balance
between electricity supply and demand in real-time.
5. Grid:
o The grid is the interconnected network of generation, transmission, and
distribution systems. It forms a large, integrated network that ensures electricity
generated at power plants can be delivered to consumers efficiently and reliably.

2.1.3: Grid and Dispatch Centres

1. Load Dispatch Centres (LDCs):

o LDCs are responsible for real-time balancing of supply and demand in the
power system. They monitor the performance of the grid, coordinate generation to
meet demand, and manage emergencies like power outages. There are three main
levels of LDCs:
 National Load Dispatch Centre (NLDC): Operates at the national level
and oversees the functioning of the entire national grid. It ensures national
grid stability, handles large-scale power system emergencies, and
coordinates the power generation and supply between states.
 Regional Load Dispatch Centres (RLDCs): These are responsible for
balancing supply and demand within specific regions (e.g., Northern,
Southern, Western regions) of the country.
 State Load Dispatch Centres (SLDCs): They manage and control the
distribution of electricity within a specific state, ensuring that power
generated is efficiently dispatched to various consumers within the state.
2. National Grid:
o The National Grid refers to the interconnected network that integrates electricity
generation, transmission, and distribution across India. It was fully integrated in
2013, allowing for seamless transfer of electricity between states and improving
grid reliability.
o Frequency: The grid operates at a constant frequency of around 50 Hz, which
is crucial for the stability of the system. Any fluctuations in frequency indicate
imbalances between supply and demand. The LDCs ensure that the frequency
remains steady to avoid grid failures.

Box 2.5: Inter-State Energy Flow (Illustration)

The inter-state energy flow refers to the transfer of electricity from one state to another within a
country. This flow is crucial in regions where one state might have surplus electricity while
another faces a shortage.

1. Coordination by Transmission Utilities:

o Transmission utilities like POWERGRID play a vital role in coordinating energy
flow between states. They manage the interconnections between state grids and
ensure that electricity generated in one state is transmitted and supplied to another
state based on demand.
2. Example:
o NTPC (National Thermal Power Corporation), a major electricity generator in
India, often generates electricity in its plants located in one state (e.g., Uttar
Pradesh) and supplies it to multiple states (e.g., Delhi, Haryana, Punjab). The
power transmission lines connect these regions, enabling the seamless flow of
electricity.

2.3: Measuring Electricity

To understand how electricity is used and how it’s billed, it's important to understand the basic
concepts of power and energy measurement.
 1. Power (Watt):
o Power is the rate at which electricity is consumed or generated. It is measured in
watts (W).
o The formula to calculate power is:

Power (W)=Voltage (V)×Current (I)\text{Power (W)} = \text{Voltage (V)}

\times \text{Current (I)}Power (W)=Voltage (V)×Current (I)

Where:


Voltage (V): The potential difference between two points.

Current (I): The flow of electric charge.
2. Energy (kWh):
o Energy refers to the amount of electricity consumed over time. It is measured in
kilowatt-hours (kWh).
o The formula for energy is:

Energy (kWh)=Power (W)×Time (hrs)\text{Energy (kWh)} = \text{Power (W)}

\times \text{Time (hrs)}Energy (kWh)=Power (W)×Time (hrs)

1 unit = 1 kWh is the basic unit used for billing purposes.

3. Example of Usage:
o Consider the following appliances and their power consumption:
 Fan: 75 W, used for 8 hours a day.
 Monthly Usage: 75 W×8 hrs/day×30 days=18 units75 \, \text{W}
\times 8 \, \text{hrs/day} \times 30 \, \text{days} = 18 \,
\text{units}75W×8hrs/day×30days=18units
 Light: 40 W, used for 6 hours a day.
 Monthly Usage: 40 W×6 hrs/day×30 days=7 units40 \, \text{W}
\times 6 \, \text{hrs/day} \times 30 \, \text{days} = 7 \,
\text{units}40W×6hrs/day×30days=7units

This breakdown helps consumers understand how much electricity they consume and estimate
their electricity bills based on usage patterns.

Annex 2.1: Analogy with Water System

To better understand electricity flow, it is often compared to water flow. This analogy simplifies
the concepts of voltage, current, and resistance:

 Voltage = Water Pressure: Just like water pressure drives water through pipes, voltage
drives the flow of electrical current through conductors.
  Current = Water Flow: Electrical current is analogous to the flow of water through
pipes. It represents the amount of electricity flowing at any given time.
 Resistance = Pipe Width: In the water analogy, resistance is like the width of the pipe.
A wider pipe allows more water to flow, while a narrower pipe restricts the flow.
Similarly, in an electrical circuit, resistance limits the flow of current.
 Electricity = Water Flow: Just as water flow moves from high pressure to low pressure,
electricity flows from high voltage to low voltage.

This analogy is helpful for visualizing how electricity works in a system and understanding how
factors like voltage, current, and resistance interact.

Summary of Key Points:

 Components of the Power System: Includes generation (coal, hydro, solar),

transmission (high-voltage), distribution (low-voltage), meters, and control rooms
(LDCs). The grid interconnects all these components to deliver electricity efficiently.
 Grid and Dispatch Centres: LDCs (National, Regional, State) manage real-time
balancing of supply and demand, ensuring the stability of the power grid. The National
Grid has been integrated since 2013.
 Inter-State Energy Flow: Transmission utilities coordinate the movement of power
between states, allowing surplus power from one state to be used in another.
 Measuring Electricity: Power (W) = Voltage × Current, and energy is measured in kWh.
Energy consumption directly impacts electricity billing.
 Water Analogy for Electricity: Helps explain the concepts of voltage, current, and
resistance, making it easier to understand the flow of electricity.

Chapter 3: Generation (Focus: All except 3.1.4–3.1.9)

Power Generation Types:

This chapter explores the different types of power generation technologies, their characteristics, and the
role they play in the energy mix. The generation of electricity can be broadly categorized into
conventional sources and renewable energy sources.

1. Thermal Power Generation (Coal, Gas)

o Share in Energy Mix: Thermal power generation, primarily using coal and natural gas,
accounts for approximately 60% of global electricity production.
o Environmental Impact: Thermal power plants, especially coal-fired plants, have
significant environmental impacts due to high emissions of greenhouse gases and other
pollutants. This has made coal generation a major focus of environmental concerns.
 o Cost: Coal power generation is typically considered to have a medium cost due to the
infrastructure and fuel requirements, though it remains cost-competitive in many
regions where coal is abundant.
o Reliability: Thermal plants, especially those using coal and gas, have high reliability as
they can generate electricity continuously and are not dependent on weather
conditions.
2. Hydropower Generation
o Renewable & Seasonal: Hydropower is a renewable source of energy that relies on
water flow to generate electricity. It is considered clean, but its availability can vary
seasonally, depending on rainfall and water levels in reservoirs.
o Environmental Issues: Large-scale hydropower projects, such as dams, can have
significant environmental impacts, including disruption of ecosystems, displacement of
communities, and changes in water quality and biodiversity.
o Cost: The initial investment in hydroelectric plants is typically high due to the
construction of dams and infrastructure, but once built, operating costs are relatively
low.
o Reliability: The reliability of hydropower depends on water availability, which can
fluctuate seasonally, making it somewhat intermittent compared to thermal or nuclear
power.
3. Nuclear Power Generation
o Clean Energy: Nuclear power is a low-carbon source of electricity, making it a key
technology in the context of reducing greenhouse gas emissions. It uses nuclear
reactions to generate heat, which is then converted into electricity.
o Limited Scale: While nuclear power is very efficient and produces significant amounts of
energy, its growth is constrained by high initial capital costs, long construction timelines,
safety concerns, and waste disposal issues.
o Environmental Impact: Nuclear power produces minimal greenhouse gas emissions
during operation, though concerns about radioactive waste, plant safety, and high costs
of decommissioning continue to challenge its wider adoption.
o Cost and Reliability: Nuclear plants have high upfront costs but offer high reliability and
steady power generation. Operating costs are relatively low compared to thermal
plants, though safety and regulatory compliance can increase overall expenses.
4. Renewables (Solar, Wind, Biomass)
o Fast-growing Sector: Renewable energy sources such as solar, wind, and biomass are
rapidly growing due to technological advancements, decreasing costs, and increasing
global emphasis on reducing carbon emissions. Solar and wind, in particular, have
experienced dramatic reductions in cost, making them competitive with traditional
energy sources.
o Intermittent Nature: These sources of power are intermittent, meaning they depend on
weather conditions—solar generation requires sunlight, while wind generation requires
wind. Biomass, though less intermittent, depends on the availability of organic
materials.
o Environmental Impact: Solar, wind, and biomass are considered environmentally
friendly and produce little to no emissions during operation. However, issues such as
land use for wind farms, environmental impact of large-scale solar installations, and
biomass sourcing are areas of ongoing study and improvement.
Table 3.1: Comparison of Technologies
Type Cost Reliability Environmental Impact

Coal Medium High High Pollution (GHG Emissions)

Solar Low (Daytime) Intermittent Clean, No Direct Emissions

Hydro Low Seasonal Eco-issues (Dams, Ecosystem Disruption)

Nuclear High (Capex) High Low Emissions, Radioactive Waste Concerns

Wind Low Intermittent Clean, Land Use Issues

Biomass Medium Intermittent Renewable, But Sourcing Concerns

Detailed Insights

 Cost Considerations: Solar power has the lowest operating cost, particularly during sunny days.
Coal, while cheaper initially, has high environmental costs and long-term sustainability issues.
Hydropower and nuclear require significant initial investments but provide long-term stability in
terms of cost.
 Reliability: Thermal power (coal and gas) offers consistent and reliable power generation,
making it a preferred option in regions where energy stability is critical. Solar and wind, on the
other hand, are more variable, necessitating energy storage or backup solutions.
 Environmental Impact: Renewable energy sources like solar, wind, and biomass are much
cleaner, although their land-use implications and the impact of infrastructure for wind and solar
farms are important considerations. Coal and nuclear remain the most controversial due to their
long-term environmental and safety implications.

Chapter 4: Distribution (Avoid 4.3.2–4.3.4)

Key Concepts in Distribution:

This chapter focuses on the distribution segment of the electricity sector, which involves the final stage
of electricity delivery from the grid to consumers. It outlines the structure, key players, challenges, and
tariff mechanisms in place within this segment.

1. DISCOMs (Distribution Companies)

o State-Level Responsibility: Distribution of electricity in most countries is managed by
DISCOMs (Distribution Companies), which are typically state-owned or state-regulated
entities. DISCOMs are responsible for the last-mile delivery of electricity from the
transmission network to individual consumers (households, businesses, etc.).
 o Role in the Electricity Value Chain: DISCOMs operate, maintain, and expand the
infrastructure required for electricity distribution, including substations, transformers,
and power lines. They also manage customer service, billing, and collection.
o Revenue Generation: DISCOMs earn revenue by charging consumers based on the
electricity they use, but their ability to generate revenue is often compromised by the
challenges they face (e.g., theft, poor billing practices, and political interference).
2. Challenges Faced by DISCOMs
o Losses (Technical and Commercial): DISCOMs face both technical and commercial
losses.
 Technical losses refer to the inherent energy losses in the system due to
resistance in electrical wires, transformers, and other components. These losses
are inevitable but can be minimized with better technology.
 Commercial losses occur when electricity is stolen (e.g., power theft) or when
consumers do not pay their bills. Commercial losses also include issues like
inaccurate metering, poor billing practices, and inefficient collection
mechanisms.
o Poor Billing and Collection: DISCOMs often struggle with inefficient billing systems,
inaccurate meter readings, and delayed collections. These issues result in cash flow
problems and affect the overall financial health of the company.
o Political Interference: Political interference is another major challenge. In many regions,
political leaders may influence electricity tariffs, impose subsidies, or even encourage
unsustainable practices like providing free electricity to certain groups (e.g., farmers).
This reduces the financial viability of DISCOMs and hinders their ability to invest in
infrastructure or improve service quality.
3. Tariff Structure and Cross-Subsidies
o Cross-Subsidies: A major feature of electricity tariffs in many countries is the cross-
subsidy mechanism. In this structure, certain consumer groups pay higher tariffs to
subsidize the electricity costs for others.
 Industry vs. Agriculture: Typically, industrial and commercial consumers are
charged higher tariffs to subsidize the cost of electricity for residential and
agricultural consumers. This system is intended to make electricity affordable
for groups that are economically disadvantaged or critical to the economy, such
as farmers.
 Impact on DISCOMs: While cross-subsidies can make electricity affordable for
some sectors, they create financial imbalances for DISCOMs, especially when
the higher-paying groups (e.g., industries) do not pay their bills on time or the
gap between the costs of supply and the tariffs charged to farmers widens.
4. Examples of Challenges Impacting DISCOM Finances
o Power Theft: One of the major issues affecting DISCOM finances is power theft. Illegal
connections, bypassing of meters, or tampering with meters can lead to significant
losses. Power theft reduces the amount of revenue DISCOMs collect, exacerbating the
financial strain on the sector.
o Free Electricity to Farmers: In many regions, agricultural consumers are provided with
free or heavily subsidized electricity. While this helps reduce the cost burden on
farmers, it places a significant strain on the financial viability of DISCOMs. Without
sufficient revenue from this sector, DISCOMs struggle to maintain infrastructure,
improve service, and invest in modernization.
 o Political and Policy Decisions: Often, political decisions around electricity subsidies or
tariff hikes are made with little regard for the long-term financial sustainability of
DISCOMs. For example, governments might promise free electricity or delayed tariff
hikes to garner political support, which further deepens the financial woes of DISCOMs.

Summary and Challenges Ahead:

The distribution segment of the electricity sector plays a critical role in ensuring that power reaches end-
users. However, DISCOMs face numerous challenges that hinder their financial sustainability and
operational efficiency:

 Losses—both technical and commercial—are prevalent and need to be addressed through

better infrastructure, more efficient systems, and strict enforcement against theft.
 The tariff structure, which often involves cross-subsidies, needs to be carefully balanced to
ensure that DISCOMs can maintain financial health while also ensuring that electricity remains
affordable for vulnerable groups.
 Political interference, while sometimes motivated by social goals like providing free electricity to
farmers, can have detrimental effects on the financial health of DISCOMs, making them less
capable of providing reliable service or investing in upgrades.

Ultimately, addressing these challenges requires a mix of policy reform, improved management
practices, technological upgrades, and financial discipline to ensure that DISCOMs can operate
sustainably while meeting the growing electricity demand.

Chapter 5: Stakeholders – 📌 FULL FOCUS

Key Stakeholders in the Electricity Sector:

In any electricity sector, there are multiple stakeholders, each playing a unique and vital role in the
system. Understanding these key stakeholders helps in grasping the dynamics of energy policy,
governance, and regulation.

1. Central Government
o Policy and National-Level Entities: The Central Government plays a crucial role in
formulating national energy policies, creating an overarching regulatory framework, and
ensuring coordination across various sectors. It also has control over large national
utilities.
 Key Entities: Two prominent public sector entities that are under the purview of
the central government include:
 NTPC (National Thermal Power Corporation): NTPC is the largest power
generation company in India, largely focused on thermal power plants,
contributing a significant portion of the country’s power generation
capacity.
 POWERGRID (Power Grid Corporation of India): POWERGRID is
responsible for the transmission of electricity across the country,
 managing the power grid to ensure electricity is delivered from
generation points to distribution networks reliably and efficiently.
2. State Government
o Ownership of DISCOMs: In many countries, including India, electricity distribution is
handled at the state level. The state government owns and operates DISCOMs
(Distribution Companies), which are responsible for delivering electricity to households,
industries, and other consumers within the state.
o State Policies: Each state can have its own policies regarding electricity tariffs, subsidies,
and regulation. State governments may also decide on incentives or support for
renewable energy projects, which can vary significantly between states.
3. Regulators
o CERC (Central Electricity Regulatory Commission): The CERC is the central regulatory
authority that oversees the functioning of the electricity sector at the national level. It is
responsible for setting tariffs, regulating the generation and transmission sectors, and
ensuring that the power market operates efficiently and transparently.
o SERCs (State Electricity Regulatory Commissions): At the state level, SERCs regulate the
electricity sector and are responsible for tariff setting, adjudicating disputes, and
ensuring that state-level distribution systems are efficient. They play a crucial role in
balancing the needs of consumers and utilities, setting tariffs that reflect both the cost
of supply and the socio-political environment.
4. Consumers
o Households: Consumers at the household level are typically the largest group of
electricity users. They receive electricity for daily needs such as lighting, heating, and
powering appliances. Tariffs for household consumers are often subsidized or regulated
to ensure affordability, especially for lower-income groups.
o Industries: Industrial consumers use large amounts of electricity for manufacturing,
operations, and machinery. Their energy needs are often more consistent and
predictable compared to households. They may pay higher tariffs than residential
consumers due to their larger consumption and higher demand.
o Agriculture: Agriculture is a significant consumer of electricity, especially in regions
where irrigation systems and water pumping rely on electrical energy. In some
countries, including India, agricultural consumers may receive highly subsidized
electricity to promote farming activities, leading to political and economic challenges for
utilities.
5. Civil Society
o NGOs (Non-Governmental Organizations): NGOs play a critical role in advocating for
the rights of consumers, particularly marginalized groups, and pushing for reforms in the
energy sector. For example, Prayas, a well-known Indian NGO, is involved in policy
research, advocacy, and promoting sustainable energy practices.
o Activists: Civil society activists are often at the forefront of movements that demand
transparency, accountability, and social justice in energy policies. They may focus on
issues like environmental sustainability, renewable energy adoption, equitable
electricity access, and the rights of consumers, especially in rural or underprivileged
areas.
6. Private Sector
o IPP (Independent Power Producers): IPPs are private companies that generate
electricity and sell it to utilities or directly to consumers through power purchase
 agreements (PPAs). These producers contribute to the energy mix by offering flexibility
and innovation in both conventional and renewable energy production.
o Traders: Power traders are intermediaries who buy and sell electricity in the open
market. They operate in deregulated markets where the price of electricity fluctuates
based on demand and supply dynamics. Traders help balance the grid by ensuring that
excess electricity is sold or that shortages are met by importing electricity.
7. Concurrent List
o Shared Jurisdiction Between Centre and State: In some countries (like India), electricity
regulation falls under the Concurrent List, meaning both the central and state
governments have shared jurisdiction over the sector. This means that policies and
regulations can be jointly framed by the central government, while the states have the
authority to implement them at the local level. For instance, the central government
may set national standards for emissions, while state governments may determine
specific tariff structures or subsidies.

Consumers Classification:

1. Traditional Consumers
o Households: These consumers are primarily residential users who consume electricity
for domestic needs. They typically have lower consumption compared to industries but
face varying tariff rates depending on region and subsidy policies.
o Industries: Industrial consumers are large-scale users of electricity, requiring continuous
power for operations. Industrial tariffs are often higher than residential tariffs and can
vary based on the sector, demand, and the energy mix available in the region.
o Farmers: Agricultural consumers often use electricity for irrigation, which can represent
a significant portion of their energy use. In some regions, farmers receive heavily
subsidized or even free electricity, which is a contentious issue from a financial
sustainability perspective for DISCOMs.
2. Open Access Consumers
o Direct Purchases from Generators: Open access consumers are large-scale consumers
who choose to buy electricity directly from generation sources, bypassing the
distribution companies (DISCOMs). These consumers can negotiate better tariffs, often
leading to reduced costs compared to purchasing electricity through traditional DISCOM
channels.
o Benefits: Open access is more common in deregulated or competitive markets where
consumers, especially large industrial players, have the flexibility to choose their energy
supplier. This leads to cost savings and can also encourage more efficient power
generation.
3. Prosumers
o Generation and Consumption: Prosumers are consumers who both generate and
consume electricity. A common example is households with rooftop solar panels, who
can generate their own power and either use it for their own needs or sell surplus
electricity back to the grid.
o Energy Independence: Prosumers can reduce their reliance on traditional DISCOMs,
potentially leading to lower electricity bills and greater energy independence. However,
 prosumers are also subject to regulatory frameworks that determine how much they
can sell back to the grid and at what price.

Summary:

The electricity sector involves a wide array of stakeholders, each with distinct roles and interests.
Central and state governments set policies and regulate the sector, while DISCOMs manage the
distribution of electricity. Regulators like CERC and SERCs ensure that the market operates transparently
and efficiently. Consumers, ranging from households and industries to farmers and prosumers, are the
ultimate beneficiaries of the electricity sector. Civil society groups and NGOs advocate for better
governance, while private sector players, including IPPs and traders, contribute to the dynamism of the
energy market.

Understanding these stakeholders, their roles, and their interactions is critical for navigating the
complex landscape of energy policy and regulation. Each stakeholder impacts how electricity is
generated, distributed, and consumed, as well as how the sector evolves to meet the challenges of
sustainability, efficiency, and equity.

Chapter 9: Regulatory Framework – 📌 FULL FOCUS

Evolution of Reforms in the Electricity Sector

The evolution of the electricity sector in India has been shaped by various regulatory reforms over the
decades. These reforms have aimed at modernizing the sector, increasing efficiency, and making
electricity more accessible to all consumers. Below is a brief overview of key legislative milestones:

1. Electricity Act, 1910

o Initial Licensing: The first significant piece of legislation governing the electricity sector
in India was the Electricity Act of 1910. This Act primarily focused on the licensing of
electricity suppliers, setting the stage for the formalization of the electricity sector.
2. Electricity (Supply) Act, 1948
o Formation of State Electricity Boards (SEBs): The Electricity (Supply) Act of 1948 laid the
foundation for the creation of State Electricity Boards (SEBs), which were tasked with
the generation, transmission, and distribution of electricity in their respective states.
This was a key step in organizing the sector and ensuring coordinated electricity supply
across regions.
3. ERC Act, 1998
o Establishment of Regulatory Commissions: The Electricity Regulatory Commissions Act
of 1998 marked a significant development in the sector by establishing Electricity
Regulatory Commissions (ERCs) at both the state and national levels. These
commissions were given the responsibility to regulate the electricity supply, set tariffs,
 and oversee the overall functioning of the sector. The creation of these bodies was
intended to promote transparency, efficiency, and competition in the sector.
4. Electricity Act, 2003
o Key Modern Law: The Electricity Act of 2003 is the cornerstone of modern electricity
regulation in India. It consolidated and replaced all previous laws governing the
electricity sector. This Act introduced significant reforms to improve sector efficiency,
enhance competition, and encourage private participation. The 2003 Act is regarded as
a comprehensive framework that guides the functioning of the electricity sector in India.

Electricity Act 2003 – Key Provisions

The Electricity Act, 2003 introduced several important provisions aimed at modernizing the electricity
sector, ensuring fair practices, and promoting competition:

1. Private Participation
o The Act allows private sector participation in generation, transmission, and distribution,
breaking the monopoly of state-run utilities. This move encourages competition,
efficiency, and innovation in the sector.
2. Mandates CERC and SERCs
o The Act mandates the formation of both CERC (Central Electricity Regulatory
Commission) and SERCs (State Electricity Regulatory Commissions). These bodies are
tasked with regulating electricity generation, transmission, distribution, and tariffs at
the national and state levels, respectively.
3. Promotes Open Access
o Open access allows large consumers to purchase electricity directly from generators,
bypassing distribution companies (DISCOMs). This helps consumers secure electricity at
competitive rates and promotes efficiency in the market.
4. Unbundling of SEBs
o The Act calls for the unbundling of State Electricity Boards (SEBs) into separate entities
for generation, transmission, and distribution. This process is designed to improve
operational efficiency, accountability, and financial transparency within the sector.
5. Tariff Regulation
o The Act empowers regulatory commissions to set tariffs for electricity, ensuring that
prices are fair and reflective of the cost of service. Tariff regulation also aims to protect
consumers from unjustified rate hikes while ensuring the sustainability of utilities.
6. Consumer Protection & Grievance Redressal
o The Act emphasizes consumer rights, providing mechanisms for grievance redressal at
various levels. It ensures that consumers are protected from exploitation and have the
means to address issues like poor service or billing disputes.
7. Appellate Tribunal (APTEL)
o The Appellate Tribunal for Electricity (APTEL) was established to hear appeals against
decisions made by the CERC or SERCs. APTEL ensures that there is a legal recourse for
stakeholders if they believe that regulatory decisions are unjust.
Regulatory Commissions – CERC & SERCs

Regulatory commissions play a crucial role in the governance of the electricity sector. They ensure that
the sector operates efficiently, transparently, and fairly. Their main duties include regulating tariffs,
setting guidelines, issuing licenses, and promoting competition.

1. CERC (Central Electricity Regulatory Commission)

o Regulates Inter-State Transmission & Tariffs: CERC primarily oversees the electricity
transmission between states and sets tariffs for electricity that is transmitted across
state borders.
o Issues Licenses: CERC issues licenses to entities involved in the transmission of
electricity between states.
o Promotes Competition: CERC ensures that there is no monopoly or unfair advantage in
the electricity market. It also formulates the National Tariff Policy, which guides tariff
setting and ensures uniformity across states.
2. SERC (State Electricity Regulatory Commissions)
o Regulates Intra-State Supply & Tariffs: SERCs oversee the regulation of electricity
supply within a particular state, ensuring that tariffs reflect the cost of supply and are
fair to both consumers and suppliers.
o Licenses DISCOMs: SERCs issue licenses to DISCOMs (Distribution Companies), which
are responsible for distributing electricity within a state.
o Enforces State Grid Code: SERCs enforce the state-specific grid codes, ensuring that
electricity transmission and distribution are conducted in a reliable and safe manner.
o Promotes Renewable Energy: SERCs are responsible for promoting the adoption of
renewable energy sources within their states, aligning with national renewable energy
goals.

Features of Regulatory Bodies

Regulatory bodies like CERC and SERCs are designed to be independent quasi-judicial bodies, ensuring
that they can function impartially and make decisions based on facts and law rather than political
pressures.

 Multi-Member Commissions: These bodies consist of multiple members, including technical,

legal, and financial experts, to ensure balanced decision-making.
 Fixed Tenure: Members of regulatory commissions are appointed for fixed tenures, which adds
to their independence and stability.
 Dispute Resolution: Regulatory bodies have the authority to adjudicate disputes between
various stakeholders in the electricity sector, issue orders, and set tariffs.
 Transparency & Public Participation: Regulatory bodies are mandated to encourage
transparency and public participation. They often hold public hearings and invite comments on
proposed regulations, ensuring that the views of stakeholders are considered.
Grievance Redressal Forums

Grievance redressal mechanisms are vital in ensuring that consumers have a way to address issues they
encounter with electricity suppliers or utilities. These forums are set up at various levels:

1. Utility-Level Forums: Consumers can first approach the consumer service center or grievance
redressal mechanism provided by their utility company (DISCOMs).
2. Regulatory Commission-Level: If the issue remains unresolved at the utility level, consumers
can escalate the matter to the relevant SERC or CERC.
3. Appellate-Level Forums: In case consumers are still dissatisfied with the outcome, they can
approach the Appellate Tribunal for Electricity (APTEL), which provides a higher level of judicial
review.

Additional mechanisms such as Ombudsman services are also available to resolve consumer disputes in
a fair and timely manner.

Additional Important Concepts (from PPTs)

1. Technical Concepts:
o Load Factor = Average Load / Peak Load: The load factor indicates how efficiently a
system is utilized. A higher load factor means that the system is being used efficiently.
o Plant Load Factor (PLF) = Actual Output / Maximum Possible Output: PLF shows the
efficiency of a power plant. A higher PLF indicates better utilization of a plant's capacity.
2. Billing Example:
o Tariff = ₹6/kWh, Consumption = 150 units.
 Bill = ₹6 × 150 = ₹900.

Final Tip: How to Answer in Exam

 Short Answers (3-5 lines): Provide a clear definition, give one relevant example, and state the
impact.
 Technical/Diagram Questions: Use schematics from PPT or Primer to clearly explain technical
concepts.
 Regulatory/Legal: When addressing regulatory or legal questions, quote relevant provisions
from the Electricity Act 2003 and mention the roles of CERC and SERC.