The whole Northern Grid collapsed yesterday for over six hours. From Rashtrapati Bhavan to small villages in the nine states of North India, there was no power during that time. Restoration has been slow. Hospitals, hotels, schools, colleges or homes, there was a blackout everywhere.
The last time the Northern Grid had collapsed was in early 2001, on a cold day of the season. Then, I was the chairman of the Central Electricity Regulatory Commission (CERC), created in 1998. I called an emergency hearing (being in a quasi judicial position, I held hearings along with my colleagues on the petitions filed before us).
This particular occasion was of a suo motu hearing that we had called on our own, without a petition being filed. All important suppliers of power, important consumers, including the state electricity boards, the national inter-state transmission company and state transmission entities had to attend it.
What emerged was that the transmission lines in Uttar Pradesh had been maintained poorly and the initial collapse had taken place there. Since demand in the North was low because of winters, it would have been sensible to reduce the quantity of power sent on to the transmission lines in the Northern Grid. This would have ensured there wasn’t any overload in relation with demand, which caused the frequency to rise to dangerous levels and the grid to fail.
NTPC, as the principal generator supplying the northern states, did not cut generation. PowerGrid, the inter-state transmission utility that controlled the state load dispatch centres and had moment-to-moment information on demand and supply of power, was not alert enough to take corrective action.
The central government, which owned NTPC and had determined its tariffs and incentives, gave it an incentive to produce at more than its plant load factor of 64 per cent. This was because the imperative in those years (as it is now) was to generate as much electricity as possible. But NTPC was already producing at 80 per cent plant load factor (PLF) and was earning incentives without any special effort. Any backing down of generation by NTPC would have meant serious loss of earnings. So, it kept pumping electricity on to the grid, even as demand was low. This led to the frequency soaring and the grid’s collapse.
CERC warned all concerned that since this was the first such incident before it, it would not exercise penal powers. However, it made it clear that any repetition would lead to the severest penalties in its power.
We did two more things. We changed the incentives for more generation by raising the starting point to 80 per cent PLF (to be reviewed periodically). We soon came out with an availability-based tariff order. So, we replaced PLF with availability as a determinant. This meant a plant was to be available to the extent it declared (if it was not, there would be penalties). We called for day-ahead forecasts at 15-minute intervals from all important generators and users/distributors with some flexibility to change forecasts two hours in advance. If anyone using the grid went above or below the forecasts to an extent that affected the frequency (moved away from a target laid down), there would be severe financial penalties.
The proof of the pudding is in the eating. The grid remained stable for over a decade. Frequency on all Grids stabilised at much more reasonable levels than before. Since then, CERC has further raised the penalty for missing forecasts. Power trading is in much vogue now. Additional transmission lines have turned the country into almost a national grid. The new lines for the South, currently under way, will make it fully national in a few months. So, like in any market, power can flow from areas of surplus (even for a limited time) to those that are deficient. The market would determine the price for this exchange.
However, these do not resolve the fundamental problems — government ownership of almost 90 per cent of the country’s electricity assets, free or cheap power to large voter groups, free power for agriculture, non-metering of many who are supplied and theft of electricity that takes place in collusion with electricity board employees and goes unpunished. Overstaffing and indiscipline are all consequences of government ownership.
What is worse is that the electricity companies are headed by itinerant Indian Administrative Services (IAS) officers with no career commitment to the power sector. And, these huge companies are run like government departments. We must have professional management and authority delegated to the lowest organisational levels. The best answer is to privatise all electricity assets.
At the same time, we must make state regulatory commissions truly independent. At present, almost all are headed by elderly retired bureaucrats (usually from IAS), and members are retired government servants. We need these commissions to be independent of state governments and headed by people who exercise just the powers the law gives them. The central regulator has fortunately been allowed such a freedom.
Also, the regulator must have much stronger penal powers. When a grid collapses or there are frequent violations of forecasts, the CEO of the company should be made personally liable. If this continues, he might even be jailed. The regulator’s penal powers on Monday are pathetically small and are imposed only on companies, and not on individuals.
Electricity is too serious a business to be left to politicians or procedure-oriented bureaucrats, who are not held individually accountable for anything.
(The writer is the first Chairman of the Central Electricity Regulatory Commission)