Affiliations: Distinguished Fellow, TERI, New Delhi
Note:  Vice President, Transaction Advisory Service, Ernst & Young, New Delhi
Abstract: The Electricity Act, 2003 promises to bring about competition and choice in the electricity industry in India. However, since the Electricity Act, 2003 does not mandate any particular market design, there is considerable risk of state electricity regulatory commissions implementing different market structures in their respective states as per their own priorities and preferences. Such action is fraught with dangers and can severely limit consumer choice. A common market design evolved through a process of consensus among policy-makers and regulators can obviate such risks to a great extent. Regulators must articulate clear and unambiguous principles that they would adopt. A well-defined regulatory work plan would be essential to ensure that the complex and interrelated tasks are addressed in a cohesive manner. Considerable emphasis should be placed on information dissemination. Regulators also need to be vigilant on the risk of over-regulation while implementing the Electricity Act, 2003. Lack of institutional capacity in the regulatory bodies to address these challenges is a cause for concern. Efforts should be made to attract desired talent through suitable compensation structures, training inputs, etc. A separate central training institute focusing on regulatory matters would greatly benefit the regulators and their staff.