I am writing this post with reference to Indian environment. However, it is true for any other countries having similar set up.
As per electricity Act 2003, Maharashtra State Government restructured Maharashtra State Electricity Board in 4 companies w.e.f. 06 June 2005:
Everything looks good and rational till this point. However, the catch is electricity cannot be stored. MahaDiscom never gets a 'delivery' of electricity it purchased from MahaGenco. Then MahaDiscom never supplies electricity to end users. End users get electricity directly from MahaGenco using transmission and distribution infrastructure of MahaTranco and MahaDiscom. Accounting books of a distribution company are not in good shape as it is trying to do something abnormal. It is trading electricity:
Background
CAG audit of Delhi's power distribution companies
In January 2014, Aam Aadmi Party (AAP) government slashed power tariff in Delhi and asked the Comptroller and Auditor General (CAG) to audit the performance of Delhi's power distribution companies.Electricity Act 2003
Before year 2003, There was only one company per state called respective state electricity board -- for example Maharashtra State Electricity Board (MSEB). MSEB was looking after everything -- generation, transmission and distribution of electricity. There was one Profit and Loss account covering all three activities.As per electricity Act 2003, Maharashtra State Government restructured Maharashtra State Electricity Board in 4 companies w.e.f. 06 June 2005:
- M.S.E.B. Holding Co.Ltd
- Maharashtra State Power Generation Co. Ltd. (MahaGenco) -- Generates electricity
- Maharashtra State Transmission Co.Ltd (MahaTranco) -- Looks after transmission of electricity
- Maharashtra State Distribution Co. Ltd (MahaDiscom) -- Looks of distribution of electricity
Problem analysis
June 2005 onwards, MahaDiscom company is purchasing power from MahaGenCo by signing a Power Purchase Agreement (PPA). PPA is signed by both parties before the power is actually generated. MahaDiscom company is then selling electricity to end users and bills them for used electrical units.Everything looks good and rational till this point. However, the catch is electricity cannot be stored. MahaDiscom never gets a 'delivery' of electricity it purchased from MahaGenco. Then MahaDiscom never supplies electricity to end users. End users get electricity directly from MahaGenco using transmission and distribution infrastructure of MahaTranco and MahaDiscom. Accounting books of a distribution company are not in good shape as it is trying to do something abnormal. It is trading electricity:
- Which is not generated by them And
- Which cannot be stored -- distribution company never gets a 'delivery' of electricity
Conclusion
- One cannot trade electricity as it cannot be stored.
- End users should pay electricity bill directly to MahaGenco. MahaGenco will then pay some amount of it to MahaTranco and MahaDiscom for using their infrastructure.
