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Friday, December 19, 2014

Government to set up POSOCO for reforms in power sector

Thrust on bringing in further reforms in the power sector at the Central level 

The government has decided to set up of Power System Operation Corporation (POSOCO) as an Independent Government Company. In the process, the institutional framework for an independent, secure and reliable power system operation entity, at the national level has been put in place as mandated under the Electricity Act 2003. POSOCO operates the National Load Despatch Centre (NLDC) and Regional Load Despatch Centres (RLDCs) which are also responsible for operating the vibrant electricity market working in the country. POSOCO is also designated as the nodal agency for major reforms in the power sector such as the Renewable Energy Certificate (REC) Mechanism, transmission pricing, short term open access in transmission, Deviation Settlement Mechanism, Power System Development Fund (PSDF), etc. 

The need for independent Government Company in light of the introduction of competition as per Electricity Act 2003, which resulted in tremendous growth in the Indian power sector by the private sector participation in generation, transmission, distribution and trading. 

With transmission coming under competition and multiple transmission licensees operating, need was felt to ensure the independence and neutrality of the system operation function. The Enquiry Committee set up following the July 2012 grid disturbances, has recommended inter alia putting in place zero tolerance systems including setting up of an Independent System Operator. 

It has been decided to establish POSOCO as a wholly owned Government of India Company under Ministry of Power thereby giving a big thrust to bringing in further reforms in the power sector at the Central level. The decision also creates an example for implementing similar reforms at the State level to ensure independent system operation by the State Load Despatch Centers (SLDCs). 

The strengthening of the institutional mechanism of System Operation would help bring in innovation in the power sector as the RLDCs/NLDC operated by POSOCO by achieving economy and efficiency in the power system operation and facilitating implementation of various Government of India policies for Power Sector as well as provide feedback to the policymakers, regulators and planners.
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