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ELE.07   :   RLPP   over   District-owned   Electricity   Generation   Companies

Pre-requiste readings : RLPP

  1. Problem in electricity generation
  2. Solution? ELE.07
  3. Advantages of ELE.07
  4. Draft of the act to create procedure ELE.07

Problem in electricity generation

A electricity generation plant has three main costs
  1. interest plus principal repayment on initial investment
  2. salary costs
  3. fuel costs
Now say the plant is capable of creating 10 million units per hour. Now say the plant is run at 100% capacity, and in that case the costs is say Rs 2/unit. Now if supply exceeds demand, the plant may have to be run at below full capacity. Say the plant is run only at 50% the capacity and makes 5 million units per hour. Now will the cost be same Rs 2/unit? No. why? Becuase costs (1) will remain SAME, and (2) will reduce only marginally, even if plant is run at 50% or even lower capacity. Only the fuel costs will decrease to half. So the cost per unit at 50% capacity will NOT be Rs 2/unit, but may be higher say Rs 3/unit. IOW, the cost per unit rises if the plant is run below its capacity.

IOW, it becomes necessary to run plants at full capacity, or say capacity of at least 80% to 90%. Now say a region has houses, factories etc which consume say 500 billion units per day i.e. say 5800 million units per second. In such case, that region would need plants with capacity of at least 5800 Mega Watts. But since the peak consumption demand (say in summer afternoon) can be much above average daily demand, the capacity of 5800MW will NOT be enough to meet peak consumption demand. So say the region creates electricity plants that can meet 7000MW. In such case, plants cannot be used at 100% capacity, as in such case there will be over production. Sometimes, they will run at near 100% capacity and sometimes near 70%. Say on an average, the plant runs at 80% capacity.

Now there is another issue which disturb the supply side. Say the region needs 5800 MW average capacity and 7000 MW peak capacity. And it builds hydro-electricity plants of 2500 MW peak capacity and 4500 MW of thermal power. Now in some years, when rainfall is poor, the hydro-plants may only work at say 1000 MW. So the region would need say 6000 MW of thermal power. But it has only 4500MW of thermal power plants. So this will create a shortage. The only way to ensure that shortage does NOT arise even in rainless season is that there are more thermal plants which can provide say 6000 MW of power. In such case, the problem will come when rainfall is good or better than average, and hydro-electricity provides 3000MW than usual 2500MW or lower 1000MW. In such case, thermal power plants need to provide less than 3000 MW and so half the capacity of thermal will have to be left idle. But the salary/investment costs will continue even in those thermal plants. This will have thermal power more expensive that usual.

So if distribution companies take power ONLY from the cheapest power source, the other power sources' per unit cost will rise sharply, which will further discourage distribution companies to buy their power. This eventually force that power plant to shut down. This will create a shortage when cheaper sources are not capable of meeting the demand.

So the problem with power generation is that, to ensure that demand is always met, it is necessary to have supply side capable say 25% to 50% larger than usual demand, so that on a rainy (rather rainless) day, supply can still meet demand. But then, one has to bear the interest/capital and salary cost of maintaining a larger infrastructure. Solution? There are 100s of solutions to these problem. I have proposed following solution : put a surcharge on every user to meet the costs of unused plants. How can surcharge be collected and distributed? This can be done by proposed procedure ELE.07.

Solution? ELE.07 - RLPP over District Owned Electricity Generation Company

  1. The District-owned electricity generation company can be formed by an Act or Resolution in District Panchayat. The citizens may pass this Act using LM.01.

  2. The Panchayat Members will appoint the Chairman of the company. The citizens can replace the Chairman using RLPP.

  3. The Chairman will decide the per unit generation charge.
  4. In addition, if the plants are run below the planned capacity, after the approval of citizens by procedure #LM.01, the Chairman may collect a surcharge from EVERY electricity user in the district to meet the capital/interest and salary costs (but NOT the fuel cost).

  5. The district-owned electricity generation company will hire the junior employees by competitive exams only. The citizens may expel an employee by Jury Trial.

  6. For specialized personnel, the Chairman may hire contractors without competitive exams. Such appointments may be cancelled by Jurors.

  7. The State/District and Central govts will allow private players to setup their own plants. The private electricity buyers are free to give purchase gurantees to the private generation companies. But NO govt body will give any purchase gurantee to ANY private player.

Advantages of ELE.07

ELE.07 will make electricity generation business more competitive, and thus reduce the cost of electricity generation.

Draft of the act to create procedure ELE.07

To enact ELE.07, 3 laws need to be passed Parliament, Assembly and District Panchayat each. I have drafted the texts for these laws. To see the draft, please click here.

     Now citizens can ask MLAs, MPs and Panchayat Members to pass this Act. But IMO, it will be wiser for citizens to first enact procedure LM.01, LM02 and LM.03, and then use LM.01, LM.02 and LM.03 to pass this ELE.07 drafts WITHOUT any help from MPs, MLAs and Panchayat Members. To know about procedure LM.01, please click here, to know about procedure LM.02, please click here and to know about procedure LM.03, please click here.

If you have any other question, please mail it to Thousand thanks in advance.