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THE AVAILABILITY BASED TARIFF (ABT) regime — the new system governing the way the State electricity boards buy power from the Central utilities and for computing the tariff — has at last been implemented in all the regions. The Central Electricity Regulatory Commission passed the orders to switch to the ABT system about three years ago, but the implementation was delayed on opposition by a number of players either because of a lack of preparedness or the perceived impact on their financial returns. The ABT system is a key component in developing a national grid, which will help transfer surplus power from the surplus eastern region to the chronically-deficit south. Prior to its implementation, the national grid was marked by rampant indiscipline with most SEBs frequently drawing more than their entitlement, leading to grid collapses. Low frequency during the peak hours and vice versa and wide fluctuations led to frequent grid disturbances. There are hidden costs too, ultimately borne by the customer, in terms of damage to both the generating equipment and the end use machines, because they function at non-standard frequency levels.

To mark a departure from this and to facilitate meeting demand with least cost supply, through the national grid, the CERC evolved the ABT system, work on developing which was initiated as far back as in 1994. The ABT regime puts in place a scheme of proactive load management by the SEBs and dispatch discipline by the generating stations. What will drive efficiency is the threat of a penalty on either the seller or the buyer for unscheduled interchange (for the supply and consumption of energy at variance to what has already been committed to). Overall, the tariff is designed to ensure rational recovery of fixed costs, put in place a fiscal mechanism to encourage high availability of plants to meet peak demand, and encourage merit order dispatch — tapping the cheapest available source of power first.

With most SEBs or their successor entities still adapting to the new system, it will be some time before the ABT's success can be gauged. Its aims are laudable and it is up to the SEBs to improve their systems so that they tap the cheapest power at all times — be it that from the Central generating stations or their own. The onus is on the SEBs to improve their scheduling as the ABT system rewards scheduled and planned generation and consumption, and penalises deviations.. Hopefully, the new regime will not only bring more discipline to the grid and efficiency to the system, but also form the basis for an active trade in electricity. . Errant SEBs should not look at the penalty as a mere rap on the knuckle but use it to mend their ways and improve their functioning.

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