Learning from international experience: a must for regulation in India

While all the world has been watching the twists and turns of the US presidential elections, a crisis that normally would have caused great concern, at least in the US, has not received adequate coverage in the media. California, the most economically advanced state in the US, has been going through a precarious period of power shortages in recent weeks. The situation is so serious that the US Energy Secretary Bill Richardson has ordered other states in the western part of the country to sell power to California. The maintenance reserve in California has reached a low level of about 1.5% of the total supply, which in operational terms signifies a Stage-3 alert level. It is possible that blackouts will have to be imposed if the winter in the western part of the US becomes more severe than it is now. It is ironical that four years ago California decided to deregulate its power supply industry with the expectation that competition would drive prices to much lower levels and power consumers would gain substantially. Instead, utilities are making record profits but capacity remains inadequate for meeting the winter peak, caused by cold weather, which is likely to worsen further. This situation underlines the importance of India learning from the experience of other countries in establishing procedures and institutions for effective regulation of the infrastructure sectors in this country. It was with this in view that TERI established, almost two years ago, the Division for Regulatory Studies and Governance, which has already made a visible contribution in creating a body of knowledge and disseminating it for efficient and fair regulatory practices being adopted in India. A major part of the work being done at TERI analyses the experience of different models of regulation adopted in different parts of the world and evaluates lessons that would be relevant to India.