A. Srivastava, M. Shahidehpour Restructuring Choices for the Indian Power Sector T he interest in restructuring and reform of the power sector is a worldwide phenomenon that is being pursued in different formats, depend- ing on the structure and condition of the economy and political institutions in those countries. Yet the core of the reform remains the same, i.e., the es- tablishment of a transparent regulatory structure, unbundling of the power sector, creation of national and state grids with a transparent and efficient dispatch, entry and exit systems for participants, wholesale market in the power sector, more choices regarding the sales to consumers, and other mea- sures that can improve the competition and the efficiency of the sector. The experience of reform/restructuring in different countries has shown that the restructuring generally fails on account of missing pieces in the reform legislation. The restructuring pro- grams were less successful if they were not clearly defined in a reasonable time schedule or if they led to setting up ambiguous regulatory structures that decided on rules regarding tariffs, en- try to the power sector, etc. The other possible reason for failure was attributed to the fact that reform was not an integrated pro- gram that could look at the restructuring requirements of all the players, i.e., generation, transmission, and distribution in the power sector, or the reform program did not remove the poten- tial for political interference in the working of entities and in ar- eas other than policies. The Indian power sector is presently going through a pro- cess of reform and restructuring, as is the trend in many other parts of the world. Independent regulatory commissions are being set up, and vertically integrated utilities are being unbundled into corporate entities. Efforts are also being made to facilitate competition wherever feasible, and the choice of an appropriate power market model assumes significance in this context. The recent reforms in the Indian power sector have exemplified changes in the players’ role for providing policy directions, regulating, and running the sector for over 50 years. New institutional entities are being established in the power sector, and a healthy relation- ship between these institutions is presumed crucial to ensure a sus- tained development of the sector and to realize the reform goals. Indian Power Sector The power sector in India has been regulated and owned for many years by various government agencies and organizations. The role and the participation of private industry in the Indian power sector has been limited and confined to specific ar- eas of small jurisdiction and con- sumer base. The subject of electricity is covered under the con- current list in the Constitution of In- dia, implying that both the central and state governments have the power to legislate the sector. The power supply industry in India is now over a century old and experienced a slow and fragmented growth during the first 50 years of its existence. The enactment of the Electricity (Supply) Act in 1948 led to the consolidation of the power industry, initially at the state level and later at regional levels, which also led to the public sector ownership of almost the entire industry. Although the industry made rapid strides under this setup, it is found in- IEEE Power Engineering Review, November 2002 0272-1724/02/$17.00©2002 IEEE 25 This article summarizes a full report that is available at on the Web, http://mo- tor.ece.iit.edu/India. A. Srivastava and M. Shahidehpour are with the Center for Electric Power and Power Electronics, Illinois Institute of Technology, Chicago, Illinois, USA. NREB NEREB EREB SREB WREB Figure 1. Regional electricity boards of India A three-phase, nine-step action plan for reform encourages an integrated national grid, tariff setting, DSM options, energy conservation, and T&D loss reduction as possible strategies to overcome the problem of power deficit