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FORUM ON

Clean Energy, Good Governance & Electricity Regulation


Forum Report Cape Town, South Africa 19-20 May 2010

Cover: CFL lightbulb, Trinidad, Cuba Cuba (Paul Keller, 2008). Right: Urban slum, Cape Town, South Africa (flickr: Matthew, 2010).

Forum on Clean Energy, Good Governance and Electricity Regulation


Materials
19-20 May 2010

Hosted by the Institute for Democracy in Africa (Idasa), World Resources Institute and Prayas Energy Group

Left: Forum participants including electricity regulators and members of civil society organizations.

Contents
Forum Report............................................................................................................................................................5 Background Documents......................................................................................................................................... 13 Concept Note............................................................................................................................................. 14
Discussion Paper.......................................................................................................................................... .16 Case Studies Program for the substitution of electrical home appliances in the residential sector in Mexico .... 20

Luz Aurora ORTIZ SALGADO, Director General for Distribution of Electricity, and Nuclear Resources, Ministry of Energy, MEXICO

Solar Energy in Gujarat: Some aspects of regulatory decision-making ......................................... 22

Dr. P.K. Mishra , Chairman, Gujarat Electricity Regulatory Commission, INDIA D.C.Samant, Chairman, Rajasthan Electricity Regulatory Commission, INDIA

Solar Energy in Rajasthan................................................................................................................ 26

Overview of ANEELs experience with energy efficiency programs.......................................... 30 Aurelio Calheiros de Melo Junior, Brazilian Electricity Regulatory Agency (ANEEL)

Agenda......................................................................................................................................................... 32 This forum is convened with the support of the Foreign and Commonwealth Office of the United Kingdom (FCO), the Renewable Energy and Energy Efficiency Partnership (REEEP), U.S. Agency for International Development (USAID), and the Affiliated Network for Social Accountability (ANSA).

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Clean Energy, Good Governance and Electricity Regulation


Forum Report

Electricity regulators in the rapidly growing emerging economies of India, South Africa, Brazil and Mexico face similar challenges. Clean energy options are supporting their efforts to secure adequate electricity to power economic development without compromising local and global environmental benefits, but also presenting complex tradeoffs. The Forum on Clean Energy, Good Governance and Electricity Regulation hosted by the World Resources Institute (USA), Idasa (South Africa) and Prayas Energy Group (India) on 19 -22 May 2010 created a unique platform for regulators from these countries to share their insights and experiences designing new programs to support energy efficiency and renewable energy as a way of meeting societal electricity needs. Regulators in each country have taken important steps to design and implement clean energy programs, including energy efficiency (EE) and renewable energy (RE) within a very short period of time. In many cases, these programs have been prompted by their national governments emerging efforts mitigate global climate change, which has enabled regulators to take bolder measures. Participating regulators highlighted their commitment to increasing their efforts to promote clean energy at home, as well as the need for more opportunities to share experiences with each other. This brief report summarizes the Forum discussion which was held under the Chatham House Rule. The World Resources Institute (WRI), Prayas Energy Group, and Idasa have identified key insights and potential next steps. All presentations and background materials from the Forum are available online at: http://electricitygovernance.wri.org/events/2010/05/2010-forum-clean-energy-good-governance-and-electricityregulation

Clean Energy, Good Governance and Electricity Regulation

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Driving Investment in Renewable Energy
Renewable energy technologies offer many benefits, without many of the negative environmental impacts associated with conventional fossil fuels. But it can be a challenge to meet the higher up front capital, and manage the intermittency of some forms of renewable energy. In addition, issues related to siting new infrastructure, performance monitoring, and corruption are as pertinent for renewable energy technologies as they are for conventional energy technologies. Electricity regulators have been at the frontlines of efforts to introduce renewable energy technologies into the electricity mix. They have used a number of tools including specialised contracts, renewable energy targets and purchase obligations, and feed in tariffs to drive investment in renewable energy. Self Supply of Wind Energy in Mexico Comisin Federal de Electricidad (CFE), the state-owned utility, owns the grid and generates about two thirds of Mexicos electricity. Independent Power Producers (IPPs) generate the remaining balance. IPPs have generally been large commercial or industrial consumers that generate more electricity than needed for their own operations what is known as the self-supply sector. They access the grid through model contracts issued by the Energy Regulatory Commission (CRE). CREs mandate does not extend to setting prices for CFE, the state utility. In 2001 and 2006 the CRE issued model contracts designed to promote private investment by IPPs in wind energy, by recognizing the intermittent nature of wind power and designing terms that allow supply and demand to levelise. When the permit holder has generated power in excess of its needs, it may supply the grid at the prevailing public service rate. When there is an emergency need for power, the government pays 1.5 times the tariff rate for self supply electricity. The permit holder also receives a capacity credit based on the monthly average power produced during the system peak period on week days. At the end of the year the remaining surplus can be sold to CFE. When its own generating capacity is insufficient to meet its needs, the permit holder can access grid electricity at the prevailing public service rate. Essentially, by allowing electricity to be accumulated and withdrawn, this approach uses the grid as a bank. Securing access to the transmission grid has been a challenge: most wind projects were far away from the existing grid, and investors were not willing to pay for the additional transmission and distribution infrastructure required to connect to the grid. CRE stepped in and issued an open season process to encourage collaborative public-private investment in the necessary supporting infrastructure. It is worth noting that there have also been challenges associated with siting wind farms in Mexico, with local communities particularly in rural areas voicing concerns about the impacts of these projects on their lands and livelihoods. Nevertheless, the Mexican experience demonstrates that wind -- and through a similar model contract scheme, biomass projects -- can be competitive with the public service electricity rate. Even without a support mechanism such as a feed in tariff, in 2009, Mexico has fostered one of the fastest growing wind markets in the world through this program. New forms of support may be necessary, however, to sustain and scale up the contribution of clean energy technologies to the energy supply mix. CRE was able to build on its experience overseeing emerging markets for wind energy to inform the design of a new electricity law which was finally approved in June 2008. That law gives the CRE significantly greater powers to regulate the national state owned utilities, and also give it the mandate to regulate environmental externalities of the electricity system. Renewable Energy Purchase Obligations and Feed in Tariffs in India The national electricity act of 2003 gives state regulators the mandate to adopt these targets to promote the use of renewable energy. Most states in India now have a renewable energy purchase obligation (RPO) of 1 6% in place that utilities must meet. In most cases the target is based on actual generation of electricity, which requires much larger renewable energy generation capacity to be installed. A national generation based RPO of 9% from non-solar renewable energy technologies and 1% from solar energy technologies by 2015 has been proposed as part of efforts to implement the National Action Plan on Climate Change. There is presently 17,000 MW of installed renewable energy capacity in India: achieving this target would require 35,000 MW of wind, biomass and cogeneration to be installed in total, and 58,000 MW of solar capacity. Rajasthan has specified RPOs for utilities from wind (6% in 2009-10) and biomass (1.45%). However, there is a much larger appetite for investment in solar given Rajasthans arid climate: 325 investors have registered with the state nodal agencies, representing a potential 9800MW. The Gujarat Electricity Regulatory Commission (GERC) required utilities to procure 0.25 1% of their electricity supply from renewable sources. So far, 17 Power Purchase Agreements (PPAs) have been signed in Gujarat, with another 11 in the pipeline representing approximately 500MW of capacity.

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These PPAs are backed up by MoUs to help guarantee that investors will not renege on the deal. Renewable energy certificates (RECs) have been promoted by the Federal government of India so that all states can support renewable energy, even those who may have limited domestic RE resources. RECs allow utilities to buy RE from other states in the country. The Indian Federal Government, with support from the Central Electricity Regulatory Commission (CERC), has promoted the use of renewable energy certificates (RECs), to allow utilities in states with limited RE capacity, to purchase RE from those with higher capacity. Efforts to put in place feed in tariffs for electricity have also been championed in recent years. As part of its 2009 tariff order GERC approved a fixed rate declining tariff for photovoltaic solar of Rs. 15 per kWh for an initial 12 years followed by Rs.5 per kWh for the next 13 years; and similarly for solar thermal energy a tariff of Rs.11 and Rs.4 per kWh for the first 12 years and the next 13 years. The Rajasthan Electricity Regulatory Commission (RERC) approved a feed in tariff on a cost plus basis that should allow a return of 16% on equity through a 25 year power purchase agreement. A tariff of Rs 15.78 is offered for photovoltaic solar electricity, and Rs 13.78 for solar thermal energy. South Africas Renewable Energy Feed in Tariff The National Energy Regulator of South African (NERSA) has been proactive in setting a Renewable Energy Feed-inTariff (REFiT), which has sought to kick start investment in renewable energy technologies. All electricity is purchased by the state owned utility, Eskom, which has few incentives to purchase this higher priced electricity. There has also been limited transparency in the processes by which Eskom makes decisions about purchasing electricity from private actors. Efforts are underway to try and put in place an Independent System Operator that might take on some of Eskoms electricity purchasing roles and functions. The South African Department of Energy is also leading an effort to develop a long term Integrated Resource Plan (IRP2), which will determine what share of the electricity mix will be met by renewable energy. It will also shape the criteria that determine which Independent Power Producers (IPPs) are awarded licenses. These criteria may include social considerations, including the ability of the licensee to extend access to those currently not served by the electricity grid. South African laws specify that new generation can only be licensed if it is included in the IRP. South Africas feed in tariff for photovoltaic solar energy may in fact be almost twice that used by Indian state and central regulators. This wide divergence illustrates the difficulties of accessing accurate and reliable information about the real costs of renewable energy. Participating regulators noted that a comparison of the costs that factored into the South African and Indian feed in tariffs for renewable energy and approaches used would be extremely valuable. Regulating off-grid systems to protect end-users The use of renewable energy technologies to extend access to electricity to remote communities which are not within the vicinity of the existing national grid raises new challenges for electricity regulators. Electrification in rural areas has often been politicised, causing unsustainable short-term roll-out of off-grid energy. There is a need to involve local research centres and to build local expertise in the provision and maintenance of off-grid solutions in the long-term. One of the paradoxes of solar energy development at present is that the cost of on-grid solar electricity is likely to decline more quickly than that of off-grid solar, however, due both to the level of investment in on-grid technology, and because in rural areas storage incurs high costs and requires maintenance. Rural concessions have been used to attract suppliers of off-grid energy such as solar PV into remote areas, which are otherwise neglected. Such concessions need regulation,
Clean Energy, Good Governance and Electricity Regulation 7

It is noteworthy that the GERC tariffs for RE technologies are lower than those recommended by the federal CERC, yet it is still succeeding in attracting investment. GERCs credibility has been enhanced by its demonstrated willingness to make independent decisions about electricity pricing. Indian regulators note that a degree of competition to attract investment in RE as emerged amongst states within India as a result of its federal structure. For some regulators, this has been an express consideration in the design and implementation of their feed in tariffs and associated renewable energy purchase obligations programs.

There is an urgent need to bring down the costs of solar energy particularly if new national targets to bring 20GW of solar energy online by 2020 are to be met. If local manufacturing capacity for solar energy components emerges, this may help reduce the costs of solar and enhance the benefits in terms of local job creation and economic value. There is some evidence that investment in renewable energy can foster a labour intensive industry from developed countries such as the UK.

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however, to ensure that consumers are protected from unreasonable costs including for system maintenance, and low quality service. The regulation of off-grid systems requires new approaches and specialised capacity on the part of the regulator. costs, capacity utilisation factors, returns on equity, interest on loan and working capital, tax rates and discount rates are treated.

Energy Efficiency and Demand Side Management


While much is made of the potential for energy efficiency (EE), demand side management (DSM), and associated cost savings, most countries have struggled to make progress in tapping this potential. Progress has been particularly slow in developing countries where the focus may be on extending access to electricity for those who still lack it, even though there are many opportunities to improve the efficiency of existing systems. A central element of the challenge, of course, is that market and regulatory structures in most countries reward generators and distributors for producing and selling more electricity rather than less. Usually, electricity utilities charge per unit of electricity sold, and are therefore incentivised to sell more electricity. Many states in the USA have tried to address this fundamental impediment to energy efficiency by introducing utility revenue regulation methodologies that decoupling revenues from the volume of electricity utilities sell. Under decoupled regulation, utilities are assured a total net revenue per year, rather than a price per KWh. Capping revenue does not impact income in the short-run but creates an incentive framework in which the utility benefits from reducing consumption of electricity. This can create new receptiveness to EE and DSM programs, as they will not detract from the utilitys net income. There are many challenges associated with decoupling revenues from electricity sales, however, particularly in a developing country context. In many cases, electricity sales are one source of revenue for local service delivery particularly in cases where local government has jurisdiction over electricity distribution. The reduction of revenues necessary for providing local services is likely to be resisted by many stakeholders. If decoupling measures are to succeed, substitute revenues for associated actors will also need to be identified and provided. The difficulties of designing and implementing EE and DSM programs that respond to local conditions and stakeholder needs persist even under decoupled rate regulation. In India, for example, utility returns on equity are protected by the regulatory framework, so there is no need to decouple revenues from sales. While many efforts have been made to put in place EE and DSM projects, there has been little utility responsiveness and interest. Successful EE and DSM programs should reduce future demand for electricity. The regulator can play an important

Addressing Information Asymmetries


In order to set appropriate tariffs and incentivise utilities to adopt preferable technologies, regulators need access to information and analytical capacity of technologies. Without reliable estimates of the real costs of new renewable energy technologies, or a comprehensive understanding of the technical and comparative characteristics of different technologies, regulators are constrained in their ability to regulate these technologies. For example, as Gujarat developed a feed in tariff for solar energy, it found itself inadequately equipped to make an informed decision about the likely generation capacity factors for photovoltaic solar technology: estimates identified in the stakeholder engagement process ranged from 15% to 23%. The impacts of technology learning on costs, and of indigenous manufacturing, also need to be factored in. There is a need for more reliable sources of data to inform such decisions. In addition, however, good monitoring and data collection as program implementation proceeds are necessary to ensure that more accurate information can inform future decisions and reviews of the impact and effectiveness of programs implemented. In the US, a quasi-judicial process requires that utilities give sworn testimonies of their costs, which are then made available to all stakeholders. Regulators also need to measure and calculate the impact that tariffs and incentives will have on the economy. Public consultations and hearings have been of mixed use in designing rules. In general, it is primarily industry groups that have come forward with technical information, and there has been a deficit of input from civil society or independent research institutions. Civil society groups in turn may lack technical and financial resources and support to engage effectively. Yet there is a real need to ensure that accountability for effective design and implementation of clean energy programmes. There is a need to build the capacity of consumer groups and civil society to seek such accountability. The technical methodologies used in tariff setting, and in incentivizing investment in renewable energy differ greatly from regulator to regulator. Good practices are neither well understood nor shared -- In many ways, we are figuring it out as we go along. There are differences in how capital
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role in interrogating the realism of future projections for electricity demand that justify proposed new investments in electricity generation. To play this role effectively, it can be helpful to have strong processes to monitor the effectiveness of energy efficiency programs on electricity consumption, and factor these achievements into projections of electricity demand to avoid overbuilding. The regulator can play an important role in energy planning processes not just in enforcing plans, but also in informing plans. If the regulator puts in place robust and transparent frameworks for monitoring its utilities, it can help ground truth projections of future demand for electricity and critically assess the viability of proposed new investments in generation. Appliance Efficiency in Mexico Electricity tariffs in Mexico are subsidised and the regime is regressive in that middle income and rich households that consume large amounts of electricity benefit the most from these subsidies. In the face of pressures to reduce electricity prices, the government sought to reduce household electricity consumption rather than to further increase subsidies. The government initiated a large scale home appliance efficiency program to help families save money, which also helped support the appliance sector in Mexico, which was hit hard by the economic recession. Any electricity consumer can go to a store with their electricity bill, and fill out a form to qualify for financial support to replace their refrigerator or air conditioner. The stores are obliged to provide the new, efficient appliance within 10 days as long as the old appliance is turned in for disposal. Poor households were offered a combination of grants and relatively low interest loans of 12% (compared to 50% interest loans which are typically offered to most low income households). High income consumers were only offered loans. Loans are repaid over 4 years through the electricity bill. To date, 500,000 appliances have been registered for replacement. Rich consumers were not found to be interested in the programme, however. Different mechanisms will need to be designed to target high income electricity users. A fund of about $250 million per year has also been established in Mexico to help improve efficiency of technology, and research and development to ensure sustained investment in energy conservation beyond supply shortages. Although the Energy Efficiency Commission in Mexico is not yet perceived to have much enforcement authority, it is making some headway with energy intensive users. There is a long way to go, however, and the energy efficiency law will likely have to be reviewed in to support more proactive efforts and implementation. Addressing the Political Economy of Energy Efficiency in India Indian participants reflected on experiences implementing programmes wherein consumers were encouraged to exchange conventional light bulbs with compact fluorescent lights (CFLs). These programs were designed to reduce by 10MW. But corruption in the procurement processes of the utilities implementing the programmes resulted in poor quality CFLs being purchased. 50% of the CFLs distributed were faulty. This wasted scarce resources, as well undermining consumer confidence in CFLs and the DSM programme. This experience points to the need for better monitoring and oversight of EE and DSM projects, particularly in procurement processes, including to control the quality of equipment. The resistance of utilities to implementing DSM programs has also prompted regulators to explore alternative approaches to achieving energy savings. To this end, the federal Bureau of Energy Efficiency (BEE) initiated an effort to reach out directly to manufacturers to provide more efficient home appliances, and a national level CFL programme that regulates bulb manufacturers so they meet high standards. The federal government is also initiating an energy efficiency performance target: industries meet approved efficiency targets, and then have the opportunity to trade excess efficiency reductions. Consumer preferences have a significant impact on the effectiveness of EE and DSM programs that target the residential sector. Rich people tend to live the most inefficient lifestyles, which raises questions about the equity of EE and DSM programs in developing countries. The introduction of CFLs, Solar Water Heaters, or different appliances than are used in rich households may be often perceived as a decrease in quality of life for poor and middle income households.

Making the Most of a Crisis


Electricity supply shortages can create the political space for regulators to step up their efforts to improve efficiency and manage electricity demand in the residential, commercial and industrial sectors. Public Benefit Funding for Energy Efficiency in Brazil Brazil has instituted a range of programs to reduce electricity consumption including the PROCEL initiative implemented by the national ministry of Mines and Energy which is one of the longest standing energy conservation programs in the world. In the 1990s a wire charge of 1% on electricity

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sales was established to finance EE and research and development in the electricity sector. Part of the fund is overseen by Brazils electricity regulator, ANEEL, which sets criteria for selecting programs to be funded to ensure they benefit consumers. The other part (CTENERG) is managed by a Board, with representatives from government, private sector and academia, and chaired by the Ministry of Science and Technology. ANEEL oversees the funds spent by utilities. US$863 million has been invested in energy efficiency alone through these funds by utilities since 1997. The results of these investments have been mixed, however. The process and criteria by which investments are assessed and selected warrants more attention, and a flexible framework for measuring results and prompting corrections in course is necessary. Most importantly, greater transparency about the impacts and results of investments in EE and research and development is necessary to enhance accountability for implementation, and to help build consumer awareness and support of these programs. The fact that Eskoms business model is based on the sale of large volumes of electricity to finance new investments in generation infrastructure is central to the challenge of promoting EE and other demand side measures in South Africa. However, since NERSA approved a 25% per year electricity price increase between 2010 and 2013 in response to Eskoms request for a 35% increase, tariff structures in SA are beginning to shift in ways that make EE measures relevant for the bottom line in energy intensive industries for the first time. . And as economic activity picks back up, and demand rises, mechanisms will be needed to share the limited existing electricity supply among and between different classes of users. NERSA is therefore developing new PCP rules. The PCP will seek to keep the lights on: an energy reduction percentage will be required of actors in specific to sectors, and they will be charged a significant penalty for exceeding allowed consumption. In addition, a standard offer program to incentivize EE and conservation is being developed. Under the Standard Offer Program, the developer of an energy efficiency programme will be offered a payment per kilowatt hour of electricity saved; the payment will be based on the avoided cost of electricity generation. Concurrently, efforts are underway to support the roll out of 1 million solar water heaters over the next 3 years as government has committed, to further reduce consumption. A proposal has been made to offer a 30% subsidy on solar water heaters for high income households, and 100% for low income households. Progress in getting EE and DSM programmes off the ground has been slow. But it is possible that creative engagement with different actors and stakeholders might support progress in implementation. For example in South Africa, local government plays an important role in electricity distribution, and also is well placed to support the roll out of efficient home appliances. City governments in South Africa are also seeking to be proactive on sustainability issues closer collaboration with local and municipal government may support the implementation of EE and DSM programs. Brazils experience illustrates that interventions to reduce electricity consumption in the short term can have long term benefits. It took 9 years for electricity demand to recover to the point where new investments in electricity generation were necessary. Serious support of EE and DSM was not maintained after the crisis had passed, however. In turn, EE and conservation measures need to be sustained even once crises have passed, so that expensive investments in new electricity supply can be avoided. A culture of switching the lights off has not yet been instilled in most countries. It is a tricky job for the regulator to share out the unhappiness associated with making the shifts to a more efficient energy system.

In 2001, Brazil faced an electricity crisis which prompted the Government to step up its energy conservation efforts significantly. The crisis response measures had lasting impact: many users made investments in new, more efficient equipment which reduced their electricity consumption over the long term as a result of the incentives and penalties for energy conservation that were put in place.
South Africas Power Conservation Programme South Africa is in the midst of an electricity crisis. Its reserve margin is down to 1% when its gas turbine peaking plants are not operating. When the effects of the electricity crisis first became apparent in 2008, efforts were made to develop a power conservation programme (PCP) to reduce demand and promote efficiency. Initially a reduction of energy use by 10% for all large energy users was proposed, users that failed to make this reduction would be charged punitive tariffs for inefficiency. Energy intensive industries expressed strong reservations about this approach -- and were very vocal in expressing these concerns in public hearings. Furthermore, reducing their consumption to this extent would violate their contractual obligations to Eskom to purchase a minimum supply of electricity. When the economic recession hit in late 2008, electricity consumption in South Africa dropped by 1200 MW (in part because some smelters stopped operation). As demand dropped, however, so did Eskoms net income. The government and NERSA made the decision to halt the PCP, and electricity consumption was again encouraged.

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Climate Change and Electricity Regulation
Participating regulators stressed that climate change has increasingly become an issue of common focus, noting that this issue was given significant attention at the World Forum on Regulation in Athens in 2009. As governments take more proactive measures to address climate change, regulators mandates to address these issues are growing. In turn, the proactive efforts of regulators to promote clean energy can inform the design of national policies to respond to climate change and reduce the environmental impacts of the energy sector. The nature of regulation is to balance the interests of investors, utilities and consumers: consequently, the function of the regulators is to question all options proposed by regulated entities. Yet they also require new expertise to address additional complexities of clean energy technologies and the personal background and interests of the members of the commission can make a significant difference. In the case of Mexico, the members of the board of the regulator include people who have experience with the environmental sector (not just the electricity sector), as well as good lawyers and economists. By contrast, staff of utilities, investors, and government staff tend to have a background in the conventional energy sector, and greater experience and familiarity with conventional fossil fuel technologies. Similarly in the cases of Gujarat and Maharashtra, the regulators brought diverse prior experience in government including working on agricultural development and environmental issues to their role regulating the electricity sector. Regulators are often in a position to take a longer-term view of decisions than policy-makers, investors or utility officials who tend to respond to focus on short-term pressures, seek short-term profits, and have immediate capital costs. The regulator is supposed to transcend the politics of government. Its ability to take on new agendas is closely linked to stakeholder confidence in the regulators credibility and reliability. tered in a developing country context that are quite different from those encountered by regulators in the US or Europe. Improved oversight, transparency, and accountability may support greater success on this count. As an international community of stakeholders in the energy sector, we are now approaching a stage where enough states and countries have been experimenting with such mechanisms that it would be helpful to take stock of how things have worked, and identify the key lessons learned. More generally, comparisons of global approaches to estimating the costs associated with renewable energy technologies and the methodologies used for implementing feed in tariff mechanisms would be most useful. Participants proposed that WRI and the Electricity Governance Initiative would be well placed to take the lead on such an effort, including distilling lessons from failed efforts to promote renewable energy technologies. Such learning is particularly imperative as the international community explores new mechanisms to support clean technology deployment around the world, including, for example, the proposal for a global fund to help countries meet the additional costs of a feed in tariff for renewable energy.1 Better information about clean energy is needed: there is an urgent need for objective information on the real costs of renewable energy technologies which is updated in real time and made available to regulators tasked with overseeing the entry of such technologies into the energy market. Good monitoring of programs can play an important role of correcting such information asymmetries into the future. Regulators are being proactive in interpreting their mandates to promote sustainable energy. Regulators must act within their mandate, which is of course determined by policy and legislative processes. The relationships between regulators, the government, and legislators are often complex and not without their conflicts. Regulators are constrained by policy and legal frameworks. Nevertheless, there is room for regulators to be proactive in promoting renewable energy and energy efficiency within their mandates. Growing awareness of climate change is creating new space for regulators to innovate on these issues. Indeed, regulators may be well placed to infuse much needed technical information and implementation perspective into policy and legislative processes if they are proactive in seeking opportunities to do so. As one regulator noted, It is the proactivity of regulators and policy-makers that helps the promotion of clean energy -- without this you dont get very far.
1. United Nations Department of Economic and Social Affairs, A Global Green New Deal for Climate, Energy, and Development, December 2009 Clean Energy, Good Governance and Electricity Regulation 11

Time Will Tell


Regulators are gaining new experience balancing the requirements of ensuring energy security to support economic development through innovations that can prompt investment in clean energy. In so doing, they have to find new ways to navigate the realities of institutional capacity, power, and political economy within developing country contexts. While new interests in renewable energy have emerged, the potential for energy efficiency remains largely untapped. This is a crucial arena in which regulators can engage more proactively but there are significant challenges encoun-

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Sustained and creative measures to support energy efficiency through electricity regulation are needed: While regulators are demonstrating significant creativity in incentivizing investment in renewable energy, they can do more support energy efficiency. Regulators need to consider the impacts of energy efficiency on electricity expenditures in the short and long term, and as an alternative to new investments in power plants. These considerations need to become more central to the tariff setting process and regulatory oversight of utility performance. Independent actors and civil society have an important role to play in seeking accountability for clean energy programs. Civil society for their part have a responsibility to engage proactively in the design and implementation of clean energy programs, with the long term public interest and viability of markets in mind. In some countries, civil society and consumer groups have drawn attention to important problems with the targeting of incentives for renewable energy. Misdirected incentives will undermine long term confidence in markets for clean energy. Civil society can be more proactive in seeking accountability for energy efficiency and demand side management programs that meet local needs and respond to stakeholder realities. The implications of tariff revisions and utility oversight for clean energy also need to become more central to civil society engagement with the regulatory process. Good governance is key to creating viable frameworks for clean energy in the long term. Processes to feed the lessons learned from the current phases of innovation into future decisions will be key to building lasting frameworks for clean energy that meet the needs of utilities, investors, consumers, and the broader public interest. Sustained opportunities for electricity regulators in developing countries to share experience are needed. Regulators emphasised the importance of such opportunities for in depth sharing of experience amongst electricity regulators to learn from others efforts to overcome similar political, economic and governance challenges.

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Background documents
There is a wealth of emerging practice within regulatory institutions on how to advance and implement sustainable energy solutions. There may often be more similarities than would initially appear in the issues facing regulators in different regions of the world when it comes to sustainable energy. This background paper is intended to help frame discussions at the upcoming Forum on Clean Energy, Good Governance and Electricity Regulation in Cape Town on 20 -21 May 2010. contents

Concept Note................................................................................................................................................... 14
Discussion Paper................................................................................................................................................. 16 Case Studies

Luz Aurora ORTIZ SALGADO, Director General for Distribution of Electricity, and Nuclear Resources, Ministry of Energy, MEXICO

Program for the substitution of electrical home appliances in the residential sector in Mexico .......... 20

Solar Energy in Gujarat: Some aspects of regulatory decision-making ............................................... 22

Dr. P.K. Mishra , Chairman, Gujarat Electricity Regulatory Commission, INDIA D.C.Samant, Chairman, Rajasthan Electricity Regulatory Commission, INDIA

Solar Energy in Rajasthan..................................................................................................................... 26

Overview of ANEELs experience with energy efficiency programs............................................... 30 Aurelio Calheiros de Melo Junior, Brazilian Electricity Regulatory Agency (ANEEL)

Agenda............................................................................................................................................................... 32

Clean Energy, Good Governance and Electricity Regulation

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A Forum on Clean Energy, Good Governance and Electricity Regulation


Concept Note
Objective: Convene a select group of electricity regulators, stakeholders, and experts from South Africa, India,Brazil, and other major economies, including Mexico, the UK, and the US for a focused discussion of the challenges of regulating the electricity sector to support renewable energy and energy efficiency. Proposed date: 20 - 21 May 2010 Venue: Cape Milner Hotel, Cape Town, South Africa Approach: This two day workshop of 30 40 participants will build on the ongoing work of the WRI-Prayas Electricity Governance Initiative, and Idasas related efforts to draw attention to governance challenges in South Africas electricity sector. Regulators from emerging economies countries will be invited to share their experiences promoting renewable energy and energy efficiency, and managing the politics and trade-offs associated with such programs. Civil society and industry stakeholders from the same countries will share their perspectives on these programs. Regulators and experts from the United States and Europe will offer insights into the keys to the successful design and implementation of sustainable energy programs. The emphasis of these discussions will be on decision-making processes, in order to explore how information sharing, stakeholder engagement, citizen participation, and accountability mechanisms can support successful programs. We will circulate background papers framing meeting objectives in advance of the workshop, work with participating regulators to develop case studies of programs implemented as a basis for discussions, and will prepare a report summarising the conclusions of the workshop. Contacts: Smita Nakhooda Gary Pienaar World Resources Institute Institute for Democracy in Africa snakhooda@wri.org gpienaar@idasa.org.za

This forum is convened with the support of the Foreign and Commonwealth Office of the United Kingdom (FCO), the Renewable Energy and Energy Efficiency Partnership (REEEP), and the Affiliated Network for Social Accountability ANSA).

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Electricity Regulation: An Important Arena for Advancing Sustainable Development Expanding access to electricity and improving the quality, reliability, and security of electricity supply is an urgent social priority in the growing, democratic economies of South Africa, Brazil, and India. Regulation is a critically important arena in electricity that affects the economic, financial, social, and environmental aspects of sector performance. Regulators make decisions that affect the quality, cost, and accessibility of electricity services, as well as the impacts of power generation on the environment particularly by incentivizing energy efficiency and facilitating the market entry of clean renewable energy technologies. Citizens and policymakers are increasingly looking to electricity regulators, who have historically been primarily concerned with economic issues related to price setting, to address social and environmental considerations as well. It is not easy to align the economic, financial, social and environmental aspects of electricity performance. There can be very real tradeoffs incurred, for example, between the often higher up front costs of renewable or cleaner energy technologies, and the need to keep electricity costs affordable for the poor. Improving transparency of, and public participation in, the decision making process can allow greater awareness of contradictions that must be addressed, a more equitable framing of problems, and a set of systems and procedures to manage the inevitable tradeoffs that will have to be made. Better governance enhances the possibility of devising and adopting new, innovative and sustainable solutions to contentious problems. Citizens as well as policymakers in these countries are increasingly looking at the regulatory process as an important mechanism to address inevitable trade-offs, including issues relating to sustainable development in the electricity sector. Sharing Strong Practices and Innovations in Regulation The practice of regulation and rule-making in developing countries varies widely, and in most countries the state plays a major role in the generation of electricity and provision of energy services. Countries such as India and Brazil, for example, have introduced independent electricity regulators at the federal, state and national level respectively as part of efforts to restructure and privatise their electricity sectors. They regulate both public utilities as well as private actors. In South Africa, regulatory institutions are tasked with overseeing state-owned electricity utilities. Regulators, executive staff, and civil society in countries in emerging economies have accumulated a growing body of experience with the design of regulatory institutions and processes, and innovations that promote clean energy, and protect poor or vulnerable consumers. Indeed, concerns over energy security-related risks are sparking new interest in renewable energy technologies as a means to diversify electricity generation choices and alleviate dependence on fossil fuels, and energy efficiency to reduce demand for imported energy. But there are few opportunities for regulators to share and learn from each others experiences and mistakes. In addition, there are equally limited opportunities for stakeholders in these countries to draw on the experiences of countries with more established histories and experiences with regulation of clean energy. A Forum on Regulatory Governance and Clean Energy Leveraging the expertise and partners of the WRI Prayas Electricity Governance Initiative, we propose to convene a forum to explore challenges and innovative approaches to promoting clean energy through good regulatory governance. The workshop will bring together regulators and their staff, experts, and civil society from South Africa, Brazil, India, and Mexico. We will also seek to include regulators and experts from Europe, the United States, and the UK to share their experiences. Participating regulators will be asked to share brief case studies of initiatives that their institutions have taken to promote clean energy, to provide a substantive basis for this discussion. The discussion will emphasize the procedures by which these efforts have been advanced, in order to draw out lessons on how they can be enhanced. The goals are to: Provide an opportunity for a substantive discussion about practical ways to promote better governance and clean energy in the context of effective regulation of the electricity sector, drawing on case studies of both innovative and weak practices Facilitate an exchange of views among disparate stakeholders Identify key considerations for developing a conducive framework for sustainable energy

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discussion PaPer
Introduction
Concerns over energy security related risks are sparking new interest in renewable energy technologies and energy efficiency as a means to diversify electricity generation choices and alleviate dependence on fossil fuels. The realities of climate change and the need to reduce green house gas emissions globally have created a new, urgent impetus to scale up such efforts. Conventional energy systems are not supportive of sustainable energy. In both developed and developing countries there has traditionally been a focus on large-scale, centralised generation of electricity using coal, oil, gas, hydropower and nuclear energy that is transmitted over long distances to centres of use. These have been seen as the route to plentiful energy at low prices. Standard regulatory mechanisms are often not conducive to renewable energy, energy efficiency and distributed generation sources which may require different forms of price controls, investment incentives, and oversight. Electricity regulators that are independent of government are relatively new institutions in most developing countries. They have generally emerged in the context of efforts to reform and restructure the electricity sector to improve financial performance and efficiency in the electricity sector. The context for establishing an independent regulatory body has often been to separate political processes from decisions about technical issues, and to attract investment, particularly from the private sector. Social and environmental considerations have not always been woven into the mandates of these institutions. In practice, however, decisions made by regulators frame environmental, social and economic parameters for the sector. standards. All of these functions affect environmental and social sustainability in the sector, and increasingly, stakeholders are looking to electricity regulators to play a more proactive role in supporting renewable energy technologies and improving energy efficiency. These requirements add new complexities to the challenges of electricity regulation, but the there is a growing body of international experience regulating clean energy. Regulators in both developed and developing countries are innovating new approaches to drive investment in renewable energy technologies, and to incentivise energy efficiency, conservation, and demand management. Ultimately, the role of the electricity regulator is to interpret national or state level legislation and policies in practice. Ideally, renewable energy and energy efficiency programmes will be prioritized in electricity policy and planning processes which seek to maximize the synergies between clean energy and national economic development objectives. Government departments have key roles in oversight of the sector. The processes by which government and regulators interact with each other to improve environmental and social sustainability are crucially important. In some countries, governments have led initiatives to promote efficiency or renewable energy. In others, regulators have taken the initiative to develop such programmes. Their discretion to exercise leadership on these issues, however, is constrained by their mandate, and the policy frameworks within which they operate. In all cases, however, regulators have a key role in the design and administration of particular mechanisms to promote sustainable energy. Regulated utilities and licensees of course play a crucial role in these frameworks. Ultimately, these actors have to have to implement programmes, and are likely to be the subjects of public criticism and discontent if programmes do not succeed. Even when regulators are proactive, utilities and licensees may be resistant to change. Regulatory frameworks therefore have to create incentives for delivering on programme objectives, as well as effective penalties for a failure to deliver on programmes, and disincentives for those actors who might block progress on these agendas. Utilities and electricity generators always have more information about what their true costs and constraints are in implementing sustainable energy programmes. This information asymmetry is a pervasive challenge for regulators, who must make judgements about what constitutes reasonable cost. Regulatory decisions necessarily require judgments to be made between multiple solutions, with competing interests.

Electricity Regulation: An Important Arena to Advance Sustainable Development


The terms on which electricity is priced and sector actors earn revenues affect how demand for electricity is projected, managed and met. Regulators play an important role in addressing considerations such as security of electricity supply, managing adequate reserve margins for electricity, and extending universal and high quality access to electricity. They are responsible for licensing new power plants and infrastructure. They may also set service and efficiency

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Regulators often have limited financial and human resources at their disposal to execute the basic functions with which they have been entrusted. They may face practical constraints in integrating renewable energy and efficiency measures, such as capacity to assess the viability of proposals at hand, policy constraints, or direct opposition from some interests. experiences designing and implementing programmes to promote clean energy in support of economic development and poverty reduction. The 2010 Forum on Clean Energy, Good Governance and Electricity Regulation builds on the insights from the 2008 Forum of Asian electricity regulators from India, Indonesia, Thailand and the Philippines convened in partnership with the Asian Development Bank (ADB) and the Lee Kuan Yew School of Public Policy in Singapore (http://electricitygovernance.wri.org). Our work on regulatory governance in Asia continues, and we are collaborating with the ADB to convene a Dialogue on Clean Energy Governance and Regulation alongside its Asia Clean Energy Forum in June 2010.

Balancing Interests, Managing Tradeoffs, and Maximising Synergies


Regulators from the rapidly growing developing countries of South Africa, Mexico, India and Brazil will share
Table 1 | PROFILES OF THE ELECTRICITY SECTOR

India Ownership and Structure


The 2003 Electricity Act paves the way for introducing full competition, especially for large consumers. More than 80% of generation and distribution remains under public ownership.

Brazil
Since 2004, a Pool Ambiente de Contra-tao Regulado, (ACR) and a free market (Ambiente de Contratao Livre, ACL) have existed in parallel. The government is the sole buyer of electricity in the ACR through long term contracts with IPPs and distribution companies. The ACL is a short term market. Ministry of Mines and Energy National Energy Policy Council (CNPE) and a public Energy Planning Company (EPE) is specifically responsible for energy efficiency. Fully regulated by ANEEL single buyer model plus a free-market for short-term contracts.

South Africa
More than 95% of electricity is generated by the utility, Eskom. The Department of Public Enterpirse is the majority shareholder of Eskom. Transmission and distrib-ution is also managed by Eskom, except reticulation and that which is managed by municipalities within their jurisdiction. Dept of Energy and Dept of Public Enterprise

Mexico
Comisin Federal de Electricidad (CFE), the state-owned utility generates about two thirds of electricity and IPPs generate the remaining balance. Luz y Fuerza Centro (LFC), is the state-owned distribution monopoly.

Executive Bodies Planning Bodies

Ministry of Power Central Electricity Authority + National Planning Commission

The Energy Secretariat (SENER)

Department of Energy is respon- SENER, CFE, LFC sible in consultation with NERSA, and with oversight from an InterMinisterial Committee (IMC) on Energy Independent central National Energy Regulator of South Africa (NERSA) Energy Regulatory Commission Act 1995 established CRE, which independently regulates the electricity industry with some exceptions for the publicly owned CFE and LFC. Yes (2002) 97%

Regulatory structure

Independent Central as well as State Electricity Regulatory Commissions

Freedom of Information Act Household access to electricity Installed generation capacity Total GHG Emissions Carbon Intensity

Yes (2005) 64.5%

Pending: Right to Information Bill (2010) 97.8%

Yes (2000) 75%

144 GW (2006) 1,866.1 MtCO2e (2005) 932.8 g CO2e/kWh

96.6 GW (2007) 1,011.9 MtCO2e (2005) 81.8 g CO2e/kWh

50.2GW 422.8 MtCO2e (2005) 872.6 g CO2e/kWh

53.8 GW (2007) 643.4 MtCO2e (2005) 541.3 g CO2e/kWh

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Driving Investment in Renewable Energy
Renewable energy technologies offer many benefits. They can help diversify the electricity mix and reduce dependence on conventional fuels, support efforts to extend access to electricity in un-served communities, without the pollution, greenhouse gas emissions, and other environmental impactsassociated with conventional fossil fueled electricity. In 2008, global investment in renewable energy exceeded investment in conventional fossil fuels for the first time (UNEP, 2009).1 There may be trade-offs, however, between the higher up front capital costs of some renewable energy technologies and these potential benefits, particularly in a developing country context where resources are constrained. Furthermore, the intermittency of some forms of renewable energy raises additional challenges, and may present tradeoffs from a system management perspective, and raise new concerns about quality of electricity supply. Renewable energy technologies still have significant associated environmental and social impacts and that can often be difficult to overcome. For example, land rights and siting issues can be contentious, and due process to ensure that the rights of people impacted by such projects are upheld remains essential. Tensions can also arise between environmental and social objectives as a result of the costs of feed-in tariffs or public benefits funds. At the same time, renewable energy technologies are evolving, and regulators need to be aware of evolving technical possibilities and potential opportunities in this dynamic space. management. Energy prices also directly affect consumption. For example, block tariff systems give consumers, particularly commercial or industrial users, a discount as their use of electricity increases, which encourages the consumption of energy. Inverted or rising block tariffs offer the first block of units at a low rate, followed by successively higher rates for additional units, which should induce consumers to reduce their overall use of energy. Some countries also use rising block tariffs to provide a lifeline allocation of cheaper energy to help poor consumers. Charging different tariffs for energy consumed at different times of the day can make the supply more secure, by shifting the demand from peak to off-peak periods.

Climate Change
Energy ministries and electricity regulators are crucial but often under-represented stakeholders in global efforts to respond to climate change. Climate change is already affecting the roles and responsibilities of electricity regulators, and creating a new impetus to scale up programmes to support clean energy. Regulators have to manage possible tensions between local economic, social and environmental issues and global challenges such as climate change. Yet a global regime on climate change could offer finance, capacity building and technology support to promote equitable, low carbon development in the electricity sector. What kinds of support would be most helpful from a regulatory perspective?

Energy Efficiency and Demand Side Management


Opportunities to improve the efficiency of existing electricity production and use systems in all countries have not been realized even though they would seem to save both money and emissions. Conventional energy systems are set up to incentivize the addition of megawatts of new energy capacity, rather than nega-watts by reducing energy use to avoid the need for new capacity. Because the revenues of actors that supply electricity are derived from their sales, they often have few incentives to promote programmes that will reduce the demand for energy, particularly from their most reliable customers. A variety of policy and regulatory approaches have sought to overcome these barriers and promote efficiency. An important example is rate regulations that reward utilities for reducing electricity demand and consumption in key sectors. A surcharge on electricity generators or electricity rates also may be used to help fund public benefits such as energy efficiency and demand-side
1. Note that renewable energy includes large hydropower under this definition. 18 F orum r eport

Enhancing Regulatory Governance to Support Sustainable Energy


Ultimately, citizens and consumers pay the costs of electricity services and decide how to use energy. Stakeholders understanding and support of new pricing systems and behavioral changes are essential to the success of sustainable energy programmes. Engaging sector actors, including potential investors and renewable energy producers in programme design, can also help ensure that incentives and regulations respond to their needs appropriately. In addition, more transparent policies, planning, and regulatory processes can increase stakeholders understanding of clean energy initiatives, and enhance accountability for their implementation. Transparency about the analysis and assumptions underlying proposed measures can serve as the basis of useful engagement with stakeholders including consumers, renew-

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able energy providers, and citizens and civil society. For example, making information about incentive programmes for renewable energy clear and easily accessible to investors and stakeholders can help build confidence and interest in the Background papers for programme. Similarly, if public benefit funds are established to finance energy conservation, transparency about how these funds are spent can help identify whether investments are maximizing efficiency gains and enhances accountability for the programmes implementation. Independent civil society groups in many countries have recognized the importance of participating in electricity policy and regulatory processes to advocate for public interests. They have often been important advocates for sustainable energy and helped monitor the implementation of government and regulatory decisions. But for such collaborative governance approaches to succeed, civil society actors must have the capacity to provide credible, useful input.

Background papers for References and further reading


Crossley, D. (2004) Demand Management Activities Applicable to Electricity Networks. Sydney: Energy Futures Australia. Hertzmark, D. 2007. Risk Assessment Methods for Power Utility Planning. Energy Sector Management Assistance Program Renewable Energy Special Report. Washington, DC: World Bank, March. Harrington, C., D. Moskovitz, A. Austin, C. Weinberg, and E. Holt. 1994. Regulatory Reform: Removing the Disincentives. Montpelier, VT: Regulatory Assistance Project. Eto, J., S. Stoft, and T. Belden. 1994. The Theory and Practice of Decoupling. Berkeley, CA: Lawrence Berkeley National Laboratory. Dixit, S et al. (2007) The Electricity Governance Indicator Toolkit Benchmarking Best Practice and Promoting Accountability. Washington DC: World Resources Institute. Dubash, N. 2005. Regulation as an Arena for Social Policy: Examples from Electricity in Asia. Paper prepared for World Bank Conference on New Frontiers of Social Policy, December. Available at http://siteresources.worldbank.org/INTRANETSOCIALDEVELOPMENT/Resources/Dubash.rev.1.pdf. Nakhooda, S., S. Dixit, and N. Dubash. 2007. Empowering People: A Governance Analysis of Electricity in Asia. Washington, DC: World Resources Institute and Prayas Energy Group. Swisher, J.N., G. Januzzi, and R. Redlinger. 1997. Tools and Methods for Integrated Resource Planning. UNEP. Available at http://uneprisoe.org/IRPManual/IRPmanual. pdf. UNEP Sustainable Energy Finance Initiative and New Energy Finance. 2009. Global Trends in Sustainable Energy Investment 2009 - Analysis of Trends and Issues in the Financing of Renewable Energy and Energy Efficiency. UNEP.

Conclusion
The Clean Energy, Good Governance and Electricity Regulation Forum will focus on how transparency, public participation, accountability in regulation can support the design of effective mechanisms, that respond to local realities, and help regulators respond to changing circumstances and challenges that may emerge in practice. It will create a space for reflection on how regulatory mechanisms and procedures can be framed more clearly to help manage trade-offs and find effective new solutions to difficult challenges of environmental and social sustainability by considering: What constraints were faced in seeking to integrate renewable energy and efficiency measures into its operations? Can greater information about the terms and rationale by which sustainable energy resources are being integrated into the energy mix be made available? Can making such information easily available and accessible help build stakeholder support for these initiatives? Can public hearings and consultations be used to help regulators understand the nature of tradeoffs associated with some sustainable energy options, so that these can be managed better? How can stakeholders including civil society, business, local authorities, and community representatives be involved in the design and implementation of innovative solutions to the challenges of sustainable energy?

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case study Program for the substitution of electrical home appliances in the residential sector in Mexico
Luz Aurora ORTIZ SALGADO Director General for Distribution of Electricity, and Nuclear Resources Ministry of Energy MEXICO

Description of the program


The Program is targeted to the improvement of energy efficiency in the residential sector. The Program pursues the replacement of inefficient refrigerators and air conditioners by new efficient models which comply with the national efficiency norms. In order to achieve so, the Mexican government offers two different kinds of financial support to the households: Direct assistance Grant that covers a part of purchase and those costs related to the replacement (transportation of the new appliance to the household and collection and destruction of the old appliance). Financial assistance - Loan at preferential rate covering the remaining cost of the equipment, and in some instances, costs related to the replacement. This loan is repaid through the electricity bill.

What prompted the effort and what was the sequence of events in brief?
In Mexico, even though almost everyone pays subsidized electricity tariffs, people feel that they pay too much for electricity. Therefore, there is an almost general demand to the government to reduce tariffs. Mexican government, particularly the Ministry of Energy, believes that increasing the level of subsidies is not only unaffordable, given the budget constraints we face, but also that it is not the right path towards energy efficiency. In November 2008, a new legal framework was set to foster energy efficiency and renewable energies. In January 2009, when Mexican people started to feel more dramatically the effects of the international economic crisis of 2008, the President Felipe Calderon announced several measures to improve the economy of households. This Program was among those measures. In March 2009, the Ministry of Energy launched the Program. The issues to consider were: Which appliances should be replaced and which energy efficiency criteria should they meet Whether lightening should be included in the Program. What should the government offer in order to get people to replace their home appliances, given the maintenance culture of Mexican people Once we decided to give assistance, what should be the amount of the assistance and whether it should be a subsidy or a loan

The partial grants are allocated to households with limited financial resources (i.e. low energy consumption households), whereas households with high energy consumption can only receive loans. Also, depending on the level of electricity consumption and the fulfilment of the eligibility criteria, people may have access to both types of assistance, or only one. The program rests on a solid network of distributors of electrical appliances. The loans are granted by Nafin, through the Program operator, while the recollection of loans is provided by the national electricity supplier (CFE) using its system for electricity bill payment.

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How much would we pay for transportation and destruction and who should do these tasks. Which would be the interest rate of the loan and which would be the period granted to people to repay the loan Who should be benefited by the Program: every household, no matter their income, or only low-income households Where would the Program be located, given the budget constraint Refrigerators manufacturers saw this program as an opportunity not only to avoid an increase in unemployment, but also to gain a higher market share. Therefore, some of them made adjustments to their production in order to have more energy efficient models. The main constraint the government faced was the budget allocated to the Program. By the end of 2008, we were told that an amount of 12 million dollars would be allocated to the Program, which would be enough to launch the Program in a bunch of states, but not in the whole country. Later we obtained 48 million dollars from the Transition Fund for Energetic Transition. We did not explicitly included civil society while designing the program, but previously to implementing this Program, in 2008 we implemented a very small project in a few municipalities. The operation of the 2008 program was quite simple, since there were no loans (only subsidies), and from it we learned: That people liked an immediate reply to any procedure they present at government instances That the larger the grant, the less troubled people are due to their attachment to the old appliance That people were not very attracted to replacing their incandescent bulbs, even if there is no charge for the new lamps (i.e. they are free). That the share of air conditioning appliances within the Program was lower than what we had originally estimated.

Regulatory Decision-Making and Analysis


There were very intense debates within the government for 2 to 3 weeks, concerning the issue of what would be the assistance the government should offer. Should the government give a grant to completely cover the price of the appliance and the replacement costs, or should the government only consider offering a loan? A quite complex but efficient scheme was agreed to supersede these dilemmas: the objective population was defined as low-income people and divided into four groups. The first group, with the lowest income range, would be offered a grant of around 175 USD to cover partially the price of the appliance and also cover the transportation and destruction costs, and they would also be offered a loan of 175 USD to cover the remaining cost of the appliance. On the other hand, the fourth group, the one with the highest income within the objective population, would only receive a loan of 350 USD to cover the same concepts. A debate also was brought up regarding the interest rate that should be charged and on how would the interest rate be shared: how much should the financial intermediary charge and how much should be granted to the program operator. The interest rate was set at 12% (plus taxes): 11% was the lowest rate the financial intermediary could charge, whereas 1% would be given to the operator in order to cover the operational cost related to recovering the loans.

Reflections on the Case -- How Might the Outcomes Been Different If:
It is important to highlight that this is the first massive program designed and launched by the Ministry of Energy in Mexico. The recently issued laws and the changes in the existing ones provided the Ministry of Energy with more fundamentals to design and implement programs like this one.

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case study Solar Energy in Gujarat: Some aspects of regulatory decision-making


Dr. P.K. Mishra Chairman Gujarat Electricity Regulatory Commission INDIA
Gujarat State, situated in the western part of the country, is one of the more developed and progressive states of India. It has a population of 58 million and an area of 196,000 sq km. The net State Domestic Product (at current prices) in 2008-09 was Rs. 49,2512 as compared to the per capita net national product of Rs. 40,141 for the country. The percapita consumption of electricity for Gujarat in 2007-08 was 1424 kWh as compared to 717 kWh for the country as a whole. Gujarat, because of its geographical and climatic conditions, receives abundant solar radiation with a large potential for solar energy. Gujarat has almost 300 days of clear sun, with a solar radiation of 5.6-6.0 kWh per sq mt per day. As early as in the 1980s and 1990s, schemes relating to solar energy were introduced in Gujarat, particularly with the creation of the Gujarat Energy Development Agency (GEDA) in 1979. There were some initiatives even during the 1970s. Over the years, several schemes targeting individuals, communities, institutions and sectors such as industry and agriculture have been implemented through incentives for items such as solar cooker, solar water heater and solar photovoltaic systems for lighting, pumping of water and street light. For example, over sixty six thousand families have used solar cookers and over ten thousand families use home light systems. About 85 hamlets situated in remote areas, have been provided with stand-alone solar home light systems comprising 37W solar panel, 75 AH battery and two lights of 11 W per family to provide light for 4 to 5 hours a day. In addition to home light system, one solar street light is provided for 10 families. In recent times, GEDA has tried to promote use of roof-top solar systems. Seventeen such systems of 10 kW each connected to the grid at 440 Volts have been installed on government office
2. 22 Rs: Indian Rupee; US$1=Rs.45 approximately F orum r eport

buildings. About 125 stand-alone solar roof-top systems of 1 kW each have also been installed on government residential buildings. In the year 2001, Government of Gujarat introduced an incentive scheme for energy generation from renewable sources including solar energy, particularly through PV technology. This scheme envisaged purchase of energy at Rs. 2.25 per unit with 1994-95 as the base year and 5% escalation of the purchase price every year for a period of 10 years from the date of commencement of generation of power. This scheme specified technical and commercial aspects such as evacuation of power, metering, wheeling, third-party sale and banking. It may, however, be noted that not much happened in respect of solar energy, possibility because of technological and commercial constraints. The Gujarat Electricity Regulatory Commission (GERC) came into existence in the year 1999. The GERC issued its first tariff order on solar energy on 22 January 2009. This was in the context of the scheme of grid interactive solar power generation projects launched by the Ministry of New and Renewable Energy (MNRE), Government of India. The scheme announced in January 2008 envisaged a generation based incentive progarmme as a demonstration project with 50 MW and 10 MW maximum cumulative capacities at national and state levels respectively. Keeping in view the MNRE guidelines, GERC determined a tariff of Rs. 3.37 per kWh which was, at that time, the tariff for wind energy and the highest among the tariffs for energy from renewable sources. An additional amount (difference between Rs.15 and Rs. 3.37) was to be paid by the MNRE as incentive to solar power generators. Reliance Industries and Euro Solar proposed 5 MW each from the 10 MW quota allotted by the Government of India to Gujarat. The plants were to be located in Kutch and Jamnagar districts respectively

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by Euro and Reliance Industries. These projects, however, were not implemented. The MNRE scheme itself was discontinued with the introduction of the Jawaharlal Nehru National Solar Mission. In the meantime, Government of Gujarat announced a Solar Power Policy 2009 on 6 January 2009, prior to the progarmme of Vibrant Gujarat Global Investors Summit which was held during January 2009. The idea was to encourage investors to come forward with solar power projects in the state. The policy envisaged an installed capacity of 500 MW of solar power generation during a period of 5 years up to 31 March 2014. The policy, inter alia, indicated tariffs for PV technology based and solar thermal projects. It was, however, indicated that tariff and other related aspects were subject to the Regulations and orders of the Gujarat Electricity Regulatory Commission to be issued from time to time. In response to the policy, and promotional measures for investment in the State, a large number of MoUs were signed for solar projects, in addition to projects relating to power and several other sectors. The MoUs basically indicated the intention of the developers and the government. Further work needed to be done to crystallize the MoUs into concrete projects and power purchase agreements. The potential investors were also awaiting the tariff order of the GERC, which was issued on 29 January 2010. Further interactions continued. By 7 May 2010, 17 power purchase agreements for 235 MW were signed. Eleven more developers have paid the required earnest money deposits for 211 MW in order to be able to sign the PPAs by the end of May 2010. The Government of Gujarat has also signed an MoU with the Clinton Foundation for setting up the countrys largest Solar Energy Park (3000 MW) in the western part of the State. The Government of India launched the Jawaharlal Nehru National Solar Mission in February 2010. The mission envisages adopting a three-phase approach to achieve 20,000 MW solar power by 2022. The first phase has a target of 1000 MW of grid connected and 100 MW of off-grid solar power by 2013. The GERC issued a comprehensive order on 29 January 2010 in the matter of determination of tariff for procurement of power by the distribution licensees and others from solar energy projects. It also incorporates tariff for energy from roof-top and other small solar power plants connected to LT/11 KV grid. This was the culmination of a long process of analysis, consultation and interaction. In fact, the process started as early as in July 2008, when a discussion paper was issued for determination of tariff in the context of the MNRE scheme. As it was not feasible, due to inadequate information on technical and commercial aspects, to issue a comprehensive order at that time, an order was issued on 22 January, 2009 fixing the tariff based on wind energy tariff for the purpose of the scheme of the MNRE. However, the exercise continued. The Commission prepared a new draft on Determination of Tariff for Procurement of Power by Distribution Licensees from Solar Energy Projects and placed it on its website on 15 June 2009 inviting comments and suggestions. A public hearing was held on 3 December 2009 and the tariff order was issued, as mentioned above, on 29 January 2010. In this context, the Commission kept in view various provisions of the Electricity Act, 2003, the National Electricity Policy, the Tariff Policy, Government of Gujarats Solar Power Policy 2009 and the Central Electricity Regulatory Commissions (CERC) Regulations of 16 September 2009. The GERC is the first State Regulatory Commission to issue a comprehensive tariff order on solar energy. The GERC has also issued the Gujarat Electricity Regulatory Commission (Procurement of Energy from Renewable Sources) Regulations 2010 setting out an updated regulatory framework for renewable energy. It envisages that power purchase obligation by distribution licensees and others from solar power projects will be 0. 25, 0.5 and 1.0 percent for years 2010-11, 2011-12 and 2012-13 respectively. In other words, it has enabled solar project developers to have an assured and increased quantum of power to be purchased by procurers. The Regulations also provide for Renewable Energy Certificates as designed by the CERC. A number of issues came up during the process of tariff determination: Project specific or generic tariff Single-part or two- part tariff Market based or cost plus tariff Tariff for different technological options even for solar PV and solar thermal

After several rounds of discussions, it was decided to have a generic levelised tariff arrived on a cost plus-basis. For tariff determination, it was necessary to analyse various operational and financial parameters, such as, capacity utilization factor, auxiliary consumption, control period or duration of the tariff, capital cost including cost of evacuation, O&M charges, debt-equity ratio, tenure of loan, interest on term loan and working capital, rate of depreciation and return on equity. The main problem was of reliable
Clean Energy, Good Governance and Electricity Regulation 23

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information on technical and financial parameters. During the process of public hearing there were diverse views. For example, CERC had considered, for the year 2009-10, a capital cost of Rs. 170 million and Rs. 130 million per MW respectively for solar PV and solar thermal projects. During the hearing, participants suggested capital cost ranging from 170 to 250 million for solar PV projects, and capacity utilization factor ranging from 17 to 25%. It was not feasible to have empirical data relating to power projects based on operational experience. During this period, a number of seminars and workshops were organized by various agencies, at national and regional levels. Diverse views emerged. Some of the presentations indicated sharp declining trend in the prices of materials for solar PV projects. Others argued that the cost was still high. GERC also organized a brainstorming session in January 2009 to elicit the views of experts and various stakeholders on technical and financial aspects of wind and solar energy. Availability of skill and expertise for technical and financial analysis in respect of various types of solar power projects was a constraint. Project developers with inflated figures demanded very high tariff. There was a large difference between the tariff announced by CERC and that indicated by the policy announced by the Government of Gujarat. This created a complex situation in the context of the regulatory process for determination of tariff in Gujarat. Some of the issues that emerged during the process of regulatory decision making are enumerated below: Impact of the tariff for Solar Energy on the Annual Revenue Requirement, particularly the revenue gap, in respect of distribution licensees. How to strike a balance between the need to provide, for promotion of solar energy, adequate incentive to investors and protect the interest of consumers in terms of affordability of power. How to determine tariff in a way that the solar generation projects become sustainable in the sense that the parties concerned do not renege on Power Purchase Agreements. Problem of inadequate and asymmetric information. Tariff for Solar Energy in Gujarat vis--vis tariff fixed by the CERC and those likely to be adopted by other States, which could impact on solar power projects in Gujarat. Developing analytical and appraisal skill Adequacy of consultation with stakeholders; whether public consultation was adequate and effective.

Efforts were made to address the above issues to the extent feasible. The Electricity Act, 2003 and the relevant Rules and Regulations provide adequate power to the GERC to take into consideration various aspects for determination of tariff. However, there were practical and operational constraints. There was the problem of inadequate and asymmetric information on technical and financial aspects. In spite of inviting views and comments of the public, those who came forward to participate in the hearing were mostly potential project developers and utilities, which have diametrically opposite views. There was not much participation of the civil society. Furthermore, the need to take into account the approaches, perceptions and methodology adopted by other States and at the national level can make the process more complex. Yet, the GERC was able to come up with a balanced - and possibly an optimal - decision, given the constraints. Needless to say, the process of regulatory decision-making for solar energy will continue to evolve with time, experience and technological development.

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case study Solar Energy in Rajasthan


D.C.Samant Chairman Rajasthan Electricity Regulatory Commission INDIA

Rajasthan is a major State among 28 States of Indian union and is the largest in area having a population of around 60 million, being 5.5% of Indias population. Two-third of the State is desert/semi-desert with erratic and scanty rainfall and is deficient in conventional power resources like Coal, Hydro. The State has an installed generation capacity of about 8000 MW (as on 31st March, 2010) with 1158 MW of Renewable Energy (RE) as against total capacity of 1,60,000 MW of India (16,800 MW being RE). However, the State has immense clean energy potential, particularly solar and wind. States geo-climate handicaps offer huge advantage as far as solar energy is concerned. Solar potential in the State is among the best in India and comparable with the best in the world due to strong Sun, large number of sunny days (about 325 in a year) with solar radiation being in the range of 6-7 kWh/sq.mtr and abundance of land at low price. The desert/semi-desert area of the State is around 200 thousand sq.km. with promise of becoming solar hub of the country. The State is also endowed with significant wind energy potential, among the best in non-coastal States (Northern India). Deployment of clean energy has become imperative both for energy security as well as environmental security in the context of global warming and climate change. India is witnessing rapid increase in demand of energy due to high rate of economic growth and Governments endeavour to provide access to electricity for all. Continuing high level of energy shortages also call for quick harnessing of renewable energy, including Solar.

energy. The National Action Plan on Climate Change, formulated by Government of India in the year 2008 visualises rapid growth of Renewable Energy (RE) with its share in consumption reaching a level of 15% by year 2015. The Electricity Act, 2003 stipulates policy and regulatory support to RE development and empowers State Regulatory Commissions to specify Renewable Purchase Obligation (RPO) on consumption in the area of a distribution licensee. The Tariff Policy formulated by GoI also emphasises on enhancing RE generation through feed-in tariff (FIT) and other support. The State has also formulated a policy to support clean energy development and deployment. National Solar Mission has been launched by Government of India a few months ago, which aims at India becoming a world leader in solar energy generation. It focuses on both grid connected and off-grid applications. The Mission envisages bundling of cheap conventional power with the solar energy which would bring down weighted average cost. It also envisages grant of subsidy to distribution entities, which may range between 70 to 80% of energy cost (depending upon the tariff rate determined by the Regulatory Commission of a State), for small and roof top solar systems. The draft guidelines of GoI propose to include projects below 3 MW of capacity under the said subsidy scheme. Mission also lays emphasis on support to R&D activities in the solar field, human resource development as well as on promotion of indigenous manufacturing. The envisaged support for indigenous manufacturing include, inter-alia; setting up manufacturing parks, akin to Special Economic Zones, import duty exemption on capital equipment and raw materials, excise duty exemption and financing at concessional rate. In its first phase ending in year 2013, the mission aims to add 1300 MW of solar capacity with 1000 MW as grid

Policy Support and National Solar Mission:


Government of India (GoI) as well as State Governments are laying considerable emphasis on deployment of clean
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connected, 100 MW as roof top PV and small solar systems and 200 MW as off-grid applications. The solar mission ultimately aims at total capacity of 20,000 MW by the year 2022. It is envisaged that due to rapid scale up of solar capacity as well as technological developments, the solar power price will attain parity with the grid power at the end of the mission enabling large scale expansion. 1080 MW by March, 2010 with about 50% of this capacity getting added in past two years. The wind energy potential in the State is 5400 MW. The solar energy now is poised for a rapid growth from MW scale grid connected Solar project being NIL to two projects of 5 MW each being at advance stage of commissioning (one to start part generation in next two months and other by Dec. 2010). Additional capacity of about 100 MW is expected in next 2 years for use of power within Rajasthan. Apart from this, considerable capacity addition in the State is expected for sale to States outside Rajasthan. It may be mentioned that there is overwhelming response from the investors to set up solar plants in Rajasthan. As on date, 325 investors have already got registered with the State Nodal Agency for a total capacity adding up to 10,000 MW. The State Govt. has also announced to formulate a new Policy for Solar Energy, which will provide further fillip to solar generation in the State. Potential sites have been identified in the State for setting up of solar parks and an agreement has also been signed between the State Government and the Clinton Foundation for setting up 3,000 MW solar park(s). Interest of investors in MW scale projects got generated after specification of RPO in year 2008, which has now gathered considerable momentum. The State Agency in the past had been focussing on promoting off-grid applications like water heating, domestic and street lighting, electrification of remote habitations as well as setting up of small grid interactive solar demonstration plants. The off-grid applications would expand further in view of emphasis on this also under Solar Mission.

Major Initiatives:
Rajasthan is poised to become a solar power hub in India in years to come due to: (i) abundant solar potential; (ii) land availability; (iii) increasing power demand; (iv) pro-active policies of the State Government; (v) regulatory support; and (vi) emerging opportunities under National Solar Mission. State Government has notified a policy to support development of non-conventional energy sources, which stipulates, inter-alia; (i) preferential tariffs for sale of solar power; (ii) open access; (iii) third party sale/captive use; (iv) evacuation of power by State Transmission Utility; and (v) land at concessional rate. In addition, facilitation and single window clearance is provided by Rajasthan Renewable Energy Corporation (RREC), which has been designated as nodal agency. The regulatory support for RE capacity addition is broadly through RPO, feed-in tariff, grid connectivity, evacuation facilities and open-access. The State Regulatory Commission specified RPO for RE for the first time in the year 2006. The purchase obligation in year 09-10 as percentage share in total energy purchases by power distribution entities, was 6% for wind and 1.45% for Bio-mass. In case of solar energy, the obligation was for the first time specified in the year 2008-09 as 60 MW and remained the same in year 09-10. Along with RPO specification, the Commission also started determining feed-in tariff for Wind and Bio-mass from the year 2006. The prevailing FIT incorporates handsome return of 16% on equity (net of tax liability) and levelised tariff is announced for 20-25 years. However, FIT at that time was not fixed for solar energy and instead rate of Rs. 15.78/kWh for SPV and Rs.13.78/kWh for Solar Thermal was fixed in April, 2008 under incentive scheme of GoI.

Renewable Energy Certificate (REC):


Another key initiative under consideration of the Commission is formulation of regulation for Renewable Energy Certificate (REC). RE resources are unevenly distributed across the country. REC mechanism would enable the resource deficit States of India to meet their RPO obligation by purchasing REC and thereby contribute to full exploitation of RE potential. Under the REC framework, the utilities can achieve their RPO obligation either by purchasing these certificates or buying RE under FIT. The REC mechanism classifies the cost of generated electricity into an energy cost equivalent to conventional energy and a cost for environmental attributes of such energy in the form of tradable certificates.

Acceleration in RE generation:
RE generation in the State has witnessed considerable acceleration in past few years. For instance, the wind generation, which was 2 MW in the year 99-2000, jumped up to

Experience gained in addressing some issues:

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The first issue and the constraint, which required to be addressed by the Commission was specification of RPO for solar energy, which had already been done for wind and Bio-mass as early as in year 2006. The major deterrent was very high cost of solar energy, being 4-5 times that of conventional power. However, Commission in the year 2008, after much debate and deliberation decided to specify RPO for solar energy also in the larger interest of paving the way for growth of such a promising energy source, especially for a State like Rajasthan, where solar energy is in abundance. Rajasthan was the first among the States in the country to specify RPO for solar energy. The second challenge arose as to whether there should be generic feed-in tariff or project specific tariff. Though the Commission had adopted generic tariff for wind and Bio-mass in the year 2006, the issue was left open for solar energy with the project developers having the option of seeking project specific tariff. Accordingly, project developers in the year 2009 filed petitions for project specific tariff to be valid for a long period (20-25 yrs.). However, tariff for such a long period cannot be determined, as Commissions Regulations stipulate project specific tariff to get determined on annual basis. This issue was resolved after discussion with petitioners and most of them agreed to opt for generic tariff. Accordingly, the Commission issued draft generic tariff order on 10th March, 2010 and the same would be finalised very soon, as the hearing process is over. The long term generic tariff would also address the concerns of financing agencies in terms of uncertainty of likely income in future years in projects which are subject to annual tariff determination.

Issues/Challenges:
i. The high cost of solar power would continue to be a major challenge and the success of National Solar Mission hinges critically on rapid cost reduction. ii. Indigenisation and development of manufacturing base in India would be key in bringing down solar energy cost. This would need support of technology suppliers as well as equipment and component manufacturers. iii. The peak demand in Indian situation is normally after sun-set hours due to lighting load. In view of this, solar capacity with storage would be required if the solar energy has to become the primary source of energy in years to come. iv. The non-firm nature of wind energy with high level of fluctuation on day to day and even hour to hour basis is a serious challenge in balancing supply as well as in inter-state trade. The problem would get further accentuated when wind capacity assumes a significant share in overall capacity. This is a major challenge, moreso, because hydro-power availability is limited and there is virtually no spinning reserve.

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case study Overview of ANEELs experience with energy efficiency programs


Brazilian Electricity Regulatory Agency (ANEEL) Aurelio Calheiros de Melo Junior BRAZIL The ANEEL Energy Efficiency Public Benefit Program was initiated after the privatization of Brazils power distribution companies, beginning in 1998. As the utilities signed the concession contracts, specific clauses obliged them to invest 1% of their net revenue in Energy Efficiency Programs (EEP) and in Research & Development Programs. When Federal Law N 9.991/2000 was enacted, the obligation was extended to all distribution utilities, both private and public. The Brazilian Electricity Regulatory Agency (ANEEL) is in charge of regulating and setting the basic EEP procedures and guidelines to be followed. ANEEL is also responsible for the overview and local inspection of the EEP. Since the first programs were initiated in 1998, the EEP has saved more than 5,6 TWh and avoided more than 1,7 TW from the peak demand of the system by replacing electrical devices/appliances which enhanced efficiency in the residential, commercial, industrial, rural and public sectors.The amount of investments in the EEP regulated by ANEEL is about US$ 170 million per annum. The EEP was motivated by a concern about growing energy consumption and the increasing use of electric home appliances in the absence of an energy saving consumer culture. The program was created as a means to stimulate a market for energy efficient products and services, with the idea that the obligation would be phased out as utilities recognized the benefits provided for the customers and for the electrical system, and incorporated energy efficiency projects into their business models. What happened was slightly more complicated. As the distribution utilities saw the opportunity to use the EE resource for their own purposes, the investments that should ideally have been proportionally distributed among different segments of electricity usage were instead concentrated in a subset of segments. Public lighting, loss reduction and marketing saw disproportionate investment allocations, while industry and other energy saving opportunities were left behind. This situation was exacerbated in 2008, when a federal law directed a minimum of 60% of the resource towards low income consumers. This meant less investment in classes of consumers (such as industry) which consume higher rates of electricity than the residential classes, and where better cost-benefit projects could be implemented. Such an allocation would promote a wider variety of energy efficiency actions, ultimately benefitting all consumers as savings are passed on in the form of reduced electricity tariffs. The lack of authority to manage the allocation of energy efficiency investments in response to observed impacts of the law is a regulatory gap. One of the challenges for the regulator is to induce the proper distribution of the resources by setting regulatory signs in order to stimulate the utilities in directing the resources in such segments/actions that maximize the energy savings. However, ANEEL has to work within the boundaries of its authority under the national congress and enacted federal laws. The Agency does not participate in the definition of the projects submitted by the utilities. This gap would need to be addressed by either expanding the regulatory role, or by amending existing laws and directives. ANEEL is also tasked with establishing guidelines and procedures, and with proposal assessment and results evaluation. Although the ANEEL EEP Guidebook establishes the basic procedures and guidelines to be followed, there are

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capacity gaps with respect to the methodology for measurement and verification of project results. ANEELs lack of capacity to adequately assess the results reported by the utilities has lowered the expectations of utilities in relation to project approval and recognition of expenses incurred. The regulatory procedures followed in ANEEL are transparent, publically available and impartial. ANEELs rule making procedures include public hearings on any regulation that involves the public interest. Consultation materials are posted on the internet and contributions can be sent by e-mail. All submissions are evaluated and given consideration. Decisions must be approved by the majority of the Board of Directors. When it is necessary to review the regulation, the same procedures are followed and the review includes different stakeholders representatives. ANEEL always invites the consumers councils to participate in the public consultations in the process of adopting a new regulatory standard. However, it is observed that the participation of representatives of these councils is very small, which means there is not a correct understanding of society about its role in the establishment of new regulatory standards. This too is a governance gap that needs to be addressed.

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A Forum on Clean Energy, Good Governance, and Electricity Regulation


Agenda
19 21 May 2010 Cape Milner Hotel, Cape Town, South Africa

Wednesday 19th May 7.00 PM 8.30 PM Welcome Reception, Cape Milner Hotel Thursday 20th May 9.00 AM Welcome and Introductions Richard Calland, Director Economic Governance Programme, Idasa Key note address: Richard Wood, UK Consul General Overview and Objectives Smita Nakhooda, World Resources Institute 10.30 AM Break 11.00 AM Driving investment in Renewable Energy Solar energy in Gujarat, P.K. Mishra - Chairman Gujarat Electricity Regulatory Commission Solar energy in Rajasthan, D. C. Samant, Rajasthan Electricity Regulatory Commission South Africas RE-FiT, Thembani Bukula, National Energy Regulator of South Africa (NERSA) Mexicos experiences with Wind Energy, Ing. Francisco Salazar, Mexicos Electricity Regulatory Commission (CRE) Responses and Facilitated Discussion Carlos Mena, Mario Molina Institute Mexico Hilton Trollip, member of the South African Renewable Energy White Paper team 1.30 PM 2.30 PM Lunch

Energy Efficiency and Demand Side Management South Africas Power Conservation Program, Thembani Bukula, NERSA Energy Efficiency in Mexico, Luz Aurora Ortiz Decoupling revenues from electricity sales, Regulatory Assistance Project (by video conference) Responses and Facilitated Discussion Shantanu Dixit, Prayas Energy Group Gilberto Januzzi, International Energy Initiative Brazil Break Climate Change and Electricity Regulation
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4.30 PM 4.45 PM
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Facilitated Discussion How are concerns about climate change and efforts at both the international and national level affecting regulators roles and responsibilities? What kinds of conflicts and challenges are manifesting? How are regulators and government officials putting in place processes to address these challenges? What kinds of finance, technology, and capacity building support are most necessary from a regulators perspective? 6.00 PM Wrap Up

Friday 21st May 9.00 AM Welcome and review of agenda / objectives for the day 9.15 AM Integrated Approaches to Supporting Sustainable Energy Using the Smart Grid to Support Efficiency and Renewable Energy in the UK, Gill Owen REEEP (via video conference) Mexicos Efforts to Regulate Clean Energy , Dr. Alejandro Peraza Garcia, CRE Mexico Extending sustainable energy services to the rural poor, Xavier LeMaire, Renewable Energy and Energy Efficiency Partnership Public Benefit Funding to Support Sustainability in Brazil, Gilberto Januzzi, International Energy Initiative Responses and Facilitated Discussion Davida Wood, World Resources Institute Andrew Marquard, Energy Research Centre University of Cape Town 11.15 AM 11.30 AM Break Enhancing Regulatory Governance to Promote Sustainable Development Framing Presentation: Shantanu Dixit, Prayas Energy Group Facilitated Discussion Forum Conclusion Lunch Open Seminar: International Good Practices in Integrated Resource Planning Gary Pienaar, Idasa Gilberto Januzzi, the International Energy Initiative Shantanu Dixit, Prayas Energy Group Andrew Marquard, Energy Research Centre of the University of Cape Town Wrap up
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1.15 PM 1.30 PM 3.00 PM

5.30 PM

EGI TOOLKIT

The Electricity Governance Initiative: Promoting Good Governance to Ensure a Sustainable Energy Future
The Electricity Governance Initiative (EGI) is a collaboration of civil society, policymakers, regulators, and sector actors to promote the open, transparent, and accountable decision-making processes that are necessary to reach a socially and environmentally sustainable energy future. EGI is a joint undertaking of the World Resources Institute and Prayas Energy Group (India).

electricitygovernance.wri.org

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