M'sia should learn from India's massive electricity blackout

INDIA'S massive power outage on Monday had paralysed the northern
and eastern parts of the country, including its capital city, New
Delhi. Over 600 million people were left powerless for two solid days
before glimpses of power returned.
The engineers there were furiously working to get power back but there are fundamental issues that need to be addressed as well.
The
outage in India reminds me of the big blackout Malaysia had experienced
on Sept 29, in 1992 and again on Aug 3, 1996. These two episodes have
changed the landscape of the power sector in this country and once and
for all broke Tenaga Nasional Bhd's (TNB) monopoly of the power sector.
Hence
mushroomed the independent power producers (IPPs) and they have been
repeatedly criticised for being smart in getting the better end of the
stick in terms of pricing for the power they supply to TNB.
Today the IPPs are part of the equation of power to the nation.
Because
of all that planning Malaysia today has more than adequate power with
our reserves margins of about 30% but many have also warned that there
could be power outages if nothing is done to add more power plants in
the future. And the question of fuel pricing also needs to be addressed
and there are suggestions that we should move to the competitive
bidding system.
Hence, MyPOWER was set up two years ago.
It
is an agency that falls under the purview of the Energy, Green
Technology and Water Ministry. Its objective is to reform the Malaysian
Electricity Supply Industry and transform the country's power sector.
To
do all that, MyPOWER has come up with nine initiatives to resolve
issues related to industry governance, government and regulatory
policy, tariff, fuel supply and security as well and the industry
structure.
Thus far, MyPOWER with the Energy Commission has
facilitated in the competitive bidding process for the construction of
the 1000MW Prai gas power plant. This is an international bidding
process where local and foreign IPPs submit their bid. The bidding is
transparent and is expected to offer better pricing for electricity for
TNB.
MyPOWER also developed ring fencing rules which essentially
redefines TNB's role as a single buyer of electricity and as a system
operator. The rules would allow the industry to be managed in a more
open and transparent manner.
Even the first generation IPPs now
have a chance for a longer lifetime as the Energy Commission, early
this week closed a tender that allows the IPPs to be part of the
competitive bidding process.
In the transformation process, TNB
which has all its generation, transmission and distribution housed
under one unit will need to unbundle their account into three divisions
so that the unit cost can be ascertained.
The unit cost needs to be unbundled so that TNB will know what its cost base is in generation, transmission and distribution.
Hence, customers will also know from their bills what they are paying for in the delivery of electricity to their premises.
The
future will be about all players competing to supply electricity to a
single buyer, that is TNB. Under the programme, even TNB will have to
put competitive bids to win the tender.
The competitive bidding
will make prices of electricity supplied to TNB more competitive and
take into account the real cost of supply.
No date has been
fixed for that as of now but the sector will be transformed into one
that is efficient and the major component of that is that power will be
sold based on the best bids.
This is nothing new it is happening
in Hong Kong, Singapore and Britain. If a player is not efficient it
will not get to supply its power, hence its earnings may be affected.
For now the format is that TNB generates power and also buys the power
from the IPPs at a certain price, transmits and distributes electricity
to users.
But whatever MyPOWER does, the one thing it should
ensure is that consumers are not unfairly burdened with higher
electricity tariff. Of course there is a price to pay for modernity,
transparency and efficiency, but it should not be at the expense of the
consumers. Consider a reasonable rate for supply of electricity to
consumers.

Deputy news editor B.K. Sidhu believes
electricity tariff will go up when competitive bidding kicks in and it
is time to look for energy-saving appliances.