Restructuring And Deregulation Of Power System -A Review

In several decades, the electric power industry has been structured as vertically integrated utilities which can generate, transmit and distribute power to the consumers. These utilities operate according to the policies, guidelines and regulations framed by the government and are responsible for the development, expansion and standardization of electric power industry. These state-owned utilities are obliged to provide electricity to every customer in a region and are assured of fair returns without any risk. This assurance has led to incompetent and lethargic attitude in the industry with lack of motivation for technical innovation, good management and customer focus. Hence most of the utilities are undergoing restructuring to overcome the adversities of monopolistic market. Restructuring of power industry aims at abolishing the monopoly in generation and trading sectors, thereby introducing competition at various levels, wherever possible. Competitive generation provides a market within which independent firms compete on the basis of price, to sell electricity directly to the large consumers and to supply electricity, via common carrier transmission, to distributors who in turn sell power to final users. Thus the electricity in restructured power market, is dispatched with the help of either power exchange or the pool/system operator. Power sector restructuring, popularly known as deregulation, is expected to attract private investment, increase efficiency, promote technical growth and provide good customer service with improved system efficiency.