Can Delhi Learn from Competitive Model of Power Distribution in UK and US?

Abstract

A reliable and cheap electricity supply is extremely necessary for growth of the manufacturing as well as service sector of any nation. The People’s Republic of China built its massive manufacturing capabilities on back of a cheap and reliable power sector enabling the nation to pull out the maximum number of people out of poverty in human history. India desperately needs a system to develop its power and infrastructure sector so as to boost its sluggish manufacturing capabilities if it ever wants to pull its majority of people out of poverty. However its initial plan of developing this sector in a command and control system (similar to that of China) has failed miserably. It did experiment with western style privatisation in Delhi which has been relatively very successful. Now these measures have to be expanded. The goal of this paper is to compare the effectiveness of the Delhi model of private regulated monopolised electricity distribution companies to the retail competition model of developed nations like the UK and US and see how their retail competition model works. The Delhi model of distribution utilities and analysis of how the government privatised the distribution business and how these companies perform today is discussed briefly. The common features of these systems retail competition model employed in the UK and US is discussed, the initial differences in how their energy sector was liberalised is compared. Developments that made competition in power retailing possible and the characteristics of the retail competition model are discussed. The concept of retail being differentiated from traditional distribution services along with the pricing model is talked about. The benefits of this model are discoursed about.