Calcutta, March 28: The Union power ministry does not want to merge the Central Electricity Authority (CEA) and the Central Electricity Regulatory Commission (CERC) as recommended by Indian Institute of Management (IIM), Ahmedabad.

The management institute feels that the technical and economic regulatory functions should be carried out in close co-ordination.

The power ministry had asked the institute to submit a report on the restructuring of CEA.

The report says, “The Electricity Act 2003 envisages separate identities for the CERC and CEA and we too feel the need for separation in the short run. However, the two regulators should be merged eventually as there are substantial synergies between them.

However, a power ministry source said, “The ministry is not in favour of the proposal to merge the two entities. Tariff fixation is the exclusive right of electricity regulatory commissions (ERCs) and no other entity or the government has any role to play.”

Power secretary R. V. Shahi recently held detailed discussions on the IIM report.

CEA is primarily engaged in generating thermal and hydel power, monitoring power projects, planning and developing transmission and distribution facilities, renovating and modernising existing facilities and appraising projects. It is a technical and advisory body under the power ministry.

CERC regulates tariff for the power utilities, mobilises resources for the power sector, looks into the environmental aspect of power projects and other related activities.

IIM-Ahmedabad has suggested that during the transition period (before the merger of CEA and CERC), the CEA should be divided into CEA-1 (regulatory role) and CEA-2 (advisory role). CEA-1 would ensure the tariff fixation for the power utilities.

CEA-2 would advise state electricity boards on ways to tide over their financial and organisational weaknesses.

Once the two CEAs excel in their respective functions, the two entities should be merged and CEA will become an independent regulator. Once that is done, CERC will be merged with CEA.

However, the power ministry says such a separation is unwarranted.

“The Electricity Act 2003 provided the roadmap for reforms and growth in the power sector. It provides for transparency in operations, ushering in an era of open access, doing away with licensing and giving freedom to operators over the choice of technology. Removal of the techno-economic clearance of CEA is part of the liberalisation in the sector. There is no compelling reason to go back on this issue,” a power ministry official added.