The Impact of Electricity Sector Restructuring on Coal-fired Power Plants in India

We examine whether the unbundling of generation from transmission and distribution services at state-owned power plants in India improved operating efficiency at these power plants. Between 1995 and 2009, 85 percent of coal-based generation capacity owned by state governments was unbundled from vertically integrated State Electricity Boards into state generating companies. We find that generating units in states that unbundled before the Electricity Act of 2003 experienced reductions in forced outages of about 25% and improvements in availability of about 10%, with the largest results occurring 3–5 years after unbundling. We find no evidene of improvements in thermal efficiency at state-owned power plants due to unbundling.