India suffered the worst blackouts in history this week, leaving over 600 million people without power and providing evidence of deep problems in a sector teetering on the edge of bankruptcy for the second time in a decade.
But the issue is not simply mismanagement. As much as 40 percent of the power generated in India is not paid for, it is stolen. And the sector loses $10 billion per year, roughly 1 percent of India's gross domestic product, due to populist pricing and inefficiency. People want modern infrastructure at 1999 prices - but costs have gone up 40% since then and utilities are losing increasing amounts on every unit of electricity they sell because tariffs set by regulators have not kept pace with rising costs. Yet the old infrastructure can't support all of the people stealing electricity.
In California, we feel their pain; we have regulators far more incompetent and short-term populist than anything they have in India. When the deregulation craze swept California, legislators made sure to kill it by regulating deregulation so utility companies could not own their power lines or sign long-term contracts. When a heat wave hit, other states not crippled by California regulation of deregulation, bought more power and California suffered rolling blackouts.
India left in dark by utilities losing $10B a year by Erika Kinetz, Associated Press
