Frontier Economics in a recent report on "Indian power sector reform post-Orissa", prepared for the World Bank, has said that the guiding principle should be to introduce competition wherever this is feasible, taking into account its impact on the privatisation of distribution.

"Given the political will and effective support, far-reaching reforms can be adopted in India," the report said.

Frontier Economics has recommended four different models for the Indian power sector reforms comprising vertically integrated monopoly, the single buyer model, wholesale competition and retail competition.

Under the vertically integrated monopoly, a single company, either publicly or privately owned, holds the monopoly over generation, transmission, distribution and supply of electricity within a geographic region. The single buyer model envisages establishment of a power purchasing agency to buy power and capacity from generators and sell it on to distribution companies, paying a charge for the use of the transmission network.

Under wholesale competition, generators compete to sell power to large consumers and monopoly distribution companies, paying a charge for the use of the transmission network. The retail competition model introduces competition in supply for all consumers either purchasing directly from generators or through trading companies. Third party access in introduced for both the transmission and distribution networks.