During the present Monsoon Session of Parliament, the Union Government introduced the Electricity (Amendment) Bill. Following its introduction, the Bill was submitted to the parliamentary standing committee on energy for more stakeholder engagement. In a word, the bill proposes several revisions to the Power Act of 2003 and sets the framework for electricity privatization.
The Electricity (Amendment) Bill proposes various power providers to consumers, as well as periodical revisions to power pricing to assist Power Discoms in recovering losses. Several revisions and enhancements proposed in the bill have been criticized by various parties, including farmers and power industry personnel, since its adoption in the lower house. Here’s an in-depth look at the Electricity (Amendment) Bill, the changes it proposes, and the implications for the country’s electricity industry.
The Following are the Key Provisions of the Bill
the Electricity (Amendment) Bill, was introduced in Lok Sabha in order to bring reforms to the sector. The bill amends the Electricity Act of 2003, which governs India’s electricity sector. It establishes the Central and State Electricity Regulatory Commissions (CERC and SERCs) to oversee inter-state and intra-state electricity regulation.
- Multiple Discoms in the same area: According to the Act, Discoms must distribute electricity through their own network. This requirement is repealed by the Bill. It also states that a Discom must provide non-discriminatory open access to its network to all other Discoms operating in the same area for a fee. The criteria for determining the area of supply may be prescribed by the central government.
- Power procurement and tariff: If multiple licenses are granted for the same area, the power and associated costs will be shared among all Discoms in accordance with the existing power purchase agreements (PPAs) of the existing Discoms.
- CERC gains authority over multi-state retail supply: The Central Electricity Regulatory Commission (CERC) will now license applicants for distribution in more than one state, a significant change. Previously, licensing distribution was solely the responsibility of SERCs.
- Cross-subsidy Balancing Fund: The Bill adds that the state government will establish a Cross-subsidy Balancing Fund if multiple licenses are granted for the same area. Cross-subsidization is the practice of one consumer category subsidizing the consumption of another.
- Payment Security: The Bill states that if the Discoms do not provide adequate payment security, electricity will not be scheduled or dispatched. The central government may establish payment security rules. and if you want to make Tamilnadu electricity bill payment online with a secure and user-friendly process then you need to download Bajaj Finserv app and start using it today
- Contract enforcement: electricity Bill empowers the CERCs and SERCs to adjudicate contract performance disputes. Contracts for the sale, purchase, or transmission of electricity are included.
- Renewable purchase obligation (RPO): The Act gives SERCs the authority to specify RPO for Discoms. The Bill also states that RPO should not be less than a certain percentage set by the government.
The Bill’s Significance for Consumers and Suppliers:
- Consumers would gain significant power if they could select their own power supplier.
- The 90-day time limit for regulator approval or application means that regulators can no longer sit on license applications.
- Every year, power regulators will set electricity tariffs, resulting in dynamic prices based on emerging situations.
- The ability of regulators to implement orders as civil court decrees will result in better and more timely compliance.
- The provision to remove regulatory body members for willful violation/negligence will result in better rule and process implementation.
The Following are the Major Objections to the Bill:
- A Significant Burden on the State Budget:
The electricity bill implications may place a significant burden on the state exchequer, as cross-subsidizing consumers will shift to private companies offering competitive rates, while subsidized consumers will remain with government companies. Government Discoms will inevitably incur losses and will soon be unable to purchase electricity from generators.
- The Myth About Consumers Paying Less for Electricity:
It is highly unlikely that consumers will benefit if more than one Discom competes with each other because approximately 80% of the costs borne by the Discoms are directed toward purchasing power from power-generating companies. Thus, based on these statistics, the myth of cheaper electricity for consumers appears to be a pipe dream.
The Electricity (Amendment) Bill will enable periodic tariff revisions along with simplified planning of payment and power structure and enable the distribution of electricity subsidies through direct benefit transfer. It will also introduce private players, competitive pricing and services, and the formation of NLDC.
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