New bill to see power sector rejig

Power minister R.K. Singh on Monday introduced the Electricity (Amendment) Bill 2022 in the Lok Sabha which proposes to let multiple power distribution companies operate in a particular area to drive competition and allow consumers to choose their power supplier. The bill has now been referred to the parliamentary standing committee.

The bill proposes to amend the Electricity Act 2003 “in order to facilitate the use of distribution networks by all licensees under provisions of non-discriminatory open access with the objective of enabling competition, enhancing efficiency of distribution licensees for improving services to consumers and ensuring sustainability of the power sector”.

This provision led to protests by power engineers over alleged favour to private discoms over government entities.

Speaking to reporters after introducing the bill in Parliament, Singh termed all the apprehensions and allegations as “false”. He said that in order to ensure a level playing field, the government has proposed that both the maximum and minimum tariff should be fixed by appropriate commissions.

It would be the first time that minimum tariffs would be fixed for retail sale of power.

Regarding concerns raised about the amendment on either reducing or ending subsidies in the power sector, Singh said that the bill does not have any provision on lower subsidies, but would mandate the use of excess cross subsidy with a discom at a particular area to be used at another area which requires the subsidy.

“In case of issuance of licence to more than one distribution licensee in an area of supply, the state government shall set up a cross subsidy balancing fund which shall be managed by a government company or entity designated by that government in accordance with such regulations as the state commission may make in accordance with the provisions of this Act and the rules made thereunder by the Central Government,” the bill said, adding that any surplus with a distribution licensee on account of cross subsidy or cross subsidy surcharge or additional surcharge shall be deposited into the fund which shall be utilized to fill up for deficits in cross subsidy in the same area or any other area of supply.

The bill also proposes to raise the penalty for non-compliance with renewable purchase obligations (RPO), but would decriminalize the offence of non-adherence to the norms.

It would also strengthen the functioning of the National Load Despatch Centre (NLDC) for ensuring the safety and security of the grid and for the economic and efficient operation of the power system in the country. Singh said that the strengthening and constant monitoring of the steps to boost the defence of the power network would are the need of the hour on the backdrop of incidents of cyber attacked on India power networks.

In April, private intelligence firm Recorded Future had said that Chinese state-sponsored hackers targeted Indian electricity distribution centres near Ladakh over eight months. The government later said the attacks were not successful and the defence system were strengthened.

According to the statement of objectives and reason of the bill although the Electricity Act 2003 has facilitated the development of the power sector, the continuing as well as new challenges of sustainability of the power sector, contract enforcement, payment security mechanism, energy transition and the need to provide choice to consumers in order to promote competition and the like, it has become necessary to make certain amendments in the Act.

“The amendments to the Act are also necessary in view of the importance of green energy for our environment in the context of global climate change concerns and our international commitments to increase the share of renewable energy,“ it said. The statement further said that it has become necessary to strengthen the regulatory mechanism, adjudicatory mechanism in the Act and to bring administrative reforms through improved corporate governance of distribution licensees.

The bill has attracted criticism from opposition parties and power engineers. About 2.7 million power employees and engineers under the aegis of All India Power Engineers Federation (AIPEF) protested on Monday against the introduction of the bill over allegations that the provision allowing multiple discoms to supply power in an area would hurt government discoms. It further said that the bill would hurt the consumers and the employees in the power sector.

On allegations that the bill would impact the farmers, power minister Singh told reporters here that the bill does not have any provision related to farmers.