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Polity & Governance
Mahesh

11/08/22 06:10 AM IST

Electricity Bill

In News 
  • The government has tabled the Electricity (Amendment) Bill 2022 in the Lok Sabha and then referred it to the parliamentary standing committee on energy for wider consultation.
Provisions of the bill 
  • Allows multiple Discoms in the same area: More than one power distributor can operate in an area. This is aimed at boosting competition and giving more choice to the consumers. The new supplier can use existing supply lines.
  • Regulator must decide in 90 days or the application will be deemed to be approved.
  • It will end distribution monopolies and improve the viabilities of business.
Benefit for DISCOMs:
  • Fixing of Tariffs:There will be “mandatory” fixing of minimum as well as maximum tariff ceilings by the “appropriate commission” to avoid predatory pricing by power distribution companies and to protect consumers.
  • It aims to ensure graded and timely tariff revisions.
Benefits for remote areas and farmers:
  • Cross-subsidy Balancing Fund: Cross-subsidy refers to the arrangement of one consumer category subsidizing the consumption of another consumer category. E.g. commercial consumers subsidies residents or farmers. The state government will set up such a fund.
Benefit for Environment:
  • Renewable purchase obligation(RPO):Under the previous act SERCs are empowered to specify renewable purchase obligations(RPO) for discoms. RPO refers to the compulsory procurement of a certain percentage of electricity from renewable sources.
  • As per the Bill, RPO should not be below a minimum percentage prescribed by the central government or DISCOMS may face a penalty.
Concerns with the bill 
  • ‘Electricity’ is a state subject and any legislation on it should be in consultation with the state government. However, no consultation was done before introducing the bill.
  • Provision to encourage competition may lead to more entities entering lucrative and urban areas, while loss-making areas may continue to be underserved.
  • Fear of end of subsidies by farmers.
  • Privatization of distribution companies may result in job losses
  • There is a fear that the Bill might result in the privatization of profits and the nationalization of losses
  • Multiple distribution licensees may lead to a situation similar to the telecom sector where monopoly companies will destroy the public sector and smaller companies.
Source- PIB 

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