In January 2021, a proposal to seek Cabinet approval for the Electricity (Amendment) Bill 2021 was circulated, and the new bill was tabled in Parliament during the Budget session. The electricity amendment bill proposes certain amendments to the Electricity Act, 2003. The primary objective of the bill, with respect to services, is to allow power customers to pick from a variety of service providers as also seen in telecom sector.
What are the amendments and its objectives?
(i) Giving choice to the electricity consumers as per the announcement in the Union Budget 2021-22:
At present, the distribution companies run monopolies, either government or private. In order to stop this monopolistic function and provide a fair chance to all companies across the country this amendment has been made. The selection of the companies is at the customer’s discretion, through this the customers will get a wide variety of choices to select from and at the same time increase competition in the market which will in directly lead to improvement in the services. This will not only benefit the customer but also maintain a fair competition in the market. The amendment does clarify that the existing distribution company shall continue to supply electricity to the consumers without any change in the area of supply. With such delicensing, the other distribution companies can come in and compete.
The companies shall register themselves with the Appropriate Commission before beginning supply of electricity, the registration is supposed to be done if the requirements prescribed under the bill are fulfilled. It mandates the Commission to register the company within 60 days of the application and also gives down basis for disqualification or rejection of the application.
It aims to enable improvement in the distribution services and provide efficient services to the electricity consumers.
(ii) Mandatory appointment of a Member from Law background in the Electricity Regulatory Commissions in compliance to the Hon'ble Supreme Court Judgement dated 12th April, 2018:
The amendment will also give effect to a Supreme Court judgement wherein it has been held that Electricity Regulatory Commissions must have a member with experience and qualifications in law. A bench will be constituted in each of the commissions for adjudicatory functions in accordance with the aforementioned amendment. It is recommended that these benches be responsible for resolving disputes involving power generation companies or licensees, including matters related to the performance of obligations under contracts related to the sale, purchase or transmission of electricity, and granting them the power to enforce their law as a civil court decree. The power of ERCS have been increased by adding a member so that there are enough representatives from various fields of experts in Electricity Regulatory Commissions.
(iii) Strengthening of APTEL by increasing number of Members in view of long pendency of cases and consequent delay in deciding the appeals:
Appellate Tribunal for Electricity (APTEL) is being strengthened by increasing number of members, The domains, from where Chairperson and members of Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERC) would come, have been described. From the present strength of two benches, it would increase to four benches.
(iv) In order to meet the India's International commitment, new provisions related to compliance of Renewable Purchase Obligations (RPO) is being proposed to promote use of renewable energy:
Keeping in view the national climate change goals, the responsibility of fixing renewable power obligation (RPO) is shifted from State Commissions to the Central Government. It mandates that all electricity distribution licensees should purchase or produce a minimum specified quantity from renewable energy sources as a percentage of their total electricity consumption. The aim is to increase the share of renewable energy. The Bill introduces a specific provision for penalties for not meeting RPO, which are necessary in view of importance of green energy for environment in context of global climate change concerns and international commitments made by India to increase the share of renewable energy.
(v) In addition, the bill calls for the regional grids to be unified. With the unification of regional grids, it is critical that the national grid's supervision be improved to maintain its security and dependability. As a result, the National Load Despatch Centre (NLDC) is planned to be given specific tasks and powers.
Public response to the new amendments
The public response to the bill is not quite positive and in favour of the bill due to the various amendments and its silence of a few issues. To combat the problems of power distribution firms delaying payments to power production firms, the bill recommends that no electricity be planned or dispatched under a contract unless appropriate payment security is given. Nationwide protests are being noticed against the laws with a view to terminate the bill as it seeks to privatise the power sector and help the corporate division.
By a letter to the Prime Minister the All India Power Engineers Federation (AIPEF) requested to delay the enactment of the said bill until proper detailed discussions are done with power sector engineers and employees with respect to the consequences of the proposed bill.
Mamata Banerjee, is seen vehemently opposing the bill, in her letter to the Prime Minister that the amendment would lead to “a concentration of private, profit-focussed utility players in the lucrative urban-industrial segments while poor and rural consumers would be left to be tended by public sector discoms.”
Higher fines for failing to comply with Renewable Energy Purchase Obligations (RPOs) and the need that Regional Load Dispatch Centres and State Load Dispatch Centres obey orders from the National Load Dispatch Centre are two other major issues voiced by states.