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Explained: All you need to know about the Electricity Amendment Bill 2021, and why some states are against it

One of the main amendments proposed in the Bill seek to de-license power distribution, allowing the entry of private sector players into power distribution sector. Once the Bill is passed, it would let consumers choose a distributor of their choice.

August 10, 2021 / 02:27 PM IST
The Electricity Amendment Bill, 2021, is among the 17 Bills which would be introduced in the ongoing session. (Representative image)

The Electricity Amendment Bill, 2021, is among the 17 Bills which would be introduced in the ongoing session. (Representative image)

Protests by an unrelenting opposition over the Pegasus snooping allegations and farm laws have taken a big hit on Parliament’s productivity, washing out the first three weeks of the ongoing monsoon session. Adding to it is the opposition to the central government's long-awaited Electricity Amendment Bill, 2021, which seeks to de-license power distribution.

The Bill proposes certain amendments to the Electricity Act, 2003. The Electricity Amendment Bill, 2021, is among the 17 Bills which would be introduced in the ongoing session.

Moneycontrol takes a look at the amendments the Bill proposes and the concerns raised by the states opposing it.

What are the key proposals?

Entry of private players: The amendments seek to de-license power distribution, allowing private sector players to enter the sector and compete with state-owned power distribution companies (discoms). Once the Bill is passed, it would let consumers choose a distributor of their choice.

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The finance minister, during her Budget speech, had announced that the government would bring a framework to allow consumers to choose between discoms.

Disputes & Penalties: The Bill provides for the constitution of the Electricity Contract Enforcement Authority (ECEA). The ECEA will have the sole authority to adjudicate upon contract-related disputes in the electricity sector.

The Bill also provides for certain penalties for non-compliance by licensees in meeting Renewable Purchase Obligation (RPO).

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.

It also proposes that a selection committee will be constituted to select the chairperson and members of the Appellate Tribunal (APTEL), the central and state regulatory commissions (CERC, SERCs) and the ECEA.

What are the objections to the Bill and what concerns have been raised?

Except for cities like Delhi, Ahmedabad and Mumbai, power supply in most parts of the country is controlled by state-owned companies.

In a recent letter to Prime Minister Narendra Modi, West Bengal Chief Minister Mamata Banerjee had argued that the entry of private players could lead to private players providing power to only commercial and industrial consumers, while the poor and rural consumers will be left to public sector discoms.

"Power is too important a sector for such unilateral interferences, especially when electricity as a subject is in the Concurrent List," the Bengal CM added. She also said the Bill is anti-people.

Recently, Shiv Sena MP Sanjay Raut also criticised the Bill, saying it is not in the interest of the country, and states were not consulted on its provisions. The states have expressed concerns over the high penalties for failing to comply with RPO rules.



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Shreeja Singh
first published: Aug 10, 2021 02:24 pm
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