The government is likely to introduce the much-awaited Electricity (Amendment) Bill 2022, which aims to streamline the payment framework, empower regulators and encourage competition in the sector.
The suggested amendments are to the Electricity Act, 2003 which was enacted to consolidate the laws relating to the generation, transmission, distribution, trading, and use of electricity and generally for taking measures conducive to the development of electricity.
"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. Further, it has become necessary to strengthen the regulatory mechanism, an adjudicatory mechanism in the Act and to bring administrative reforms through improved corporate governance of distribution licensees," the government said.
The Bill proposes that power distribution licensees will be allowed to use the networks of other licensees, which could boost competition and enhance efficiency. The government also hopes to insert a new section in the Act that will enable the management of power purchase and cross-subsidy in case of multiple distribution licensees in the same area of supply. These measures are expected to promote competition in the power distribution sector so that consumers benefit from competitive prices.
The government also proposes to enable regulators to fix a minimum tariff ceiling to discourage unhealthy pricing wars among distributors and a maximum ceiling to ensure consumers are protected against price increase shock.
Amendments are also being made in the Act to strengthen the functioning of the National Load Despatch Centre for ensuring the safety and security of the grid and for the economic and efficient operation of the power system in the country.Power distribution companies (discoms) owe Rs 1 lakh crore to power generation companies. Whereas, states owe Rs 60,000 crore to discoms and another Rs 75,000 crore on account of the various subsidies that states had promised to their citizens. The amendments to the act and other recent policy initiatives like the Ministry of Power’s flagship Revamped Distribution Sector Scheme (RDSS) are aimed at resolving issues in the power sector by improving the performance of the distribution sectors which has been a drag on the industry.