The Union Cabinet
has approved the proposals for amendment in Electricity Act, 2003 on 10th
December, 2014 as contained in the Electricity (Amendment) Bill 2014. The
Electricity (Amendment) Bill, 2014 was introduced in the Lok Sabha on 19th
December, 2014. This was referred to Parliamentary Standing Committee on Energy
and the committee has submitted its report to the Parliament on 7th May, 2015.
This was stated by Sh. Piyush Goyal, Minister of State (IC) for Power, Coal
& New and Renewable Energy in a written reply to a question in the Rajya
Sabha today.
The Minister
further stated that the amendments proposed in Electricity (Amendment) Bill,
2014 seeks to end the monopoly of power distribution companies by segregating
the carriage (distribution sector/network) from the content (electricity supply
business) in the power sector by introducing multiple supply licensees so as to
bring in further competition and efficiency in the distribution sector by
giving choice to the consumers, the Minister added.
Electricity
Amendment Bill, 2014 Introduced in Lok Sabha; Changes Aimed at Promoting
Competition, Efficiency in Operations and Improvement in Quality of Supply of
Electricity
The
Electricity (Amendment) Bill, 2014 was introduced today in the Lok Sabha by the
Minister of State (I/c) for Power, Coal and New& Renewable Energy Shri.
Piyush Goyal. The amendments will usher in much needed further reforms in the power
sector. It will also promote competition, efficiency in operations and
improvement in quality of supply of electricity in the country resulting in
capacity addition and ultimate benefit to the consumers.
The Electricity Act, 2003 was enacted to amalgamate and modernize the
earlier Electricity Laws, namely, the Indian Electricity Act, 1910, the
Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act,
1998. The Act was reviewed and amended twice, in the year 2004 and 2007,
to give effect to certain changes considered necessary.
Based on the experience gained over the years, it was felt to
review the provisions further to bring efficiency and competition in the
distribution sector, strengthening grid security and safety, promotion of
renewable energy, rationalization of tariff and strengthening and performance
oversight of Regulatory Commissions etc.
Certain legislative changes were suggested by the Working Group on
power for the formulation of 12th Five Year Plan which were
further examined under a Committee constituted under Chairperson, CEA.
Based on the recommendations of the said Committee, the proposed amendments
were uploaded on the website of Ministry of Power in the month of October,
2013. Thereafter, consultations were held with various stakeholders including
those from Central Ministries, State Governments, Generation, Transmission,
Distribution utilities, Regulatory Commissions, Private Developers, traders,
industry associations, consumer groups, power exchanges and individuals etc.,
in meetings taken in the Ministry.
Based on exhaustive
consultations, certain amendments to the Electricity Act, 2003 have been proposed
broadly covering the following areas:-
A. Enhancing
Grid safety and security: In order to strengthen and enhance Grid
safety and security, specific measures regarding maintenance of spinning
reserves along with strong and effective deterrence in the form of enhanced
penalties for violations of the directions given by the State and Regional Load
Despatch Centres etc., have been envisaged.
B. Separation
of Carriage & Content in the Distribution sector: To achieve the
objectives of efficiency and for giving choice to consumers through competition
in different segments of electricity market, concept of multiple supply licensees is proposed
by segregating the carriage from content in the distribution sector and
determination of tariff based on market principles, while continuing with the
carriage (distribution network) as a regulated activity. To protect the
interest of consumers, the tariff for retail sale of electricity is proposed to
be capped through the Regulator and one of the supply licensees is proposed to
be a Government controlled company. Further, the existing distribution
licensees are proposed to continue till the expiry of their term as specified
in their licence.
C. Promotion of Renewal Energy: In order to accelerate the
development of Renewable Energy sources, a number of measures including the
provision for a separate National Renewable Energy Policy, development of
renewable energy industry, Renewable Generation Obligation on coal and lignite
based thermal power plants, specific exemptions to Renewal Energy sources from
open access surcharge, separate penal provisions for non-compliance of Renewal
Purchase Obligation etc., have been envisaged under the Renewable Generation
Obligation for coal and lignite based thermal power plants.
D. Tariff Rationalization: To rationalize the tariff structure on sound financial principles for the
viability of the distribution sector and recovery of revenue requirement of licensees without any gap, the
provisions of Tariff Policy are proposed to be made mandatory for the
determination of tariff. Further, the bill envisages timely filing of tariff
petitions by utilities, disposal of the same by the Appropriate Commission
within a specified time period and powers to Appropriate Commissions for initiating
suo-motu proceedings for determination of tariff in case the Utility/Generating
Companies do not file their petitions in time.
E. Miscellaneous : Suitable amendments are also proposed for improving the accountability and
transparency in the working of Appropriate Commissions without affecting their
functional autonomy; bringing clarity in regard to appointments, functions and powers of the Chief
Electrical Inspector/ Electrical Inspectors and levying of fees for electrical
inspections; exemption to developer of SEZs, Railways and Metro Rail for
obtaining distribution licence; collection and realization of any dues along
with the electricity dues, etc.
Media advice
passed from Raman Kannah PSI South Asia Sub Regional
Secretary
"Similar models have been introduced in other Countries , that in turn are used to create competition and provide the split of generation , transmission /distribution, and retail...the model is long standing. ..but it's a big move for such legislation and market change for a country the size and population of India plus it's economic growth. ..While a model not our favorite it will see privateers push to build generation capacity and use the common electricity grid / network to share the retail side
It might also be an encouragement to some Govt owned electricity systems to move to divest their generation capacity and retail arms piece by piece leaving the grid and network in public hands for a while? ?,
Industrially as PSI Affiliates we need to be cautious on a number of fronts including ownership and current electricity structure break up , ..plus the regulatory issues around transmission charges and network / grid cost recovery costs for the ongoing operation,plus safety and operational issues ..Greg Mclean "
