Describing the proposed amendment as important to strengthen the legislative foundation of India’s power sector, he said that though the country has made commendable progress in all aspects of the power sector since the enactment of the Act in 2003, challenges in the distribution segment in the form of persistent financial stress continue.
He informed us that the provisions in the Bill have been proposed to mandate cost-reflective tariffs and to empower Commissions to act suo moto when utilities delay tariff filings. He clarified that state governments may continue to provide subsidies to priority consumer groups such as domestic and agricultural consumers, adding that it may not result in any increase in cost for such consumers with an aim to ensure that financial discipline and consumer welfare go hand in hand.
The Amendment seeks to enhance the economic competitiveness of the Indian industry by reducing distortions caused by cross-subsidies and surcharges. The Amendment proposes to empower SERCs, in consultation with the State Government, to exempt discoms from the obligation to supply large consumers, adding that such consumers can procure power at competitive rates from other sources.
At the same time, the fixed cost burden on discoms associated with supplying electricity to these consumers aims to be reduced, even as the Minister clarified that the large consumers will have a choice to exit after giving notice with a reasonable time.
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Terming support for an increased use of electricity from non-fossil sources as a collective responsibility, he said that a minimum obligation for the use of non-fossil source electricity is proposed under the Bill. To ensure the availability of cost-competitive and adequate renewable energy, it has been proposed that capacity addition will also be enabled through market mechanisms in addition to through agreements by the discoms in order to reduce their burden.
The Bill further proposes provisions to ensure better service for the general public, reduce financial and compliance burdens, and create a better environment for business. To strengthen regulatory governance, several provisions have been proposed under the draft Bill. The draft Bill proposes to expand the strength of APTEL to handle increasing case loads and includes operational reforms like the incorporation of Right-of-Way provisions directly in the Act.
The Bill also proposes enabling distribution network sharing to avoid duplication, on which the Minister emphasised that by allowing the sharing of the network, the consumers will benefit. He clarified that the apprehensions about privatisation and increase in cost or adverse effect on employees have no basis, assuring that suitable regulatory and policy measures will be taken to ensure that there will not be any adverse effect on any class of consumers or employees.
The Bill envisages the establishment of the Electricity Council to foster cooperative federalism and national consensus on power sector reforms. The Minister assured that the Central Government will take necessary steps for reasonable compensation to farmers for their land used for laying of electric lines, as he informed the members that the Ministry of Power has already issued guidelines for the determination of compensation, linking it to the market rate.
