Electricity (Amendment) Bill 2022 – A Critical Analysis of Power Sector

Electricity (Amendment) Bill 2022 – A Critical Analysis of Power Sector

It is widely known that India has now become a surplus state in terms of electricity but yet find it hard to take electricity to every corner of the country. Now the union parliament is pondering over a new bill. There is need to take a critical look at the Bill.

Provisions of the Bill:

    • It allows multiple Discoms in the same area to boost the competition among power distributors.
    • There will be “mandatory” fixing of minimum as well as maximum tariff ceilings by the “appropriate commission”. It aims to ensure graded and timely tariff revisions.
    • The state government will set up Cross-subsidy Balancing Fund, in which the commercial consumers will subsidize the residents or farmers.
    • Under the electricity act SERCs (State Electricity Regulatory Commissions) specifies renewable purchase obligations (RPO) for discoms. As per the Bill, the central government will provide a minimum value for RPO or DISCOMS may face a penalty.

About Electricity Act, 2003:

    • It regulates the electricity sector in India by setting up the Central and State Electricity Regulatory Commissions (CERC and SERCs) to regulate interstate and intrastate matters, respectively.
    • It does away with the requirement of approval or clearance from any authority for setting up a captive power plant. Moreover, any person setting up a captive power plant can also establish and maintain dedicated transmission lines.
    • The Open Access (OA) policy allows consumers with electricity load above 1 MW to procure electricity directly from electricity markets. Thus, facilitating the discovery of a single market price for power around the country. In 2008, power exchanges were set up to operationalize OA. However, some states have imposed significant barriers to OA like cross-subsidy surcharge and additional surcharge.


    • According to WB report titled “the challenge of the distribution in India”:
      • Weak distribution network affects the overall performance of the India’s power sector.
      • The state Discoms have been accumulating losses majorly in UP, TN, Haryana and Rajasthan
    • Even the installed capacity is under-utilised as plants have deficiency of raw material.
    • Private sector and foreign investors are yet to play their role in a major way.
    • There are few Peaker plants, since there isn’t sufficient incentive for these.

WEF report – Power Sector at ‘inflection point’:

    • Though, central government recognises the need of private investment and renewables in the energy mix but the problem persist as centre has devolved significant power to the states. Thus, the cooperation between federal and state government is critical.
    • Even with huge investments in renewables, most of the electricity over the next 2 decades will be generated by burning fossil fuel and hence it is time for India to improve the efficiency of the existing power infrastructure.
    • As per IEA’s World Energy Outlook by 2040, China’s net oil imports will be nearly 5 times those of the United States, while India’s will easily exceed those of the EU.

Issues with the Bill:

    • Electricity is a state subject.
    • Inequity due to difference of purchasing power and political power leading to more and better supply to urban areas, while losses to underserved areas.
    • Fear of end of subsidies by farmers.
    • There is fear of privatization of distribution companies.
    • It may be backdoor entry to monopoly companies as happened with telecom sector.

Thus it appears that the bill aims to take care of certain issues with the power sector in India. however provided the withdrawal of government support, the private led electricity sector could not be very viable. Keeping the spirit of democracy alive, the bill needs a lot of enhancment.

plutus ias current affairs eng med 12th August 2022

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