What is the Electricity (Amendment) Bill 2022 and how it will impact Power Subsidies?

Electricity (Amendment) Bill 2022: The Electricity (Amendment) Bill 2022 proposes multiple power suppliers to consumers and also provisions for regular revision of power tariffs to help Power Discoms come out of losses. Here’s All You Need to Know about the Electricity (Amendment) Bill 2022.

What is the Electricity (Amendment) Bill 2022 and how it will impact Power Subsidies?
What is the Electricity (Amendment) Bill 2022 and how it will impact Power Subsidies?

Electricity (Amendment) Bill 2022:Union Government has tabled the Electricity (Amendment) Bill 2022 during the ongoing Monsoon Session of the Parliament. After its introduction, the Bill was referred to the parliamentary standing committee on energy for wider consultation with stakeholders. In nutshell, the bill proposes multiple amendments to the Electricity Act 2003 and lays the groundwork for the privatization of electricity. The Electricity (Amendment) Bill 2022 proposes multiple power suppliers to consumers and also provisions for regular revision of power tariffs to help Power Discoms come out of losses.Since its introduction in the lower house, several amendments and improvements proposed in the bill have come under criticism from different stakeholders; including farmers and power sector employees. Here’s a complete overview of the Electricity (Amendment) Bill 2022, the changes it proposes and its impact on the country’s power sector.

What amendments are proposed in Electricity (Amendment) Bill 2022?

The Electricity (Amendment) Bill 2022 which has been introduced in the Lok Sabha tries to address the challenges and problems that the power sector is facing today. One of the central themes that the bill tries to address is to provide more choice to the consumers while also paving the way ahead to make power discoms financially sustainable. The bill proposes some key amendments to the Electricity Act, 2003 which are discussed below:

  • Introduction of Private Power Companies

The Amendments proposed by the bill seek wider and active participation of the private power companies in the distribution of electricity to the end consumers. The bill talks about introducing state-authorized/owned power distribution companies partnering with private players for electricity distribution.

  • Multiple Power Discoms to Operate in Competing Space

To improve the service and promote competition to offer better service at reasonable cost and pricing; the Union Government also plans to allow multiple power discoms to operate in the same area. The Electricity (Amendment) Bill 2022 proposes allowing more than one power distribution company - DISCOM.

  • Formation of National Load Despatch Centre (NLDC)

Another key amendment proposed in the Electricity (Amendment) Bill 2022 deals with the formation of a centralized apex body to manage power load and distribution needs across the country. The Bill calls for the setting up of the National Load Despatch Centre (NLDC) to ensure integrated operations of the power sector across India. The NLDC will be entrusted the task of overseeing grid operations and ensuringthe security of the electricity grid. In addition to this, it will also coordinate with theRegional Load Despatch Centre or the State Load Despatch Centre for the management of electricity needs and loads, among other things.

  • Tariff Revision Policy

The bill introduced in the lower house of the Parliamentproposes a tariff revision policy for power discoms. The bill proposes that in case two companies are allotted licence to supply electricity in a particular area, they will have a maximum and minimum limit for commission and tariff for the retail sale of electricity.

Farmers, Power Sector Works Protest against the Bill

Since its introduction in the Lok Sabha, several amendments proposed in the Electricity (Amendment) Bill 2022 have come under serious criticism from different stakeholders. Farmers and Retail Consumers have raised a concern about the privatization of the sector and how it will end the subsidies that are being provided to the end users.

Farmers also held protests across Punjab against the provisions of the amendments proposed by the bill saying that “the farming community will be the most affected if the bill is passed in the parliament”. Punjab CM has also backed the protesters saying that the introduction of the Bill is an attack on the country’s federal structure as Electricity and Electricity Distribution fall under the concurrent list. All India Power Engineers Federation (AIPEF) has also joined the chorus to protest against the new amendments being proposed in the bill and alleged that this is the first move by the government to end power subsidies for the consumers.

Defending the bill introduced in the lower house of the Parliament, Union Power Minister RK Singh said that “The Bill is not contentious at all. There are no provisions in the Bill that will affect the subsidies being granted to any category. There is no provision in the Bill which affect farmers.” He also said that the ministry had also consulted state governments, in writing and at meetings, to give final shape to the bill that has been introduced in the Parliament.

Impact of Electricity (Amendment) Bill 2022

The Power Sector is one of the most poorly managed and financially strained sectors of the Indian Economy. Electricity is a major resource and power subsidies and relaxations are being used by multiple political parties as a ‘freebie’ during elections. This has led to a huge pending Power Bill which state governments have to settle with Power Distribution who in turn have to pay Power Generation Companies for the same.

The latest data shared by the Central Government puts the total power bill that is pending from State Governments to Power Discoms at 62,931 crore for key services. In addition to this, Rs 76,337 cost has also been incurred for the ‘freebies’ being announced by the State Governments for the consumers through power subsidies.

In terms of state-wise performance; Tamil Nadu, Maharashtra and Telangana have the highest debt against power distribution companies and they combined contribute to about 57% of the pending bills. State-wise Data for pending Power Bills for different States is as follows:

State

Cumulative Pending Payment

Telangana

Rs 11,915 crore

Maharashtra

Rs 9,131 crore

Uttar Pradesh

Rs 18,946 crore

Madhya Pradesh

Rs 16,240 crore

The Electricity (Amendment) Bill 2022 with the introduction of private players and competitive pricing and services and the formation of NLDC will enable revision of tariffs from time to time along with streamlined management of payment and power structure and enable distribution of power subsidies through direct benefit transfer.

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