Why are some states opposing the Electricity (Amendment) Bill 2021?

Electricity Amendment Bill 2021 is being opposed by states like West Bengal. The Chief Minister of Bengal has written to the Prime Minister proposing to avoid bringing the Bill to the Parliament calling it anti-people. She also said that the Bill would be promoting capitalism more than required. In the article below know about the reason for the protest the Bill is facing. 

What is the Amendment?

The amendment has provisions to de-license the power distribution. This would allow the private players to enter the electricity distribution sector and compete with state owned power distribution companies. 

This Bill would also help the customers to choose between the power companies. 

The Bill intention was announced in the annual Union Budget by Finance Minister Nirmala Sitharaman. 

The state government generally controls the Power distribution but there are some exceptions like Delhi, Mumbai, Ahmedabad etc. 

Need of the Bill: 

The discom companies are running under huge losses and are also in debt. The Bill brought by the Government would allow a number of schemes that would restructure the outstanding debts of these power companies and would in turn incentivise them to reduce their loss. But these schemes are only of short term financial use to the discoms and the debts tend to accumulate. This happened after the UDAY scheme was launched in 2015 by the Government. 

Electricity Amendment Bill: Objections raised

The states have highlighted that the private players could become the reason of cherry picking as they would provide benefits only to industries and commercial consumers. This could lead to loss in the general customers rights or residential and agricultural consumers. 

As per Mamta Banerjee's point of view, "concentration of private, profit-focussed utility players in the lucrative urban-industrial segments while poor and rural consumers would be left to be tended by public sector discoms."

Currently a wide difference is observed in the tariffs of the power companies throughout India. Commercial players cross subsidize the power consumption of rural residential consumers and agricultural consumers by paying far higher tariffs.

However the Power Ministry has assured the state governments that minimum areas to be covered by the private sector competitors would be so defined that they cover urban and rural service provisions both and also include the concept of cross subsidy in ceiling tariffs. 

Mamata Banerjee is in no mood to listen to these clarifications as she says the Bill “strikes at the roots of federalism”. Other concerns include the higher penalties on failure to meet the Renewable Energy Purchase Obligations and the need of a Local Dispatch Centre and State load dispatch centers following the National load dispatch center.

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