The Electricity (Amendment) Bill 2020 was recently introduced by the central government to change key clauses of the Electricity Act 2003.

Why the amendment?

• To address major challenges affecting the power sector’s commercial and investment activity.
• The current problems facing India’s power sector are the result of a failure to address structural issues.
• Operational and financial inefficiencies in power generation, transmission, and distribution utilities, access and quality of power supply, political intervention, a lack of private investment, insufficient public infrastructure, and a lack of customer participation are all examples.
• Increasing openness and accountability to protect consumers’ interests while also supporting the electricity sector’s healthy expansion.

Main amendments

• There is a proposal to create a National Selection Committee instead of a separate Selection Committee (for the selection of the Chairperson and members of State Electricity Regulatory Commissions-SERCs).
• Direct Benefit Transfer (DBT) is a method of transferring money from one person to State governments, as well as distribution companies, will benefit from Direct Benefit Transfer.
• Establishment of the Electricity Contract Enforcement Authority (ECEA): This is an authority led by a former High Court judge with the authority to carry out their orders as a civil court judgement. The Authority will ensure that contracts for the purchase, sale, or transmission of electricity between a producing business, a distribution licensee, and a transmission licensee are fulfilled.
• APTEL (Appellate Tribunal for Electricity): It is being bolstered by the addition of new members. The chairperson and members of the Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commissions (SERC) shall come from the following domains.
• Renewable Power Obligation: With the national climate change goals in mind, the responsibility for determining renewable power requirements (RPO) has been transferred from state commissions to the federal government.
• Instead of a distinct Selection Committee, a National Selection Committee is being proposed (for the selection of the Chairperson and members of State Electricity Regulatory Commissions-SERCs).
• Direct Benefit Transfer (DBT) is a way of moving money from one person to another. Direct Benefit Transfer will benefit state governments as well as distribution corporations.
• De-licensing: Electricity distribution has been delicensed, at least in theory, allowing customers to select a distribution business in their area.
• Universal service obligation: A universal service obligation fund has been established, which will be maintained by a government corporation. This fund will be used to cover any cross-subsidy deficits. There will be no need for a security deposit if the supply is provided through pre-paid metres.
• India has a national renewable energy programme and is a signatory to the Paris Climate Agreement. As a result, it is suggested that a separate strategy be developed and promoted for the growth and promotion of power generation from renewable sources of energy.
• India is a signatory to the Paris Climate Agreement and has a national renewable energy policy. As a result, a separate policy for the development and promotion of power generation from renewable sources of energy is recommended.

What more can be done

• The key to moving this forward is the role of electricity regulatory commissions.
• The commissions should be established as powerful institutions, with their independence respected and preserved.
• The government should reduce its frequent involvement in the industry after establishing a strong foundation for fair competition.
• Government interventions frequently distort the market and are likely to be used only in the event of a market failure.

The bill gives the Central government more authority over the power sector’s tariffs and regulations. Because electricity is a concurrent subject, this Amendment must not deprive states of their authority.

How to structure:

• Give a brief intro on the Electricity Bill, 2020
• Mention the issues faced in the distribution sector environment- list out the issues and give examples
• Explain how the latest amendment can solve these issues
• Suggest further measures and conclude

Reference:

1. https://www.thehindu.com/opinion/op-ed/powering-the-energy-sector/article37046277.ece