Electricity Amendment Bill, 2022

Q:

What is the electricity amendment bill, 2022?

On August 8,2022, the electricity amendment bill was introduced in the parliament despite opposition. It aims to amend the electricity amendment bill, 2003. The bill intends to provide multiple distribution licensees (discoms) to operate in the same area of supply. In order to control interstate and intrastate issues, it creates the Central and State Electricity Regulatory Commissions (CERC and SERCs).Additionally, it enables customers to select the service provider of their preference.

Q:

What amendments will be made to the electricity amendment bill, 2003?

Through the amendment the bill seeks :

  • To make it easier for all licensees to use distribution networks under the terms of non-discriminatory "open access," with the goal of fostering competition, increasing licensee efficiency for better services to customers, and maintaining the sustainabilty of the power industry.
  • To enable open, non-discriminatory access to the distribution network of a distribution licensee.
  • To change the punishment from imprisonment or a fine to a fine.
  • To strengthen the duties that the regulators would carry out
  • In addition to the necessary setting of the maximum ceiling and minimum tariff by the competent commission, provisions must be made for a graded review in tariff over the course of a year.

Q:

Why is the opposition against the bill?

The opposition has following argument against the bill:

  • Electricity Subsidy: Free electricity for farmers and the BPL people will gradually disappear.

  • Impact on the Federal Structure: According to the Constitution, "Electricity" is listed as Item 38 of List III (Concurrent) of the Seventh Schedule, which means that both the federal and state governments have the authority to enact laws on the matter.The federal framework of Indian politics, which is a component of the "basic structure" of the Indian Constitution, is being breached by the proposed amendments.

  • Differential Distribution: The only entities required to provide a universal power supply are government discoms or distribution firms.Private licensees are therefore likely to choose to supply electricity in profit-making areas- to industrial and commercial customers. When this happens, government discoms will lose their profitable areas and turn into loss-making companies.

Q:

What impact will the bill have on consumers and power employees?

The bill will have the following impact on consumers and power employees:

  • Monopoly of Private Players:Government distribution companies will suffer a significant loss as a result, eventually paving the way for a few private players to gain a monopoly in the nation's power sector.
  • Operational Problem:
    -Power purchases account for around 80% of the cost of supply, and these costs will be the same for all distribution licensees operating in a given area.
    -A wide range of operational problems will arise from having different retailers.
    -The service quality or cost won't change by adding more retailers or distribution licensees.
  • Hit on the Consumers:
    -According to a research by UK auditors, consumers had to pay more than 2.6 billion pounds due to the implementation of such flawed models.
    -The regular customer was required to pay for these transfers.
    -Consumers suffered the most as private companies faltered.

Q:

When will the electricity amendment bill, 2022 come into effect?

Due to widespread protest against the bill it was sent to a standing committee for further deliberation. The standing committee will make recommendations and suggest changes to the bill after which it will be reintroduced in the parliament. In order to come into effect the bill will need to pass in both the houses of parliament after which it will become an act.

Q:

What are the solutions to the problems arising in the bill?

Following steps can be taken to solve the problems:

  • To prevent unequal distribution, regulations for private players should be implemented.
  • Subsidy-related provisions for farmers and below poverty line people should be elaborately written to avoid confusion or disagreement.
  • The Indian Constitution lists electricity as item 38 of the Concurrent List of the seventh schedule, so both central and the state governments should have the power to make laws on this subject. Hence, suggestions from the states should be taken into account for the effectiveness of the provisions of the bill.