The Electricity (Amendment) Bill 2022 is currently a hot topic of discussion and debates. It was recently introduced in Parliament, sparking protests all over the country, notably in states like Tamil Nadu, Telangana, and Rajasthan. The bill has been forwarded to the standing committee for further consideration.
Understanding the Electricity (Amendment) Bill 2022
This particular amendment aims at expanding access to distribution networks of power suppliers, allowing more than one player and giving consumers the freedom to select their service provider. In essence, it seeks to amend the Electricity Act 2003, with a primary focus on encouraging competition and improving services to consumers.
The proposed changes include facilitating non-discriminatory open access to the distribution network of a distribution licensee, introducing provisions for graded revision in tariff over a year, mandating the fixing of maximum and minimum tariffs, converting punishment from imprisonment or fine to fine only, and strengthening the functions discharged by regulators.
Arguments Against the Bill
The proposed amendments have met with strong resistance from several quarters. One argument against the bill is that the Constitution of India places ‘Electricity’ under Concurrent List, allowing both Central and state governments to make laws on the subject. Critics argue the bill undermines this federal structure.
There are also concerns about potential impacts on electricity subsidies, which could lead to the gradual elimination of free power for farmers and individuals below the poverty line. Furthermore, critics argue that private licensees will prioritize profit-making areas, leading to differential distribution and making government distribution companies less profitable.
Impact on Power Employees and Consumers
The critics maintain that the proposed amendments could result in private players monopolizing the power sector, leading to major losses for government distribution companies. It could lead to operational issues, with no significant improvement in service quality or pricing despite an increase in retailers.
Drawing upon experiences in other countries, critics warn that adopting such models could ultimately burden consumers with additional costs.
Government’s Stand on the Bill
The government, however, maintains that the bill does not curtail the states’ powers to regulate the power distribution sector or to provide power subsidies. According to the government, the bill merely simplifies the process of competition in power supply, leading to better services and operations.
The government also argues that there is nothing anti-farmer about the bill and that it has consulted every state and many associations. One of the notable features of the bill is the use of additional cross-subsidy collected from industrial and commercial users for subsidizing the poor.
With an ambition to achieve 50% of installed power capacity from renewable sources by 2030, the government believes this bill can stimulate power demand while achieving green targets set by Paris and Glasgow Agreements.
A Way Forward
Considering ‘Electricity’ is a subject under the Concurrent List of the Indian Constitution, recommendations from states should be taken into account for effective implementation of the bill’s provisions. Clarity regarding subsidies and regulations for private players to prevent differential distribution should also be addressed.
Reference to UPSC Civil Services Examination Questions
Past questions in the UPSC Civil Services Examination have focused on government initiatives related to the power sector. For instance, a 2016 question asked about the purpose of ‘UDAY,’ a scheme designed to provide financial turnaround and revival of power distribution companies.