The amendment to the Electricity Act is likely to change the business dynamics for the power distribution companies. Touted as the next generation reforms in the power sector, it would not only give the choice of supplier in the hands of small consumers but also allow discoms to procure power from their own renewable energy plants to meetRenewable Purchase Obligation (RPO).
The Union Cabinet on Wednesday cleared the changes in the Act. Union power minister Piyush Goyal earlier this week said the Bill for amendment would be tabled in Parliament next week.
Aimed at creating a competitive market for retail buyers, open access would now allow consumers of less than 1 mw to choose their supplier. Under the Electricity Act 2003, consumers with more than 1 mw demand can change their distribution company.
Besides, power generators, too, would be allowed to sell surplus power outside a state. “Opening up the sector would make sure that the supply of power is in line with the market realities,” said an executive in one of the distribution companies. Currently, state governments can appeal to the regulator to stop such a sale in "extraordinary circumstances".
Distribution companies in other states are unable to freely procure such power. "We end up scheduling costly power which has pushed us to the wall. Banks have also withdrawn any support from the discoms,” said a senior executive of Delhi-based private power distribution utility. The distribution industry owes Rs 13,000 crore as dues to the generators.
A major breather for the distribution sector is also the separation of content and carriage business. This entails that building infrastructure for power supply and the supply of power would be two different business entities. Besides, any power supplier could use the infrastructure.
The Bill has also an important insertion imposing ‘duty to connect, supply to request’, wherein last-mile supply would be done keeping in mind the economics and viability. “In most of the developed markets, the carriage business is controlled by the regulator and content i.e. power supply is market driven within a price band,” said the executive. With separate business, the onus of the development of the network would rest with the carriage provider.
Discoms from across the country have written to the ministry of power seeking clear demarcation of duties and responsibilities for content and carriage.
The cash crunched discoms have always cited their financially stressed state as the reason for not complying with the renewable purchase obligation (RPO), have now been asked to generate renewable power to meet their targets. The Act proposes a National Renewable Energy Policy and a new ‘Renewable Generation Obligation (RGO)’.
A discom head said that the sentiment among the Indian consumer is that power should be cheap. “All consumers think they are burdened with costly power whereas the discoms struggle with recovering their cost. In a situation like this, unbundled distribution sector helps all,” said the executive.
The Union Cabinet on Wednesday cleared the changes in the Act. Union power minister Piyush Goyal earlier this week said the Bill for amendment would be tabled in Parliament next week.
Aimed at creating a competitive market for retail buyers, open access would now allow consumers of less than 1 mw to choose their supplier. Under the Electricity Act 2003, consumers with more than 1 mw demand can change their distribution company.
Besides, power generators, too, would be allowed to sell surplus power outside a state. “Opening up the sector would make sure that the supply of power is in line with the market realities,” said an executive in one of the distribution companies. Currently, state governments can appeal to the regulator to stop such a sale in "extraordinary circumstances".
Distribution companies in other states are unable to freely procure such power. "We end up scheduling costly power which has pushed us to the wall. Banks have also withdrawn any support from the discoms,” said a senior executive of Delhi-based private power distribution utility. The distribution industry owes Rs 13,000 crore as dues to the generators.
A major breather for the distribution sector is also the separation of content and carriage business. This entails that building infrastructure for power supply and the supply of power would be two different business entities. Besides, any power supplier could use the infrastructure.
The Bill has also an important insertion imposing ‘duty to connect, supply to request’, wherein last-mile supply would be done keeping in mind the economics and viability. “In most of the developed markets, the carriage business is controlled by the regulator and content i.e. power supply is market driven within a price band,” said the executive. With separate business, the onus of the development of the network would rest with the carriage provider.
Discoms from across the country have written to the ministry of power seeking clear demarcation of duties and responsibilities for content and carriage.
The cash crunched discoms have always cited their financially stressed state as the reason for not complying with the renewable purchase obligation (RPO), have now been asked to generate renewable power to meet their targets. The Act proposes a National Renewable Energy Policy and a new ‘Renewable Generation Obligation (RGO)’.
A discom head said that the sentiment among the Indian consumer is that power should be cheap. “All consumers think they are burdened with costly power whereas the discoms struggle with recovering their cost. In a situation like this, unbundled distribution sector helps all,” said the executive.
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