Amendment Bill in The Electricity Act-2003

The amendment to electricity Act 2003 was presented in the parliament on 19th December 2014. It is expected that the amendment will bring the desired reforms in the Indian electricity sector. The Government had earlier expressed its interest of bringing amendment in the Electricity Act 2003 along with the introduction of the Renewable Energy Act, which mandates RPO compliance to 10%.

The Electricity (Amendment) Act Bill has been presented in the parliament by the government. The main highlights of the proposed bill are as below:

1. The Concept of multiple distribution licensee should be introduced, meaning that a consumer will have multiple options in regard to choosing its electricity supplier.
2. The amendment proposes separation of the carriage and content business. Some companies will own the wire business while the other electricity suppliers or distributors will pay a specific fees to them.
3. The regular and timely revision of electricity tariff will be made mandatory under the proposed amendment bill. If the electricity suppliers do not approach the Regulatory Commissions seeking revision in tariff, the Commission shall reserve the rights to do so at its discretion.
4. The Bill also proposes the concept of Inter-state Open Access, meaning that any power generator can sell the surplus power generated within a state to entities outside the generating state.
5. The amendment proposes that the Regulatory Commissions can initiate Suo-motu proceedings to determine the rate in case a utility/generating company doesn’t file its petition on time. This will empower the Regulatory Commissions to take action on tariff determination and revisions at the right time.
6. The amendment also proposes that the central government will be vested with power of imposing penalties of up to Rs. 1 Crore on entities violating norms under the Electricity Act, which was previously Rs. 01 Lakh.

The proposed changes is expected to not only promote competition among various stakeholders, but also improve efficiency in operations and quality of supply of electricity, as private electricity suppliers will focus on higher efficiency. Such models have already been implemented in cities like New Delhi and Mumbai, with considerable improvement in quality and reliability of supply.

Promotion of Open Access will induce more competition resulting in Consumer-oriented market and lowering of electricity tariffs, unless the Commission decides otherwise at the state level. The regular and timely revision of Discom tariffs has been a major concern of correction, since losses or gains are linked with it to a great extent. This amendment proposes to address the issue on a stringent note. Defining timelines for tariff petitions and tariff revisions will significantly reduce political influence on electricity tariffs, especially when elections are near.

In contrast to the points mentioned above, the amendment bill may entail a lot more reforms to address current issues in the Indian Power sector, not undermining the Renewable Energy Sector, which has been a major focus area of the newly formed government. Grid operations, Scheduling of Renewable Power, Grid Connectivity, 100% Rural Electrification, Incentives for clean energy, may also find a mention in the amendment.

A big slice of market, including the power and the banking sector, looks forward to see how the amendments, when they come into effect, impacts the sector, as all stakeholders want to reap the benefits of the much awaited change in the Power arena.


Analysis:

The amendment bill in the electricity act-2003 will boost the power sector in India.Presently,in distribution segment there is not much of competition.If the amendment bill will pass from both(Lok sabha and Rajya sabha) then there will be a seperate carraige and content type.Many players will take part in content business.Due to this consumers will have many choices.Then there comes Inter-state open access.Open access was introduced in electricity act 2003.But proper policies for open access is not there.At last when we talk about tariff revision in India,then it is said that many states are not implementing properly.So from my point of view,I have lots of expectation from amendment bill of EA-2003