The amendment to electricity Act 2003 was presented in the parliament on 19th December 2014. It was expected that this amendment will bring about big reforms in the electricity sector.

The Government had earlier expressed its intention of bringing amendment in the Electricity Act 2003 along with the introduction of the Renewable Energy Act.

The amendment of The Electricity Act has been presented in the parliament by the government. The mains highlights of the proposed amendment are as below:

  1. The Concept of multiple distribution licensee will be introduced, meaning that a consumer will be have multiple options with regards to choosing its electricity supplier.
  2. The amendment proposes to separate the content and carriage business. Some companies will own the wire business while the other electricity suppliers or distributors will pay a specified fees to them.
  3. The timely revision of electricity tariff will be made mandatory under the proposed amendment. If the electricity suppliers do not approach the Regulatory commissions seeking revision in tariff, the commission will have the right to do so at its discretion.
  4. The Bill also proposes that a power generator can sell the surplus power generated within a state to entities outside it (Inter-state Open Access).
  5. The amendments 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 revision at the right time.
  6. The amendment also proposes that the central government will have power of imposing penalties of up to Rs. 1 Crore on entities violating norms under the Electricity Act.

The proposed changes will also promote competition, efficiency in operations and improvement in quality of supply of electricity, as private electricity suppliers will focus on bringing efficiency. But such models have already been experienced in some cities like Delhi and Mumbai, without much improvement. Promoting Open Access will induce more competition resulting in higher efficiency and competitive electricity prices, unless the commissions decide otherwise at the state level.

The timely revision of Discom tariffs has been a major area of concern, since losses or gains are linked with it to a greater extent. This amendment proposed to address the issue on a stricter note. Fixing timelines for tariff petitions and tariff revisions will significantly reduce political influence on electricity tariffs, especially when elections are round the corner.

Apart from the points highlighted above, the amendment might entail a lot more reforms to address current issues in the Power sector, not undermining the Renewable sector, which has been a major focus area of the new government. Grid operations, including Scheduling of Renewable Power might find a mention in the amendment.

It is to be seen how the amendments, when they come into force, impact the sector, as all stakeholders would want to foresee the commercial and operational implications in the longer run.

The related news articles can be read in the links below:

Economic Times

Business Standard