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Current Affairs

Electricity Amendment Bill, 2021

Date: 11 August 2021 Tags: Bills & Laws

Issue

The Electricity Amendment bill, 2021 of the centre is facing opposition even before introduction in the parliament.

 

Background

Many state governments, including West Bengal  have asked the centre not to introduce the bill in the parliament.

 

Details

  • The bill will deregulate electricity distribution sector and allow private companies to compete with state-owned distribution companies (DISCOMS).

  • This would give options to the consumers to choose the distribution company they want without relying on inefficient state owned ones.

  • At present many private distribution companies exist in major cities such as Delhi, Mumbai, and Ahmedabad. But these are exceptions.

 

Need for private distribution companies

  • Government-owned DISCOMS are suffering from large debts and losses. The government had introduced many schemes to restructure their loans without success.

  • Scheme such as UDAY brought temporary respite to the sector but they still are relying on government funds to stay afloat.

 

Objections to de-licensing

  • There is a fear that private players will cherry pick supply targets in form of industrial and consumer players who pay high tariffs.

  • They may not provide supply for domestic and agricultural consumers as the margin for profits are low due to low rates.

  • Poor and unaffordable consumers will be on the mercy of public distribution companies, which may not be efficient as they lose commercial revenue to private players.

  • Higher penalties will be levied on companies who fail to meet Renewable energy Purchase Obligations (RPOs).

 

Addressing concerns

  • There can be a universal service obligation agreement by private players to supply power to agricultural as well as domestic users to prevent cross subsidy.

  • There is a plan to define the minimum area to be covered by private sector competitors to include a universal service obligation and also ceiling subsidy.