Union Minister for Power and Renewable Energy RK Singh, after tabling the Electricity Act Amendment Bill 2022 in the Lok Sabha on August 8, has sent it to the Standing Committee on Energy for analysis.
The Union Government has said that if the Bill is passed to amend the Electricity Act, 2003, it will unify laws related to generation, transmission, distribution, trading, utilization of electricity, and development of the electricity sector and also reform the power sector. However, opposition parties are raising various objections to this bill.
Private Power Supply
According to the amendment brought in Sections 42 and 14 of the Electricity Act to give private companies the supply of electricity to consumers, it is said that by creating competition in the supply of electricity, consumers will be given the opportunity to choose their electricity supplier in the same way that they would choose their telephone or internet service providers.
As per the amendment of Section 42 of the Act, “An electricity distribution licensee may use the distribution systems of other licensees in the area of supply for supplying power through the system of non-discriminatory open access on payment of wheeling charges.”
However, the state governments are objecting by stating the reasons that how to give the system that has been created for so many years to the private sector, the fees offered by the private companies would not be enough, and there are more chances of cheating by the companies.
Free electricity and subsidized electricity are being provided in some states including Tamil Nadu. The current amendment bill does not directly mention the prohibition of free electricity. However, it insists on proper charging of electricity.
As per the amendment of Section 62, “the appropriate commission shall, for promoting competition among such distribution licensees, fix the maximum ceiling of tariff and the minimum tariff for retail sale of electricity”. In this, the state government will not be able to provide electricity at a lower price than the minimum tariff.
National Load Despatch Center
The National Load Dispatch Center, which was previously the organization regulating power distribution across the country, will now be the apex body to ensure the integrated operation of the power system in the country as per the amendment brought in Section 26 of the Act.
The power distribution system across the country will be under the National Load Despatch Centre. This system will regulate power distribution between different states and regions.
Further, it has been stated that every Regional Load Despatch Centre, State Load Despatch Centre, distributors, power generating companies, generating stations and sub-stations shall accept the orders issued by the National Load Despatch Centre.
Increase in Penalty Amount
As per the amendment to Section 142 of the Electricity Act, “when the appropriate committee is satisfied on a complaint made to it or otherwise that any person has contravened any of the provisions of this act or the rules made there under, the Commission may after giving such person an opportunity of being heard, by order in writing, direct that without prejudice to any other penalty to which he may be liable under this Act, such person shall be liable to pay a penalty, which shall not exceed one crore rupees for each contravention.
And if any regulation, direction or order issued by the appropriate committee is contravened, such person shall be liable to pay a penalty, which shall not exceed ten lakh rupees for each contravention and in case of a continuing failure with an additional penalty which may extend to sixty thousand rupees for each day during which the failure continues after contravention of the first such direction.”
According to Section 60 of the Electricity Act, “In case of issuance of licence to more than one distribution licensee in an area of supply, the State Government shall set up a cross subsidy balancing fund. Any surplus with a distribution licensee on account of cross subsidy or cross subsidy surcharge or additional surcharge shall be deposited into the fund.”
But in the case of private companies, they would be involved in power supply only in profitable areas including metros and cities. The state government will have to provide power supply to villages and agricultural areas. State governments feel that if profitable areas go to the private sector, they will not be able to provide benefits to other sections through Cross Subsidy.
The Electricity Act Amendment Bill 2022 has been sent to the Parliamentary Standing Committee for scrutiny. Meanwhile, opposition parties are raising objections that the bill is an attempt to privatize the power sector and transfer all power to the Union government. Moreover, electricity sector workers in many states are also protesting against the bill.