Electricity (Amendment) Bill, 2021 PDF : Pros and Cons of the Bill 2021

The Bill is a rehashed version of one the central government has been trying to pass in Parliament since 2014

The Electricity (amendment) Bill, 2021 is expected to be introduced during the short-term monsoon session of Parliament (scheduled to conclude on August 13, 2021), and is expected to have a swift passage. Many believe this will help to turn the power sector around.

The distribution of electricity is quite revolutionary within the power industry. Even after 25 years of reforms, the electric distribution companies are not in good financial health, so they are not able to pay for generation and transmission services, as well as banks. It will be very difficult to resurrect the power sector through patchwork in this case, and an all-encompassing strategy is required.

Pros

At least in theory, the newly liberalised regulations give customers the ability to select an electricity distributor in their locale. There is a government corporation to manage a government-funded obligation fund, which will assist with all essential telecommunications services.

In the event of any shortfall in cross-subsidy, this fund will be used to cover the expenses. If customers are getting their supply through prepaid metres, they won’t have to pay a security deposit.

The appeal tribunal has seen an increase in the number of members. The officials from each of the regulatory commissions’ respective domains are described.

To help reach national renewable energy targets, the control of setting RPOs has been moved from state commissions to the federal government.

The role of load despatch centres is gaining prominence as more and more generators of variable output are connected to the grid.

While, disputes over the power transmission are also rising, regulatory commissions are taking on the task of resolving those controversies as well.

It was said that the regulatory commissions were “toothless tigers,” but they have now been strengthened. Their commands can now be enacted as orders including property attachments, arrests, and imprisonment.

The member of the commission will ensure that their powers are used appropriately and as a result, enforcement will be improved.

Breaking the law will cost one million rupees, now. Non-compliance with RPO may result in stiff penalties, as specified in the planned changes.

Cons

Power companies collect payments from customers and use that money to pay the providers. However, they have failed to recover their costs, and approximately 75-80% of these costs were for the purchase of power.

The Forum of Regulators recently released a report on tariff’s cost elements and suggested methods to reduce it. In addition, there is no regulatory action to raise coal prices or reduce the cost of shipping.

This rise has exceeded both the rise in the Wholesale Price Index and the Retail Price Index. The amendment bill provides no way to help balance power production and distribution companies’ profit margins while reducing the already massive expense of unused power.

According to the distribution utility forum, the AT&C losses of twelve states were more than 25%, and of six states, they were between 15 and 25%, based on data gathered via the Uday dashboard in 2020.