Far-reaching amendments to Electricity Act 2003 may run into political roadblocks

The proposed amendments to the Electricity Act, 2003 through the Electricity Amendment Bill, 2014, has already attracted the ire of some state governments, as it will have deep impact on the Indian power sector.

“The key intent behind the amendments is to allow competition and better customer service without significantly increasing tariff,” Yogesh Daruka Partner, Advisory, Price Waterhouse Cooper Pvt Ltd (PWC) told The Hindu during an interaction. While the 2003 Electricity Act brought provision on open access, enabling power trading while de-licensing generation, the main objective of the he present set of amendments is to improve governance. It also aims at enhancing competition in distribution sector and strengthening grid safety. However, there are several sections that may run into hurdles with the state governments and the bill may not have an easy passage through the two Houses of Parliament.

Parliamentary Standing Committee has given its recommendations to the amendments and it is now ready for being placed before Parliament, it was learnt.

Legal ramifications

“Some are still wary of the legal ramifications of separating carriage from content and its impact on the average consumer and on consumer service” the PWC report on changing rules of Indian power sector : empowering the economy said. The report was released here at a recent Energy Conclave organised by CII. There is also provision of setting up a body to monitor the state electricity regulatory commissions, Mr Daruka said, adding that there is scope of superseding a state electricity regulatory commission. He said that the key amendments to the Act were separation of carriage and content, boosting renewable power generation through generation obligation (in addition to the present purchase obligation), provision for open access and tariff rationalisation.

Separation of carriage and content envisages significant reorganisation of the distribution and supply framework effectively separating power distribution from supply. This will provide for consumers having increased options in terms of choosing a supplier as more than one supply licensee can share space within a particular distribution area. This will encourage competition in the retail segment, the report said The report also dealt on coal sector developments saying that the recent auction has still left some questions unanswered. The need of the hour was to re-look at the existing mining practices prevailing in India.

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