The government dismissed all concerns and sent the bill to the parliament’s standing committee for its suggestions.
What is the bill about?
The bill will allow consumers to select their choice of electricity distributor and will also open up space for more suppliers who will now be able to use the existing supplier’s distribution infrastructure. It also allows the presence of more than one distributor in an area. This will inject some much-needed competition into discoms, boosting their efficiency.
The bill states that regulators will set a minimum price cap to prevent discoms from offering unrealistic prices to chase rivals and will also cap the maximum price to protect customers. The bill also provides for the automatic granting of a license to an entity after a period of 90 days if the regulator does not approve or reject the application within that period. Regulators will have civil court status and can enforce compliance by issuing orders.
The bill establishes rules for appointments and removals from the regulatory body. It also proposes that if a state commission is unable to perform its duties, the center may, in consultation with the state, temporarily assign the duties to other state commissions or joint commissions so that the work may continue. without hindrance.
The bill also encourages the use of green energy and aligns the states’ vision with that of the center.
The changes are largely desirable and driven by the urgency in the power distribution sector – the weakest link in the electricity sector.
What are the problems in discom difficulty?
States have accumulated heavy debts due to the subsidies they provide to low-income consumers. According to a report by news agency PTI, total unpaid dues owed by discoms to power producers increased by 4% year-on-year to reach Rs 1,32,432 crore in June 2022. Discoms owed a total of Rs 1,27,306 crore to power generation companies in June 2021.
According to data from the Office of the Chief Economic Adviser (CEA) and reported by Business Standard, Indian states and union territories (UTs) owe over Rs 1 trillion to gencos.
Why are there protests?
Protesters say the bill will allow private players to cater only to profitable industries and commercial consumers, leaving large areas unattended with only government-owned discoms forced to meet the electricity needs of the rest.
Electricity workers say state-owned companies will turn into loss-making companies and lose leverage to buy power from gencos or maintain infrastructure.
The farmers’ unions believe that the subsidies given to them will eventually come to an end because of the bill which will introduce competition into the sector and that private actors will aim for profits.
The Center, meanwhile, rejected the claims even as it agreed to broader consultations on the bill which raised objections even from parties considered pro-BJP like the YSRCP and BJD.
Energy Minister RK Singh said the Center was not privatizing the electricity sector, but “opening the door” to competition. He said the existing discoms would continue as they are.