Power users may soon get to choose supplier

Source: Live Mint

Relevance: Electricity amendment bill 2021 will improve energy efficiency and consumer protection.

Synopsis: Electricity (Amendment) Bill, 2021 is a landmark bill to reform power distribution. The Landmark Electricity (Amendment) Bill, 2021 is expected to be introduced in the monsoon session of the parliament.

Provisions of the Landmark Electricity (Amendment) Bill, 2021

Source: Live mint
  • Aims of the bill
    • To de-license power supply to increase competitiveness.
    • Allows multiple distributors in the same area
    • Gives consumers the option to switch power suppliers.
  • The bill also proposes appointing a member with a legal background in every electricity regulatory commission and strengthening the Appellate Tribunal for Electricity (Aptel).
  • It also spells out penalties for any failure by power distribution companies to meet renewable purchase obligations. Discoms are required to buy a fixed amount of renewable energy to reduce their reliance on fossil fuels.
  • In addition, the Electricity (Amendment) Bill also lays down the rights and duties of electricity consumers.

What needs to be done further to improve the electricity market?

  • Apart from the above-said reforms, issues related to high levels of cross-subsidy, losses, and poor infrastructure will also need to be resolved.
  • The success of de-licensing or retail competition will critically depend on its ability to address the core issues relating to
    1. the high level of cross-subsidies in retail tariffs;
    2. inefficiencies in the form of T&D (transmission and distribution)/ AT&C (aggregate technical and commercial) losses; and
    3. poor state of T&D infrastructure
  • Imposition of restrictions to address existing tariff distortions or imposition of universal supply obligation on new suppliers would defeat the objective of creating a market-driven industry structure.

India has an installed power generation capacity of 383.373GW, the demand has usually been lower than 200GW. However, this changed on 7 July when India’s peak electricity demand breached the 200GW mark. And this (electricity demand) gives us the space to carry out energy transition which otherwise would have been difficult.

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