Amendments in electricity bill detrimental to power sector

Amendments in electricity bill detrimental to power sector
Saturday January 31 2014

The amendments proposed in Electricity (Amendment) bill 2014 have far reaching changes and are detrimental to the power sector of the country.
The All India Power Engineers Federation (AIPEF) submitted its Views and suggestions of on the Electricity (Amendment) bill 2014 for consideration of the standing committee on energy.
The proposal of separation of carriage from content and consumer choice was introduced in United Kingdom under ideal conditions and even then it took 10 years to complete and in contrast the conditions are totally different and adverse
In the Indian scenario. There were 14 Regional Distribution and Supply Companies in operation at the time of privatisation in 1990-91.
In UK there was surplus of power generation capacity with no transmission constraints. The distribution sector in good financial health, AT&C losses at low levels and all consumers were having electrified households. In contrast in India there is shortage of generation capacity with transmission constraints, Distribution networks are inadequate and overloaded and about 80 million households without electricity with distribution companies financially sick.
AIPEF has quoted a recent report of a sub group of the forum of regulators on strategy for providing 24X7 power supply. The report claims that reliable 24 X 7 power supply to all consumers and 8 to 10 hours power supply irrigation pumps to be achieved by 2018-19.
The report says that total investment in distribution sectors estimated at Rs. 5.27 lakh crore. This comprises of investment in transmission estimated at Rs. 3.2 lakh crore and with 80 million un-electrified households, investment of Rs. 1.6 lakh crore required for electrifying all the households. Feeder separations and improvement required an estimated Rs. 1.67 lakh crore and for catering to load growth and reduction of AT&C loses, Rs. 1.75 lakh crore required.
The process of separating carriage from content i.e. wires business from supply business will start with the high end consumers of 1 MW and above. These consumers are the subsidizing category which enables the domestic/ rural and agricultural rates to be lower. The exit of large industrial consumers from the State Discoms to the private sector suppliers will adversely impact the financial viability of the State Discoms and further deteriorate their financial health.
The practical impact of proposed amendments will be inability of the State Discoms to make investments for extending power supply to 80 million un-electrified households and making it impossible to achieve the Govt. of India objective/ target of 24×7 supply for all consumers by 2018-19.
The biggest problem is that the Discoms have not been able to meet their revenue requirements leaving an uncovered revenue gap. However, in the proposed mendment, there is a clear safeguard for ensuring the recovery of revenue without any revenue gap apparently to cover the risks of the supply licensees. There is a clear discrimination since up to now from 2003 up to 2015, the revenue gaps of State Discoms and utilities have remained largely uncovered.
It is extremely anomalous that while the objective of National Electricity Policy With respect to power for all by 2012, with respect to financial turn around and Commercial viability and minimum life line consumption of 1 unit per household per day. Now Government is proposing the amendment to Electricity Act 2003 by which the supply function would be separated from network function so that the large industrial consumers can get further benefits.

The existing provision is that the Regulatory Commission will be guided by the National Tariff Policy whereas the amendment proposed makes the provision of tariff policy mandatory and binding. AIPEF request for an extension of 15 days for submission of further detailed comments before the committee


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