Proposed Amendments Of Electricity Act Aims At Promoting Transparency: R K Singh


The Minister of State for Power & MNRE, R. K Singh, held a Press Meet through Video Conferencing and underlined the importance of proposed reforms in the power sector, dispelling doubts and misinformation. He stated that the reforms are steps in the direction of making the sector consumer-centric as we are all here to serve them. Singh said, “ We are not taking away any powers of States in the appointment of members and chairpersons of State Electricity Regulatory Commissions (SERCs), and the proposed reforms are aimed at promoting more transparency.”


While giving clarity on electricity tariff fixation, the Union Power Minister stated that the powers of tariff fixation remain with SERCs. He emphasized that proposed power reforms are aimed at introducing transparency and accountability to protect the interest of consumers and ensuring the healthy growth of the power sector. He also mentioned that there are no restrictions on States for providing subsidy as States can give as much subsidy as they want but they must pay it upfront through Direct Benefit Transfer(DBT) so that Discoms remain healthy and are able to maintain and improve distribution infrastructures like transformers and distribution lines, pay for power purchased and are able to provide quality electricity to the people.

The Ministry of Power had prepared a draft proposal for Amendments in Electricity Act 2003 in the form of draft Electricity (Amendment) Bill 2020 with the following broad objectives which include Ensuring consumer centricity, Promoting Ease of Doing Business, Enhance sustainability of the power sector and Promote green power.

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The Ministry stated that some canards and misconceptions are being spread regarding some of the proposed amendments to the Electricity Act and It is important to place the correct position pertaining to them.

The Ministry clarifies that there is no proposal to take away the power of appointment of Members/Chairpersons of State Electricity Regulatory Commissions from the State Governments. As per the draft circulated the appointments of Members/Chairpersons of the State Electricity Regulatory Commissions will continue to be made by the State Governments. The proposed Selection Committee in the draft Bill has an equal number of members from the Central and State Governments as earlier. The only difference is that instead of the Selection Committee being presided over by a retired Judge of the High Court, it is proposed that the committee be headed by a sitting Judge of the Supreme Court. Instead of the multiplicity of Selection Committees, there is one Selection Committee for drawing up of panels for the vacancies in the Central Electricity Regulatory Commission and State Electricity Regulatory Commissions. 

The subsidy is now being proposed to be given into the account of the consumers maintained by the Distribution Companies through DBT. It is being provided in the new Tariff Policy that the electricity supply shall not be discontinued even if the State Government is unable to pay the subsidy in time or even if the State Government fails to pay the subsidy for 3 to 4 months. The Direct Benefit Transfer will be beneficial for both the State Governments and as well as Distribution Companies, Ministry added.

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Presently, the tariff is determined by the State Electricity Regulatory Commission and no change has been proposed in the present arrangement ministry said.

The other major amendments proposed in the Electricity Act are

Cost reflective Tariff: To eliminate the tendency of some Commissions to provide for regulatory assets, it is being provided that the Commissions shall determine tariffs that are reflective of cost so as to enable Discoms to recover their costs. 

Establishment of adequate Payment Security Mechanism for scheduling of electricity: It is proposed to empower Load Dispatch Centres to oversee the establishment of adequate payment security mechanisms before dispatch of electricity, as per contracts. In collective interest to put in place systems for ensuring timely payments, it is being provided that electricity shall not be scheduled or despatched unless the security of payment has been established.

Cross Subsidy: At present, the Act provides State Commissions to progressively reduce cross-subsidies as per the provisions of the Tariff Policy. 

Establishment of Electricity Contract Enforcement Authority: Ministry cleared that CERC and SERCs do not have powers to execute their orders as a decree of a civil court. An Authority headed by a retired Judge of the High Court is proposed to be set with such powers. This will enhance the sanctity of contracts and spur much-needed investment in the power sector.

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National Renewable Energy Policy: India is a signatory to the Paris Climate Agreement. It is therefore proposed to have a separate policy for the development and promotion of generation of electricity from renewable sources of energy, Ministry informed. It is being further proposed to levy penalties for non-fulfillment of obligation to buy electricity from renewable and/or hydro sources of energy.

Other amendments include Strengthening of the Appellate Tribunal, Cross border trade in Electricity and Distribution of sub-licensees.

The Ministry highlighted that the provisions relating to Distribution Franchisee already exist in the Act and are being successfully used by Distribution Companies to improve performance and enhance efficiencies.

The Ministry ensured that the Distribution Sub Licensee remains under regulatory control and jurisdiction to protect the interest of consumers.

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