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Comments and suggestions on the Proposed Amendment of the Electricity Act, 2018

Author(s): Prayas (Energy Group) Publication Date: November, 2018

The Ministry of Power published draft amendments to the Electricity Act, 2003 on the 7th of September 2018. Previous to this, a bill to amend the Act was introduced in the Lok Sabha on December 19, 2014. Our commentary on this bill is available here 

The proposed amendments have several provisions to account for the flux in the sector and shed light on the direction of reforms being contemplated by the Ministry of Power. Some of the major changes suggested seem to be:

  • Introducing carriage and content separation
  • Development of markets with greater impetus of open access, captive and market instruments
  • Commitment to supply 24x7 power and ensuring power procurement for the same
  • Increased accountability for institutions especially Electricity Regulatory Commissions
  • Elimination of cross subsidy surcharge and cross subsidies
  • Mandating use of DBT for all electricity subsidies
  • Increasing role of the central government in the concurrent decision making processes in the electricity sector
  • Mandating the National Tariff Policy instead of it being a guiding document

Given uncertain demand, rising cost of supply for utilities, significant pressures on utility finances and the emergence of several alternative options of supply for cross-subsiding consumers, several structural and institutional changes are required. Considering the varied impacts, possible ramifications and disparities in state-level realities, it is important that these changes are consistent and are introduced in a calibrated, planned manner while preserving the concurrent nature of the sector decision making. Our comments and suggestions to help the sector prepare for an uncertain future are written keeping this context in mind.

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