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A Commentary On The Electricity (Amendment) Bill, 2014

Author(s): Prayas (Energy Group) Publication Date: February, 2015

The Electricity (Amendment) Bill, 2014 was introduced in the Lok Sabha on December 19, 2014 by the Minister of Power. The Bill seeks to amend the Electricity Act, 2003. Amongst the various changes that the amendment proposes, following seem to be the major thrust areas:

  • Introducing carriage and content separation, i.e. segregation of wires and the supply business
  • Further enabling open access, competition and markets
  • Greater impetus for renewable Energy
  • Greater accountability of the regulatory institutions

Amending the Electricity Act 2003, which is the central act governing the power sector structure and policy, is a crucial exercise with far reaching and long terms implications. It also is an opportunity to change the course of the policy direction, design and implementation, to address the critical issues currently faced by the sector. Therefore, while undertaking such a process it becomes extremely important to assess the immediate as well as long term challenges before the sector. Also, given the nature and extent of the changes that the amendment seeks to bring out, it was critical to have a larger framework to understand how and why these are useful and needed in the context of present challenges and past experience.

Unfortunately, there is no such background material that elaborates on the aims and objectives of the amendment or explains the analysis and reasoning behind introducing the new sector structure that it wants to create. In the absence of such background material, one is constrained to infer based on the limited insight provided by the statement of objects and interpretation of the proposed bare Act itself. Also, often it is not just the Act, but the associated policy formulation that lends clarity and helps to understand the broader policy vision. In this context, it was crucial to have drafts of the associated policy documents also in the public domain along with the proposed amendments. This would have helped to fully understand the policy direction, long-term objectives and the possible alternatives that have been considered for dealing with the potential implementation challenges. Unfortunately, though the amendment relies on several important issues to be dealt with through policy formulation, the same not being in public domain, makes it difficult to understand how exactly implementation is envisaged. This naturally puts serious limitations on undertaking a comprehensive analysis of the broader scheme of things proposed by the amendment, but cannot be helped in the present context.

It is with such limitations and constraints that this commentary puts forth a preliminary analysis of the key changes being proposed, their implications based on experience of the past ten years of the 2003 act implementation, along with a few alternativs and suggestions.

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Comments  

#2 Guest 2015-02-08 22:07
I think a very lucid and detailed commentary. My congratulations to the Prayas team for a very useful discussion. I personally feel the distinction between 'distributor' and 'supplier' is a far reaching amendment. This is consistent with the provisioning UK and may help usher in competition, efficiency and investment. If the Distributor gets protected against losses owing to theft, poor collection of dues and faulty pricing policy it will lead to greater investment in wire sector. The 'supply' business is subject to better implementation, political support and efficiency. I would also recommend that Prayas offer some views on whether these measures will lead to greater 'demand' for electricity. The discussion states upfront that there is excess capacity being created which may block public funds. We also know that 300 million people dont have access and then there is poor purchasing power. Could Prayas de-mystify this elephant in the room situation so that there is a rise in per capita
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#1 Guest 2015-02-06 13:27
the amendment is an attempt to push through throat of every state FRP proposals ,which majority of the states decline to accept. privatisation of distribution system in favour of private generators to have outlet retail store.in this context even the captive generation also targeted. the limited insight as rightly mentioned is intentional not erroneous. target is the market facilitation not social objective..gand hi--power engineers society of tamilnadu
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