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Opposing Draft Electricity (Amendment) Bill, 2020

  • 16 Jun 2020

  • Recently several states like West Bengal, Punjab, Puducherry, Kerala, Rajasthan, Jharkhand, Chhattisgarh, Maharashtra, Delhi, Telangana and Andhra Pradesh have voiced their concerns against the proposed bill.

Why the Bill is being opposed?

  • According to the states, the proposed Electricity (Amendment) Bill undermines India’s federal structure and attempts to privatise distribution could be the next flashpoint between the government and the Opposition.
  • The amendments will take away the autonomy of state-owned discoms and state electricity regulators.
  • One of the sweeping changes proposed in the Bill is an end to subsidies. All consumers, including farmers, will face a crisis if the subsidy on electricity given to them for irrigation is not continued and thereby, it will affect the production of food grains.
  • The Seventh Schedule of the Constitution provides powers to both the Centre and states to make appropriate laws on matters related to electricity.
  • But the proposed amendments will “centralise power” and make “states weaker in the matters related to power sector.
  • The draft “divests” the States of their power to fix tariff and hands over the task to a Central government-appointed authority.
  • This is discriminatory, since the tariff can be tweaked according to the whims and fancies of the Central government.
  • Further, the proposed provision makes it compulsory for the State power companies to buy a minimum percentage of renewable energy fixed by the Centre. This would be detrimental to the cash- strapped power firms.

About Draft Electricity (Amendment) Bill, 2020

Following are major changes that this Amendment proposes to introduce in the Electricity Act, 2003:

Policy Amendments

  • Renewable Energy: It seeks to promote a legal and administrative eco-system which harbours special attention to renewable energy. It delegates the Central Government with the power to prepare and notify a National Renewable Energy Policy “for promotion of generation of electricity from renewable sources”, in consultation with State Governments. It must be noted that the Amendment seeks to give special attention to hydro power.
  • Cross Border Trade: The Central Government has been delegated with the power to prescribe rules and guidelines to allow and facilitate cross border trade of electricity.
  • Electricity Contract Enforcement Authority: The Amendment has inserted a new chapter in the Act which prescribes the creation and functioning of the Electricity Contract Enforcement Authority. The Authority has been proposed to be given sole jurisdiction to adjudicate upon matters on performance of obligations under a contract regarding sale, purchase and transmission of electricity, which exclusion of this specialized authority’s jurisdiction on determination of tariff or any other dispute regarding tariff.

Functional Amendments

  • Payment Security: Lack of payment security mechanism has created a large pool of unpaid dues. To disrupt any future trickle down of such unrealized revenues, this Amendment proposes a mechanism wherein “no electricity shall be scheduled or dispatched under such contract unless adequate security of payment as agreed upon by the parties to the contract has been provided.
  • Constitution of Selection Committee to Recommend Members for Commissions/ Authorities: There are a slew of provisions for the constitution of a Selection Committee for making recommendations of members to the Appellate Tribunal and the Chairperson and Members of Central Commission, Electricity Contract Enforcement Authority, State Commissions and Joint Commissions.
  • Grant of Subsidy Mandated: The benefit of subsidy to be granted directly to the consumer and the licensee shall charge the consumers as per the tariff determined by the Appropriate Commission. The determination of tariffs shall be fixed by the commission without accounting for subsidies. Further, basis the tariff policies, surcharges and cross subsidies shall be progressively reduced.
  • Time Limit for Adoption of Tariff: It has prescribed a period of 60 days to adopt the determined tariffs. Failing such timeline of 60 days, the tariff would be deemed to be accepted. Such deemed acceptance is a good method to not allow red-tapism to impact the functioning of the sector.
  • Inclusion of Distribution Sub-licensee and Franchisee: To ease the burden of distribution licensees and in order to promote some form of demographic specialization, the distribution licensees, can appoint another entity for distribution of electricity on its behalf, within its area of supply.
  • Enhancement of Powers of The Appellate Tribunal of Electricity: APTEL is proposed to have the powers of a High Court to deal with wilful disobedience of persons and entities under the Contempt of Courts Act, 1971. Additionally, any person can appeal the decisions of the Authority which is introduced by this Amendment in front of the APTEL.
  • Applicable to the Whole of India: It is needless to mention, that in addition to the above mentioned broad themes that the Amendment seeks to cover, the Act shall now be applicable to the territory which was erstwhile exempted from the State of Jammu and Kashmir.