The proposal, to separate electricity supply and network maintenance services, has been in works for last many years.
NEW DELHI: The government plans to give electricity consumers the freedom to choose the supplier by enacting a new law that will bring the long-awaited system similar to mobile number portability.
It plans to table the necessary bill in the winter session of Parliament that begins in the third week of November, although it has faced resistance from states. Several state distribution companies are keen to protect their monopolistic position, without which consumers can shift to the suppliers they trust.
The new bill will usher in competition, which analysts say will attract investors apart from giving consumers reliable supply at affordable rates and reducing losses.
"It will provide the biggest platform for investors to get into Indian utility business which has 250 million customers providing choice and facilities to customers. Clear road maps were drawn on its implementation in 2014. Heartening to note government is pushing a transformational legislation," Sambitosh Mohapatra, Partner, Energy & Utilities at PwC said.
This will also improve the financial health of the sector, he said. "To ensure Uday-related targets are achieved on the ground, segregation of content and wires along with competition in content business is necessary."
Officials said that to address the concerns of the states, the bill may not impose timelines for implementation.
The states may, however, be asked to notify their plans for implementation of the reform for electricity connection portability in the next 3-5 years, he said.
The proposal, to separate electricity supply and network maintenance services and introduce multiple licensees for a single area by amending the Electricity Act 2003, has been in works for last many years.
The proposal is similar to mobile number portability where consumers can switch to a telecom operator of their choice. Currently, the power distribution utilities are responsible for operating and maintaining distribution system in their licensed areas.
"Though the proposal will benefit consumers by bringing competition in the retail electricity sector, it has been resisted by the states. So the government is considering introducing a lenient version of the bill with no timelines imposed on states," a government official said.
Once the bill is enacted, the central government, however, may ask states to notify their plans to implement the law, he told ET on the condition of anonymity.
Segregation of the network maintenance and electricity distribution businesses is seen as an important reform for improvement in quality of electricity supply services.
Earlier the government had planned specific timelines for opening up the retail electricity sector. These included reaching milestones like implementation of advanced metering system, separate accounts and employees of distribution companies, ownership separation and introduction of multiple licensees and de-regulating tariffs for large industrial consumers.
