Explained: Modi govt vs States, again! What’s Electricity (Amendment) Bill, 2021 & why it has triggered new power struggle

The states are also concerned with higher penalties for failure to RPO rule and the load dispatch provision.

The Narendra Modi government, which is already facing farmers and opposition’s ire over agri laws, is now facing stiff resistance over the Electricity (Amendment) Bill, 2021 even before it is introduced in Parliament. Such is the conception about the Bill and its provision that electricity unions across several states have staged a protest against it.

Except for some cities like Delhi, Ahmedabad and Mumbai, the power supply in most parts of the country is controlled by discoms at present. However, the state-owned firms have been grappling with losses and debts for several years and the government has to bring out several schemes to restructure their debts and incentivise them to reduce losses.

What are the Bill’s key proposals?

The Amendment aims to de-license power distribution and facilitate private companies’ entry allowing them to compete with state-owned power distribution companies (discoms). If the Bill becomes an act, it will allow consumers to select a distributor of their choice.

The Bill also entails de-licensing of the distribution business and bring in competition, the appointment of a member from a law background in every Commission, strengthening of APTEL (Appellate Tribunal For Electricity), and penalty for non-compliance of RPO (Renewable Purchase Obligation).

The Renewable Purchase Obligation is a tool that obligates entities (here power distribution utilities or discoms) to purchase a certain percentage of electricity from renewable energy sources, as a percentage of the total consumption of electricity. It also requires that Regional Load Dispatch Centres and State Load Dispatch Centres follow instructions by the National Load Dispatch Centre.

What are the key concerns raised by state governments?

According to an Indian Express report, several states have expressed concern that private players’ entry could lead to ‘cherry-picking’. This means the private distributors may choose to supply electricity only to commercial and industrial consumers and may shun residential and agricultural consumers. This will be detrimental to state-owned discoms who will be left only to serve residential and agricultural needs.

Recently, in a letter to Prime Minister Narendra Modi, Mamata Banerjee said that the proposed amendment would lead to a ‘concentration of private, profit-focused utility players in the lucrative urban-industrial segments while poor and rural consumers would be left to be tended by public sector discoms’. She said that the Bill is anti-people and will promote crony capitalism. The states are also concerned with higher penalties for failure to RPO rule and the load dispatch provision.

Shiv Sena MP Sanjay Raut had also criticised the Bill saying it rings ‘a danger bell’. He had said that the Centre’s Electricity (Amendment) Bill is not in the interest of the country. He said that discoms will be adversely impacted if the Bill gets passed.

Power sector employees in Madhya Pradesh and Uttar Pradesh have also raised their voices against the Bill. According to the All India Power Engineers Federation, power sector employees in Uttar Pradesh have threatened to go on strike or no work protest on August 10 against the Bill. The PTI reported citing officials of All India Power Engineers Federation and National Coordination Committee of Electricity Employees & Engineers (NCCOEEE) that they have urged MPs of different political parties to vehemently oppose the Bill in Parliament. Last week, Power sector workers stages a four-day long Satyagraha at Jantar Mantar in New Delhi to protest against the Bill. The protest was held on the call of the National Coordination Committee of Electricity Employees & Engineers (NCCOEEE).