What Electricity (Amendment) Bill 2022 seeks to do and why it is raising concerns

The Electricity (Amendment) Bill 2022 proposes some significant changes in the area of power distribution in India.

The bill seeks to introduce an array of legislative steps aimed at ending distribution monopolies. It covers several critical issues, the most important of them being the major structural change to allow multiple distribution companies to function in any territory. This is a step aimed at giving consumers the option to choose their electricity supplier.

The bill has triggered protests in several quarters, with the All India Power Engineers Federation threatening a strike in the event of the govt making any unilateral effort to pass the bill in Parliament.

First, here is what all the bill seeks to do:

How consumers & suppliers may benefit

• To be able to choose own power supplier would be a major empowerment for consumers.
• The stipulated 90-day time to regulators for approval of application means regulators can no longer sit on applications for licences.
• Power regulators will set electricity tariffs every year, which will bring in dynamic prices based on emerging situations.
• Regulators being able to implement orders as a decree of the civil court will mean better and more timely compliance.
• The provision to remove regulatory body members for wilful violation/negligence will lead to better implementation of rules and processes.
• The move to promote green energy will help India meet its commitments.

Concerns being raised:

• The bill proposes that existing PPAs be shared between the different retailers in an area. According to experts, simple measures in this aspect will lead to suboptimal outcomes, which might raise costs.
• Subsidies will require taking difficult political calls.
• A large number of new retailers are likely to come up post the bill's implementation. Regulators could have their hands full.
• Commercially lucrative zones would have many retailers setting up shop. Not-so-lucrative zones are likely to remain underserved.
• Some have alleged that the new bill is an underhanded attempt at privatisation.
• Some have raised the bogey of possible predatory pricing.
• States likely to oppose tooth and nail as they stand to lose control over regulatory bodies.
• Some are viewing it as too much intervention by the Union govt.
• According to some experts, stopping power supply to defaulting discoms may lead to disruptions and grid instability.