Government Policies

KEY POINTS

Concerns with the amendments

·         Separation of content & carriage – It separates the infrastructure builder for power distribution to consumers and the licensee to supply electricity.

·         This would entail more than one electricity supplier in an area and consumer will have options to choose their preferred electricity supplier.

·         But, it may provide opportunities for private suppliers to cherry pick profitable locations and consumers.

·         The state owned incumbent supplier will be left with the obligation to serve low-paying consumers.

·         Eliminating Cross-subsidy – It is proposed to reduce cross-subsidy to 20% immediately and progressively eliminate it within three years.

·         This would lead to a huge increase in tariffs all across the country immediately.

·         Direct benefit transfer (DBT) – Breaking the cycle of subsidy and losses incurred by the discoms, it has introduced DBT in electricity.

·         However, identifying and targeting beneficiaries remains a major challenge.

·         Moreover, with these changes, the mechanism of support for poorer customers will shift from the electricity customer to the taxpayer.

·         Power shift – Presently, two of the three members of the electricity regulatory commissions are state government's choice.

·         The amendment proposes a six-member selection committee with only one state government nominee, four Central government nominees and one sitting Supreme Court judge.

·         In effect, the Central government will decide the constitution of all State Electricity Regulatory Commissions (SERCs).

·         The centre will also gain more oversight on capacity addition, through the requirement of detailed project report submission to the Central Electricity Authority.

·         Though the draft Electricity Amendment bill, 2018 proposes a slew of measures to bring transparency in power generation market and penalise faulty distributors, it leave the poor behind and shifts the power from states to centre.

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