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These are the issues in India's new electricity laws, according to a non-profit think-tank

Jun 11, 2020, 09:01 IST
Power Line GridsUnsplash
  • In a letter for the Ministry of Power, CUTS explained various parts the government needs to reconsider before making amendments in the Electricity Act, 2003.
  • Referring to the provision in the draft bill for the direct benefit transfer of subsidy to be provided to consumers it said, the amendment is not in favour of the lower class as they “will have to pay from their own pocket first.”
  • CUTS believes the government’s move to empower the National Load Despatch Centre (NLDC) to be the authority responsible for monitoring grid operations provides “the NLDC wide ambit of powers without fixing much responsibility and accountability.”
The union government proposed major amendments in the Electricity Act, 2003 with a “good intention,” according to Consumer Unity & Trust Society (CUTS) International, a leading think-tank working on economic and public policy issues. However, the non-profit think-tank pointed out various issues in the draft of the bill, which looks for reforms such as centralisation of power, distribution franchise and subsidy for customers.

In a letter for the Ministry of Power, CUTS explained various parts where the government seeks amendment in the act.

Direct Benefit Transfers to impact poor pockets

The current draft of the bill proposes to move away from the tariff for the viability of Electricity Distribution Companies (DISCOMs) to Direct Benefit Transfers (DBT) to the consumers similar to the LPG cylinder segment.

However, according to CUTS, it does not give clarification on whether the subsidy will be transferred to the consumer bank account or will be provided to the electricity providers to be transferred to consumer accounts.

While referring to the provision in the draft bill for the direct benefit transfer of subsidy provided to consumers, the think tank said the amendment is not in favour of the lower class.

“They will have to pay from their own pocket first, which they cannot afford, and any kind of delay in the transfer of payment will affect them drastically,” it said.

State governments feel they will lose their authority

CUTS believes the government’s move to empower the National Load Despatch Centre (NLDC) to be the authority responsible for monitoring grid operations provides “the NLDC wide ambit of powers without fixing much responsibility and accountability.”

Earlier Telangana Chief Minister K. Chandrasekhar Rao also pointed out that the proposed bill would make NLDC all-powerful in scheduling of power supply throughout the country. This will result in backing down of state thermal units, which will cause loss of power to state governments. He demanded that intra-state transmissions decisions should be left with the state units.
In another proposed amendment, the Centre proposed to make it mandatory for the commissions to reduce cross-subsidy in the manner as provided by the tariff policy. However, this can have a huge impact on the pockets of the farmers and the lower strata of society.

In Tamil Nadu, the office bearers of Tamil Nadu Farmers' Association staged a demonstration in Natrampalli against the proposed amendments to the Electricity Act. The association thinks the new amendment would lead to cost escalation in production for the farmers.

The opposition has widely opposed the proposed amendment as they believe that “this is neither in the public interest nor in the interest of state power utilities.”
Earlier in a letter to Prime Minister Narendra Modi, Telangana CM KCR voiced the state’s serious concerns over amendments to the Electricity Act. He made it clear that this would have an adverse impact directly on the management of the state electricity organisations.

Electricity Act needs a reality check before its imposition in J&K

According to CUTS, the government needs to analyse ground reality first, and then the proposed changes could be modified and applied to the UT as Jammu Kashmir, and Ladakh.

According to the think tank, the UT’s have as high as 48% Aggregate Technical & Commercial (AT&C) Loss caused by the combination of energy loss — caused by technical loss, theft, inefficiency in billing and commercial loss.

The UT also has a high gap between the cost of power and revenue requirement— as the current price is ₹2.12 per unit— which can cause high financial duress of the DISCOMs.


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