Electricity (Amendment) Bill, 2021

  • The Electricity (Amendment) Bill 2020 will seek to propose amendments to the Electricity Act 2003. Further, it also sets rules and provisions for regulatory authorities in the state and central departments of the power sector.
  • Instead of the current system of a separate selection panel for the appointment of state electricity regulatory commissions (SERC), the 2020 amendment Bill has proposed a National Selection Committee.
  • The Bill seeks to establish an Electricity Contract Enforcement Authority to evaluate the performance of contracts in sale, purchase and transmission of power. It has also proposed Direct Benefit Transfer (DBT), which is a scheme launched in 2013 with an aim to transfer subsidies directly to the account of beneficiaries.
  • In a bid to ease the financial health of DISCOMs, which are mostly owned by states, the Electricity (Amendment) Bill 2020 has advocated for tariff and subsidy-related measures. The Bill has also called for a renewable energy approach in the power sector.
  • The Amendment is also bringing in provisions to de-license power distribution allowing private sector players to enter and compete with state-owned power distribution companies (discoms). The move would allow consumers to choose between power distribution companies. Finance Minister Nirmala Sitharaman had announced in the union budget that the government would bring a framework to allow consumers to choose between power distribution companies.
  • BACKGROUND: Power distribution in most of the state is currently controlled by state-owned distribution companies with some cities including Delhi, Mumbai and Ahmedabad being exceptions where private players operate power distribution.
  • Discoms are however struggling with high levels of losses and debt. The government has brought out a number of schemes to restructure the outstanding debts of discoms while incentivising them to reduce losses. However, such schemes have only brought short term financial space for discoms which have accumulated losses and debts post restructuring schemes such as the UDAY launched by the government in 2015.