What is the Electricity Amendment Bill 2021: Explained

The Central government’s long-awaited Electricity Amendment Bill which seeks to de-license power distribution is facing stiff opposition from several states. West Bengal Chief Minister Mamata Banerjee recently called the bill “anti-poor” and urged Prime Minister Narendra Modi not to introduce the legislation.  

Banerjee’s letter to the prime minister was posted by news agency ANI on its Twitter handle. The TMC supremo said that the Bill claims to provide plural choices to the customer, but will in reality allow service providers to engage in profiteering through increased tariffs.

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The Centre jas been facing opposition to the Bill even before it is introduced in the Parliament. 

What was the Electricity Act 2003?

The Electricity Act 2003 aimed to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity. While some of the sections have already been enacted and are yielding benefits, there are a few other sections that are yet to be fully enforced. The Act came into effect on June 2, 2003. As per the central government, it was adopted to replace some age-old existing legislation operating in the country. 

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What are the key changes the amendment seeks to bring in the Electricity Act?

The Amendment seeks to bring provisions to de-license power distribution allowing private sector players to enter the sector and compete with state-owned power distribution companies (discoms). Once passed, consumers will have the freedom 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. 

Why is the act being objected to?

Except for some metros like Mumbai, Delhi and Ahmedabad, power distribution in the rest of the country is largely controlled by state-owned companies. 

The government’s schemes, like UDAY (2015), to restructure the outstanding debts of discoms while reducing losses have failed to provide long-term relief. 

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States have highlighted that the reduction of the role of the state public utility bodies, the unchecked enhancement of the role of private corporate bodies, and the curtailment of the authority of the states in the power sector together imply a sinister design. 

Mamata Banerjee said in her letter added that the 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.”

Higher penalties for failure to meet Renewable energy Purchase Obligations (RPOs) and the requirement that Regional Load Dispatch Centres and State Load Dispatch Centres follow instructions by the National Load Dispatch Centre are other concerns.