Electricity (Amendment) Bill, 2022

The Electricity (Amendment) Bill, 2022 which was introduced to the Lok Sabha was immediately sent to the Standing Committee on Energy for closer scrutiny and debate. This comes at a time when the Union government is also launching yet another scheme to bail out troubled state electricity utilities. 

What are the contentious provisions?

• There are many provisions in the Bill that will have raised the hackles of the Opposition — and, incidentally, among workers in public-sector power utilities.
• Most of these provisions revolve around the principle of open access — the right of consumers to choose their electricity provider, regardless of who controls the physical infrastructure in their locality or state.
• Successive governments since 2003 have sought to introduce this principle into India, but each time a mixture of strong opposition and poor drafting has prevented its proper application. This attempt to pass an amendment Bill should not be another casualty along the same lines.

What is the issue?

• The tendency to make laws without consultation and then face hurdles to their passage and implementation should have ended by now. There are also lessons that should have been learned about this specific issue.
• In the past, open-access provisions were undermined by exceptions and legal wrangling. For example, earlier only large consumers were able to choose their provider, which seriously reduced the competitive pressures that open access would expose state utilities to.
• The government should have ensured beforehand that there are no loopholes and drafting errors that would prevent the swift implementation of this amendment.

Why the criticism is unfounded?

• As electricity is on the Concurrent List of the Constitution, and there can be little dispute that in the presence of a national grid, the consumers’ rights must be respected through a principle like open access.
• The broader concern that consumer choice will lead to poorly-performing state electricity utilities being shunned in favour of better-performing providers should be viewed as a feature, not a bug.
• As Union Minister of Power has explained, subsidies for power should be transparently provided as part of the formal Budget and not through cross-subsidisation within the public-sector power company. The latter causes inefficiency and reduces competitiveness.
• The Bill also allows for graded revisions to tariffs, which further weakens the states’ arguments in this case since the time to adapt is being provided.

Conclusion –

While it can be nobody’s case that the Union government has handled the introduction of these reforms well, there is also no doubt that the application of the principle of open access is overdue and further efforts along these lines are welcome.

Source – Business Standard

QUESTION – The criticism against the Electricity (Amendment) Bill, 2022 may be unfounded as it seeks to overhaul the power sector which is reeling under immense stress for decades. Comment.