AIPEF Chairman says claims of choice to power consumers 'misleading'

The claim of providing choice of multiple service providers to power consumers in the Electricity Amendment Bill 2022, is "misleading" and will make state-run discoms loss making entities, according to AIPEF Chairman Shailendra Dubey.

The Electricity Amendment Bill 2022 is scheduled to be introduced in the Lok Sabha on Monday.

In a letter to Prime Minister Narendra Modi, the All India Power Engineers Federation (AIPEF) has demanded that the bill be referred to the Parliamentary Standing Committee on Energy for wider consultation.

When asked about the government's claim of providing consumers choice like mobile phone sim cards in the name of multiple distribution licensees, Dubey told PTI, "the very claim is misleading".

"As per the bill, only government discoms will have universal power supply obligation therefore private licensees will prefer to supply electricity in profit making areas only i.e. industrial and commercial consumers."

Thus profit making areas will be snatched from government discoms and government discoms by default will become loss making companies and in the coming days will not have money to purchase electricity from generators, he said.

"The government discoms network will also be handed over to private licensees at throw-away prices," he feared.

As per the bill, "the continuing as well as new challenges of sustainability of the power sector, contract enforcement, payment security mechanism, energy transition and the need to provide choice (of multiple service providers) to consumers in order to promote competition and the like, it has become necessary to make certain amendments in the Electricity Act".

The bill seeks to amend section 42 of the Act to facilitate non-discriminatory open access to the distribution network of a distribution licensee.

Further, the bill seeks to amend section 14 of the Act to facilitate the use of distribution networks by all licensees under provisions of non-discriminatory open access with the objective of enabling competition, enhancing efficiency of distribution licensees for improving services and ensuring sustainability of the power sector.

Thus discoms will be able to use the power distribution network of other licensees.

The bill also provides for inserting a new section 60A in the Act so as to enable management of power purchase and cross-subsidy in case of multiple distribution licensees in the same area of supply.

Dubey explained that "Cost of electricity includes 85 per cent cost of power purchase agreements. Since power purchase agreements are for 25 years therefore the cost of electricity is not going to be reduced. Therefore the promise of competition and cheaper electricity to consumers is a farce".

He further explained that 85 per cent consumers are farmers and domestic consumers and all these consumers are getting subsidized electricity.

"There cannot be any competition in such loss making subsidized consumers. Therefore multiple licensees will not be the consumers' choice. Actually this will be the suppliers' choice. Private licensees will be operating only in profit making areas," he pointed out.

The bill also seeks to amend section 62 of the Act so as to make provision regarding graded revision in tariff over a year and for mandatory fixing of maximum ceiling as well as minimum tariff by the Appropriate (electricity regulatory) Commission.

The draft law also provides for amending section 166 of the Act so as to strengthen the functions to be discharged by the Forum of Regulators.

The bill will also amend section 152 of the Act so as to facilitate decriminalisation of offence as it would be mandatory to accept compounding. It will also amend section 146 of the Act to convert the rate of punishment from "imprisonment or with fine" to "fine".