Powering reforms

Govt should have learnt from history of open access

The Electricity (Amendment) Bill, 2022, tabled in the Lok Sabha on Monday, 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. And yet there are fears that the Bill will die in committee, given that Opposition parties and states ruled by parties other than the Bharatiya Janata Party have expressed strong concern about amendments that they believe infringe upon the states’ rights to regulate electricity supply and pricing. 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.

Unfortunately, the government has not learned from the past — either its own recent past or the long history of electricity-access disputes in India. If it had learned from some of its recent reform efforts and the subsequent climbdowns such as the farm laws, it would have made the effort to bring a substantial number of states on-board beforehand, thereby reducing the political backlash. 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.

The Opposition’s objections to the amendments are understandable when seen against a broader canvas of Union encroachment into the states’ regulatory and legal domains. Yet 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 R K Singh 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. 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.