What is Electricity (Amendment) Bill 2022?

Under the Electricity (Amendment) Bill 2022, the government intends to bring in the principle of open access — which will allow consumers the right to choose their electricity provider, regardless of who controls the physical infrastructure in their locality or state. This would be similar to the way in which they can select their mobile and internet service providers. How will it do that? The Bill, which proposes significant changes in the power distribution sector, will allow multiple distribution licensees to function in an area. Having been cleared by the Union Cabinet, the Bill proposes to amend Sections 42 and 14 of the Electricity Act. Thus, it will enable competition in retail power distribution

The proposed amendment to these Sections will allow the use of distribution networks by all licensees "under provisions of non-discriminatory open access". The freedom to choose will be provided through multiple distribution licensees on the same network. This is important because while the incumbent Act did allow multiple licensees to operate, it did not give them access to the existing power distribution network.

Earlier open-access provisions were undermined by exceptions and legal disputes. In the past, only large consumers were able to choose their provider. With this new Bill, Business Standard has argued that consumer rights must be respected through a principle like open access and that its application is overdue. However, consumer choice will mean that poorly-performing state electricity utilities could end up being shunned in favour of their better-performing counterparts.

The Bill will also amend Section 62 to allow graded revision in tariff over a year. The Bill also says that an appropriate commission will fix the maximum ceiling and minimum tariff. An amendment to Section 166 is also slated to strengthen the regulators and the functions carried out by them. However, the Centre has dropped the proposal of privatising state-owned power distribution companies.

Overall, the Bill has proved to be contentious. So, what's behind the opposition to its proposals? Farmer bodies and the Opposition believe that by allowing multiple private agencies to distribute power in one place, the amendments will weaken the power of states. The Opposition has said that the amendments will effectively curb the right of state governments to regulate tariff and distribution and are against India's federal structure. They also allege that these amendments will lead to the indiscriminate privatisation of the power distribution sector. Delhi Chief Minister Arvind Kejriwal described the Bill as "dangerous" and claimed that it would only benefit a few power distribution companies. Meanwhile, the central trade unions have also said that the Bill aims to privatise electricity distribution. One of the main concerns is that the Bill will make electricity unaffordable for both ordinary power consumers and farmers by ending all subsidies.