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Draft Electricity Act (Amendment) Bill, 2020 

Topics Covered: Infrastructure- energy.

Draft Electricity Act (Amendment) Bill, 2020 

What to study?

For Prelims: Key amendments proposed, overview of Electricity Act, 2003.

For Mains: Need for and significance of these amendments.

Context: Power Ministry floats draft Electricity Act; invites suggestions within 21 days. This will amend the 2003 act.

The draft pitches for privatisation of distribution companies, cost-reflective electricity tariff without subsidy, strengthening of payment security mechanism and Electricity Contract Enforcement Authority to bring in investment and ease of doing business in the power sector.

Background:

This is the fourth draft of the Electricity (Amendment) Bill since 2014.

  • The government had brought first draft in 2014 that was introduced in the Lok Sabha seeking separate carriage and contend electricity distribution business.
  • The Bill could have given option to consumers to change their service providers like they do for their mobile phone service. But, unfortunately, that Bill lapsed after dissolution of the Lok Sabha.
  • The second and third drafts were circulated in 2018 and 2019.

Key provisions in the bill:

  1. The draft proposes to privatise discoms by way of sub-licensing and franchisee models. The sub-licensing will allow states to choose a private company for the distribution of electricity supply of a particular area to help it bring down losses of both electricity and finances.
    The bill proposes to restrict deferment of revenue recovery and reduction in cross-subsidy to bring in a cost-reflective tariff, simplified tariff.
  2. It also proposes to bring in an Electricity Contract Enforcement Authority (ECEA) to deal with the issues of non-performance of contracts leading to uncertainty.
  3. For the renewable sector, the draft proposes to bring National Renewable Energy Policy and may bring in a minimum percentage of the purchase for the states from renewable sources.
  4. The bill enables state as well as central power regulators to specify transmission charges under open access. Earlier, both functions were with the central commission.
  5. It also provides additional roles to the National Load Desptach Centre that include scheduling and dispatch of power across the country in accordance with contracts.
  6. It also provides that the cross (power) border trade shall cover import or export of electricity from India and any other country. The transaction related to passage of electricity through India would be treated as transit between two other countries. 
  7. The Bill also provides that the Electricity Act would be applicable to the entire country, including the Union Territories of Jammu and Kashmir and Ladakh.

 Composition and powers of Electricity Contract Enforcement Authority:

  • The Authority will be headed by a retired Judge of the High Court.
  • It is proposed to be set-up with powers of the Civil Court.
  • It will enforce performance of contracts related to purchase or sale or transmission of power between a generating, distribution or transmission companies.

Significance of these amendments:

  • The proposed amendments are progressive, transformative and formulated with the objective to remove the regulatory impediments/shortcomings that were being experienced in sectoral functioning.
  • Creation of Electricity Contract Enforcement Authority with power of civil court, including arrest, attachment of property, enforcement of decree etc. will help to instil discipline amongst the contracting parties to adhere to their contractual obligations which was amiss in current environment.

Insta Links:

Prelims Link:

  1. Composition of the proposed Electricity Contract Enforcement Authority.
  2. Key functions of ECEA.
  3. How DISCOMS in the country function?
  4. What is the National Load Desptach Centre?
  5. Composition and functions of the Appellate Tribunal (APTEL).

Mains Link:

Discuss the key features and significance of Draft Electricity Act (Amendment) Bill, 2020.

Sources: pib.