In these times of the raging pandemic and economic slowdown, what is there to write about electricity policy? Quite a bit, since electricity can either worsen the situation or enable recovery, depending on how policies are designed and implemented. There have been many recent announcements in the electricity sector.
The year started with electricity consumer rules, followed by yet another proposal to amend the Electricity Act, then the budget announcement of a massive Rs 3 lakh crore distribution reforms programme and now there is a proposal to revise the 16-year-old National Electricity Policy (NEP). The new NEP will have to be more ambitious and have a clear vision to guide the sector for the next decade.
It is to be noted that the Electricity Act (E Act), NEP and Tariff Policy, all prepared by the Ministry of Power (in 2003, 2005 and 2006 respectively), are three key documents that define the legal and policy framework for country’s electricity sector.
The E Act is binding on the states, while the policies significantly influence their actions. Harmony across these three documents would ensure a facilitating framework to handle challenges like high financial losses, transition to renewable energy and ensuring 24 x 7 power supply. Since the recent attempts to introduce amendments in the Act and Tariff policy have not reached a logical conclusion, revising the NEP first is like putting the cart before the horse.
Ideally, the tariff policy and NEP should be revised together and should be updated based on the final amendments to the E Act. The policies should preferably be revised every five years to reflect changes in the sector.