After more than a decade, new Electricity Bill-2020 has been introduced to initiate several reforms in the sector. The draft bill, made public on Friday, has proposed overhaul of the power distribution sector which is currently the sickest in the whole supply chain. The Act’s focuses on removing subsidised electricity rates, cross-subsidy, complex tariff structure and strengthening regulators.
While the 2003 Act opened the power generation sector for private players, the current Bill has proposed private power distribution franchisees. This paper had reported that the ministry of power was pursuing states to join hands with private power distributors on franchisee basis to improve their revenues.
The bill has also put an end to subsidised power rates. It has revised the provision of power tariff determination and proposed that all state electricity regulatory commissions (SERCs) “to determine tariff for retail sale of electricity without any subsidy under section 65 of the Act”.
The Bill has also noted that cross-subsidy and surcharges levied on industrial consumers should be reduced. These charges are levied on industrial consumers of a state to cross-subsidise the free or subsidised power given to certain section of consumers.
Recognising that power tariff is not cost reflective and has several subsidy components, the new Bill has introduced provisions on tariff determination.