The Indian power sector is going through a major transformation owing to extensive generation from sustainable energy sources such as solar and wind and the introduction of newer market mechanisms such as real-time market, which provide the opportunity to trade power within half-hour windows.
However, there are challenges that hinder the evolution of the sector into a sustainable model. These include the poor financial health of electricity distribution companies (DISCOMs), slow momentum in attaining renewable energy targets, and the desynchronized functioning of various stakeholders. To resolve these, the Ministry of Power introduced the draft Electricity Act (Amendment) Bill, 2020 (the Electricity Act, 2003). Let’s revisit some of the key amendments proposed in the Bill.
Improving the functioning of DISCOMs
The amendment to introduce cost-reflective tariff makes it mandatory for DISCOMs to specify each parameter related to distribution costs in tariff designing. The finalised distribution costs shall be approved by the state/central electricity regulatory commission (SERC/CERC).
The proposed amendment on the Direct Benefit Transfer (DBT) scheme will ensure that subsidy is distributed to beneficiaries directly. The SERC should not take subsidy into account while determining tariffs