Highlights of Electricity (Amendment) Act, 2022

Published by firstgreen on

The government is introducing the Electricity (Amendment) Act, 2022 & a draft copy of the Electricity Amendment bill is available for public comment. The initiative of amending the Electricity Act, 2003 by the Union Government facilitates the bottlenecks faced by consumers to poor off-taker credibility. The consumers are currently stuck in a monopoly market where the inefficiencies in the distribution business are driving the electricity higher. While the renewables are now much cheaper than the fossil fuel generation, the increasing share of renewable power is not driving the cost of power downwards to the consumers.  Introduction of this bill facilitates delicensing of distribution business 7 allows private players to compete with DISCOMS in terms of better tariff and better electricity quality. The bill also allows open access provision to residential consumers and facilitates small capacity, Open Access PPA in the market. This will open power to small players.

Some of the provisions in the Electricity Amendment Bill are highlighted as follows:
1. Delicensing of Distribution Business
The electricity utilities will have to compete with private power utilities & consumers will have the opportunity to switch between their energy suppliers. This will enable consumers to be aware lowest possible tariff & better service.
2. Direct subsidy transfer to end-consumer
Electricity subsidies will be directly transferred through the state government. This will prevent the indebtedness of power utilities. In case State Government wants to provide subsidized electricity, it has to be transferred directly like the Gas Subsidy in the LPG Cylinder
3. RPO Targets
The RPO Targets (Renewable Purchase Obligations) are now applicable to DISCOMS as well as open access consumers. The RPO Targets will be decided by the Regulatory commission and there is a penalty if RPO does not comply.
4. Strict Payment conditions for DISCOM
DISCOMS has to manage adequate payment security with PPA. If payment defaults are observed through DISCOMS, the power supply can be cut by the SLDC
5. Ease open access
The open-access provisions are now available to LT (Low Tension) consumers as well. Presently, open access is possible within the state. However, open access is possible on an intra-state basis