Electricity Amendment Bill, 2022: What You Need To Know

What is the main purpose of the Electricity Amendment Bill, 2022?

Law is not meant to be static but dynamic. The substantive change in the era urges an evolutionary step at every new level to run parallel with the demands of its subjects. Amendment procedure was included as a tool to avoid discrepancies when modification becomes the need of the hour. To bring the requisite changes in the existing act current central government has opined to bring an evolution through legal means.

Electricity Amendment Bill was proposed by current Power Minister Mr R K Singh on the 8th of August 2022 in Lok Sabha. The general purpose of this bill is to foster a law that will eradicate monopolies of certain specific distributors in the regime. Apparently, it will entrust the freedom of choice to customers. The reform seeks to let the consumers opt for the service provider of their choice which makes it a pro-consumer initiative.

The government while discussing yesterday cited the example of Mumbai that, discoms are already running in the said metropolitan city similar to the formula proposed in this bill. Moreover, it is also an endeavour to augment changes in licensing of the distribution licensees along with those who are looking forward to penetrating into the realm to increase efficiency by increasing the competition.

What changes will be made to the electricity sector by the Electricity Amendment Bill, 2022?

The aforementioned bill aims to primarily amend sections 14 and 42 of the existing act. Section 14 deals with a restricted grant of license whereas the amended section will render open access to license all participants. And, amended section 42 in the bill, eradicates the discrimination among distributors in terms of open access to licenses.

Several other provisions that are proposed to be amended are sections 42, 146, 152, and 166 of the existing act. The purpose of such alteration is:

1. To make provision for the graded revision in tariff over a year besides mandatory fixing of the maximum ceiling and minimum tariff by the appropriate commission via amending section 42.
2. To impose only fine as a punishment rather than imprisonment by amending section 146.
3. To promote the practice of compounding by the decriminalization of offence by amending section 152.
4. To hold the grip on the performance of regulators by amending section 166.
5. To enable discoms to use the power distribution network of other licensees that may elevate the competition in the sector.
6. To eradicate monopoly and corruption happening as a result of those monopolies.

The bill is seeking to enable the management of power purchase and cross-subsidy in the case of multiple distribution licensees in the same area of supply via inserting a maiden section 60A in the act.

Some Other Important Amendments And Benefits

1. Bill states that a new supplier is permitted to utilize existing infrastructure to supply power (minimum area and maximum would be set).
2. Energy regulators must decide in ninety days or an application is deemed to be approved u/s 86 of the act.
3. Qualifying criteria of members of regulatory bodies are strengthened but, state governments can still handle their control over the realm and continue to appoint the regulators.
4. The upper age limit in qualifying criteria rose to 67 years.
5. The bill is entrusting power to enforce orders as a decree of the civil court to regulators u/s 94 of the act.

6. Removal of members of regulatory bodies on the wilful violation or gross negligence of rule u/s 90 of the act.
7. National and state dispatch centres will cut power supplies from plants against which discoms have not maintained bank guarantees.
8. In order to achieve green targets fixed by adhering to the Paris and Glasgow Agreements, the bill strives to promote the generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specifies, for purchase of electricity from such person, a percentage of the total consumption of electricity in the area of supply of a distribution licensee which shall not be less than a such percentage as may be prescribed by the Central Government u/s 86 of the act.

Challenges and Criticism of The Electricity Amendment Bill

Every new action becomes a bone of contention soon after its introduction. The opposition parties, farmers and various veterans in the field are condemning proffered changes in the existing Electricity Act of 2003 as an anchor to indirect privatization and a step towards disconnection of state authority by altering section 79(j) that renders power to the centre in the issuance of a license to multi-state distribution companies, without consulting with states. Furthermore, it is also denounced for non-compliance with constitutional guidelines on the matter of concurrent list as the union is bound to consult with states when the subject matter of amendment is included in the said list.

All India Power Engineers Federation has halted its working as a sign of protest against the bill. They urged the current government to either withdraw the bill or render them time to put forth their perspective on the proposed modifications. As an epilogue to all these contentions, Power Minister has clarified that the bill is set in motion after substantive consultation with state governments and it does not put any impact on subsidy provisions for the eligible farmers.

by Khushi Shukla

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of Adjuva Legal and Adjuva Legal does not assume any responsibility or liability for the same.