{"id":120526,"date":"2021-07-22T20:59:36","date_gmt":"2021-07-22T15:29:36","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=120526"},"modified":"2021-07-22T20:59:36","modified_gmt":"2021-07-22T15:29:36","slug":"power-hurdles-consumers-need-to-wait-before-they-can-choose-supplier","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/power-hurdles-consumers-need-to-wait-before-they-can-choose-supplier\/","title":{"rendered":"Power hurdles: Consumers need to wait before they can choose supplier"},"content":{"rendered":"<p><b>Source<\/b><span style=\"font-weight: 400;\">: <a href=\"https:\/\/www.business-standard.com\/article\/economy-policy\/long-way-to-go-before-consumers-can-get-to-choose-their-power-retailer-121072100801_1.html\" target=\"_blank\" rel=\"noopener\">Business Standard<\/a><\/span><\/p>\n<p><strong>Relevance<\/strong>: Challenges ahead of draft <span style=\"font-weight: 400;\">Electricity Bill, 2021.<\/span><\/p>\n<p><b>Synopsis<\/b><span style=\"font-weight: 400;\">:\u00a0<\/span><span style=\"font-weight: 400;\">The latest amendments to the Electricity Act, 2003 seek to abolish the power distribution license. Further, it will allow any company to supply electricity in an area. However, these amendments might not be enough to remove existing obstacles in the power sector.<\/span><\/p>\n<h5><b>Background<\/b><span style=\"font-weight: 400;\">:<\/span><\/h5>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The amended Electricity Bill, 2021 will be tabled in the current monsoon session of the Parliament.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">With this, the centre plans to end the monopoly of existing discoms, which are mostly state-owned entities, by amending the Electricity Act, 2003.<\/span><\/li>\n<\/ul>\n<h5><b>About Electricity Bill, 2021<\/b><span style=\"font-weight: 400;\">:<\/span><\/h5>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Section 24 (A) states that <\/span><b>any company <\/b><span style=\"font-weight: 400;\">may supply electricity to consumers in its area of supply. It can do so using its own distribution system or using the distribution system of another distribution company.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">However, the company should fulfil the prescribed qualifications and must register itself with the Appropriate Commission.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Bill has replaced the term \u2018<\/span><b>distribution licensee\u2019, and replaced it with \u2018distribution company\u2019.<\/b><span style=\"font-weight: 400;\">\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It has also allowed two or more discoms to register and distribute electricity in the same areas.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Existing power purchase agreements would be shared by all discoms in an area. Companies could also sign additional power purchase agreements.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Providing consumers the right to choose their preferred power supplier would be challenging even after the amendments to the Electricity Act.<\/span><\/p>\n<h5><b>Challenges<\/b><span style=\"font-weight: 400;\">:\u00a0<\/span><\/h5>\n<ul>\n<li style=\"font-weight: 400;\"><b>First, <\/b><span style=\"font-weight: 400;\">there is a scarcity of <\/span><b>multiple power distribution companies (discoms) in several states. <\/b><span style=\"font-weight: 400;\">Currently, it is only in Delhi and Mumbai that there are more than one discom.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><b>Second<\/b><span style=\"font-weight: 400;\">, there is <\/span><b>little interest in the privatisation of discoms in several states<\/b><span style=\"font-weight: 400;\">. In Uttar Pradesh, Rajasthan, Haryana, etc., there are more than one state-owned discom, but their area of supply is exclusive to them.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">None of these states have awarded private distribution licenses. It is<\/span><b> only in Odisha that a private distribution licence award<\/b><span style=\"font-weight: 400;\"> has been a success after a mega failure.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><b>Third<\/b><span style=\"font-weight: 400;\">, there are <\/span><b>no overarching regulations<\/b><span style=\"font-weight: 400;\"> to support the proliferation of a dynamic electricity retail market.<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">For instance, when consumers switched to Tata from Reliance in Mumbai, the company paid wheeling charges to Reliance infra.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The consumers were directed to pay cross-subsidy charges and regulatory assets charges under a 2014 order of the Appellate Tribunal for Electricity.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This became <\/span><b>a disincentive for residential consumers<\/b><span style=\"font-weight: 400;\"> to change their discom, however, industrial consumers continued to change over to Tata.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><b>Fourth<\/b><span style=\"font-weight: 400;\">, in many cases, protests and complex litigation are causing a delay in privatising the discoms.<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The finance minister last year in her Covid relief package announced that <\/span><b>discoms of all union territories<\/b><span style=\"font-weight: 400;\"> would be privatised.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Chandigarh and Dadar and Nagar Haveli and Daman and Diu since then floated tenders for discom privatisation but it has not met with success.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\">All the <b>tenders are facing legal petitions by either employees or individuals protesting against the privatisation bid<\/b><span style=\"font-weight: 400;\">. In the case of Chandigarh, the bidders have challenged the terms of bidding.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source: Business Standard Relevance: Challenges ahead of draft Electricity Bill, 2021. Synopsis:\u00a0The latest amendments to the Electricity Act, 2003 seek to abolish the power distribution license. Further, it will allow any company to supply electricity in an area. However, these amendments might not be enough to remove existing obstacles in the power sector. Background: The&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/power-hurdles-consumers-need-to-wait-before-they-can-choose-supplier\/\">Continue reading <span class=\"screen-reader-text\">Power hurdles: Consumers need to wait before they can choose supplier<\/span><\/a><\/p>\n","protected":false},"author":10322,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[],"class_list":["post-120526","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704784080},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/120526","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10322"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=120526"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/120526\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=120526"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=120526"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=120526"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}