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New Delhi : Minister of State (i/c) for Power & MNRE R K Singh on June 25, 2020, held a press meet through Video Conferencing and underlined the importance of proposed reforms in the power sector dispelling doubts and misinformation. He stated that the reforms are steps in the direction of making the sector consumer centric. Singh said, “ We are not taking away any powers of States in appointment of members and chairpersons of State Electricity Regulatory Commissions (SERCs) and the proposed reforms are aimed at promoting more transparency.”
While giving clarity on electricity tariff fixation, the Union Power Minister stated that the powers of tariff fixation remains with SERCs. He emphasised that proposed power reforms are aimed at introducing transparency and accountability to protect the interest of consumers and ensuring healthy growth of the power sector. He also mentioned that there is no restrictions on States for providing subsidy as States can give as much subsidy as they want but they must pay it upfront through Direct Benefit Transfer (DBT) so that Discoms remain healthy and are able to maintain and improve distribution infrastructure like transformers and distribution lines, pay for power purchased, and are able to provide quality electricity to the people.
While we have made significant improvements in the electricity generation and transmission segments, the distribution segment, having achieved 100% village electrification and near-universal access to electricity, is beset with problems of operational inefficiencies, liquidity, and financial solvency.
In this regard Ministry of Power had prepared a draft proposal for Amendments in Electricity Act 2003 in the form of draft Electricity (Amendment) Bill 2020 with the following broad objectives : Ensure consumer centricity: Promote Ease of Doing Business; Enhance sustainability of the power sector; Promote green power.
Misconception 1: Transfer the power of appointment to SERCs from State to Central Government – There is no proposal to take away the power of appointment of Members/Chairpersons of State Electricity Regulatory Commissions from the State Governments. As per the draft circulated, the appointments of Members/Chairpersons of the State Electricity Regulatory Commissions will continue to be made by the State Governments.
The proposed Selection Committee in the draft Bill has equal number of members from the Central and State Governments as earlier. The only difference is that instead of the of the Selection Committee being presided over by a retired Judge of the High Court, it is proposed that the committee be headed by a sitting Judge of the Supreme Court.
Misconception 2: DBT is against the interests of consumers – Another misconception is that the proposed provisions for introducing the system of Direct Benefit Transfer (DBT) of subsidies is inimical to the interest of the consumers especially the farmers. It has been argued that if the State Government is not able to pay the subsidies on time, the electricity supply to the consumers may get disconnected. This is baseless. As per Section 65, of the Electricity Act, 2003, the State Government is required to pay the amount of subsidy in advance to the distribution companies.
The subsidy is now being proposed to be given into the account of the consumers maintained by the Distribution Companies through DBT. It is being provided in the new Tariff Policy that the electricity supply shall not be discontinued even if the State Government is unable to pay the subsidy in time or even if the State Government fails to pay the subsidy for 3 to 4 months. It is, of course, expected that the State Government pay the subsidy in advance to the DISCOM/consumers as provided for in the law.