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Terming the proposed amendment as important to strengthen the legislative foundation of India’s power sector, he said that although the country has made commendable progress in all aspects of the power sector since the enactment of the Act in 2003, challenges continue in the form of persistent financial stress in the distribution segment.
He told us that provisions in the Bill are proposed to mandate cost-reflective tariffs and empower the Commissions to take suo motu action if there is delay in tariff filing by utilities. He clarified that state governments can continue to provide subsidies to priority consumer groups such as domestic and agricultural consumers, adding that this will not lead to any increase in costs for such consumers, with the aim of ensuring that fiscal discipline and consumer welfare go hand in hand.
The amendment aims to enhance the economic competitiveness of Indian industry by reducing distortions caused by cross-subsidies and surcharges. The amendment proposes to empower SERC to exempt discoms from the obligation to supply to large consumers in consultation with the state government, adding that such consumers can purchase power from other sources at competitive rates.
Also, the aim is to reduce the burden of fixed costs on discoms associated with supply of electricity to these consumers, although the Minister clarified that large consumers will have the option to opt out after giving notice with reasonable time.
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Calling it a collective responsibility to support increased use of electricity from non-fossil sources, he said that a minimum obligation for the use of electricity from non-fossil sources is proposed under the Bill. To ensure cost-competitiveness and availability of adequate renewable energy, it is proposed that capacity addition will also be enabled through market mechanisms in addition to agreements by DISCOMs to reduce their burden.
The Bill proposes provisions to ensure better service to the general public, reduce financial and compliance burden and create a better environment for business. To strengthen the regulatory regime, several provisions have been proposed under the draft Bill. The draft Bill proposes to expand the powers of APTEL to handle the increasing cases and also include operational reforms such as inclusion of right-of-way provisions directly in the Act.
The Bill also proposes to enable distribution network sharing to avoid duplication, which the Minister stressed would benefit consumers by allowing network sharing. He clarified that there is no basis for apprehensions regarding privatization and increase in costs or adverse impact on employees, assuring that appropriate regulatory and policy measures will be taken to ensure that there will be no adverse impact on consumers or any section of employees.
The Bill envisages the establishment of a Electricity Council to promote cooperative federalism and national consensus on power sector reforms. The Minister assured that the Central Government will take necessary steps to fairly compensate farmers for the land used for laying power lines, as he informed the members that the Power Ministry has already issued guidelines for determining the compensation, linking it to the market rate.