Context

• Concerns of states on some provisions of the new Electricity Bill are justified. But the legislation proposes welcome correctives to longstanding problems of the power sector.

Important provisions of the bill

• Payment security: The Bill provides that electricity will not be scheduled or despatched if adequate payment security is not provided by the discom.   The central government may prescribe rules regarding payment security.
• Contract enforcement: The Bill empowers the CERC and SERCs to adjudicate disputes related to the performance of contracts.  These refer to contracts related to the sale, purchase, or transmission of electricity.  Further, the Commissions will have powers of a Civil Court.
• Renewable purchase obligation: The Act empowers SERCs to specify renewable purchase obligations (RPO) for discoms.  RPO refers to the mandate to procure a certain percentage of electricity from renewable sources.  The Bill adds that RPO should not be below a minimum percentage prescribed by the central government.  Failure to meet RPO will be punishable with a penalty between 25 paise and 50 paise per kilowatt of the shortfall.
• Selection committee for SERCs: Under the Act, the Chairperson of the Central Electricity Authority or the Chairperson of the CERC is one of the members of the selection committee to recommend appointments to the SERCs.  Under the Bill, instead of this person, the central government will nominate a member to the selection committee.  The nominee should not be below the rank of Additional Secretary to the central government.
• Composition of Commissions and APTEL: The Bill increases the number of members (including the chairperson) in SERCs from three to four.  Further, at least one member in both the CERC and SERCs must be from law background.  Under the Act, Appellate Tribunal for Electricity (APTEL) consists of a chairperson and three other members.  The Bill instead provides that the APTEL will have three or more members, as may be prescribed by the central government.

State apprehensions of the bill

• Multi state license: The clause pertaining to applicants seeking a distribution licence in more than one state. It states that the Central Electricity Regulatory Commission (CERC), and not the SERC, will grant the licence. This is problematic because a SERC is likely to be more aware of the field-level conditions in a state than its central counterpart.
• Centre can bypass state: The Bill has a provision empowering the Centre to give directions directly to the SERCs. Till now, the CERC received instructions from the Centre and the SERCs were under the state. The new Bill enables the Centre to bypass state governments. It’s not surprising that this is a matter of concern for the states.
• Direct appointment by centre: The Bill states that the SERC chairperson will now be a nominee of the central government and will be an additional secretary-level official. This gives the impression that the Centre is trying to control the appointments to the SERCs.

Why the bill is important?

• Compensation clause: The Bill states that if power purchase agreement PPAs are renegotiated, the affected party has to be compensated within 90 days from the date of submission of the petition.
• Uniformity in tariffs revision: New tariffs have to be made applicable from the beginning of the financial year. New tariffs often come into force in the middle of the financial year (due to delays in the issuing of orders by SERCs). This means that discoms do not earn their full revenues leading to cash flow problems.
• Easy tariff petition processing now: The Bill has proposed a reduction in the time for processing tariff petitions from 120 days to 90 days.
• Suo moto jurisdiction: Regulatory commissions have been given suo motu jurisdiction if tariff petitions are not filed within 30 days of the stipulated time. This too is a step in the right direction.
• More teeth to load dispatcher: the Bill proposes to give more teeth to the national load dispatcher. We need to strengthen the load dispatcher for the smooth functioning of the grid, especially with a huge renewable capacity where intermittency of generation is a major issue in the offing.

Conclusion

• The rollout of the proposed amendments through a consensus-based approach would go a long way in overhauling the weakest link in the nation’s power supply chain.

Mains question

Q. Electricity Bill 2022 is a remedy worse than the disease afflicting India’s power sector. Critically analyse.

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