New Bill: Easy access to power distribution business proposed

A new Bill to amend the Electricity Act tabled in Parliament proposes to usher in the long-elusive competition in power distribution business. To provide more choices to consumers and bring higher efficiency in the sector, the Bill seeks to de-license the power distribution business and allow any entity to run distribution companies (discoms) anywhere in the country. The incumbent state-run discoms will have to “provide non-discriminatory access to their distribution system to all discoms registered within the same area of supply”, in return for wheeling charges to be determined by state power regulators.

Of course, the new operator can set up its own parallel distribution network, but with a condition that it can’t be for exclusive use, and needs to be shared if other parties demand access to it.

To deter new players from cherry-picking lucrative supply circles in urban, commercial and industrial areas (as these consumers cross subsidise lower paying rural and agricultural users through higher tariffs), the Bill proposes states to create a ‘universal service obligation fund’ where “any surplus with a discom on account of cross subsidy or cross subsidy surcharge or additional surcharge shall be deposited”.