More competition in power distribution soon

Amendments in Electricity Act, 2003 will allow more than one player in power distribution, including private firms

After rolling out the power distribution reform plan, Ujwal Discom Assurance Yojana (UDAY), the NDA government wants to open up the power distribution and transmission sector for competition.

The amendments in the Electricity Act, 2003, would have enabling provisions to allow more than one player in power distribution, including private companies.

The electricity amendment Bill is set to be introduced for discussion and passing in the winter session, said a senior government source on Tuesday. It was placed in the Lok Sabha in December 2014 and referred to a Standing Committee. The amendments also aim to provide a choice of power discoms to consumers with usage of less than one Mw, separate the content and carriage business, inclusiveness for renewable energy and tariff rationalisation.

In order to create a competitive market for retail buyers, open access will allow consumers of less than one Mw to choose their supplier. Power generators, too, will be allowed to sell their surplus outside a state. A senior government source said some of the state governments were opposed to the entry of multiple players. “As a beginning, we will introduce this in Bharatiya Janata Party (BJP)-ruled states,” the source said.

The amendments in the Act also propose to segregate the carriage (distribution network) from the content (electricity supply business) in the power sector. The government would introduce multiple supply licensees in the content business based on market principles and continue carriage as a regulated business.

To keep the tariff structure on financial principles, the provisions on the same were approved in the new ‘Tariff Policy’ last year.

UDAY was launched last year to turn around the discoms — both financially and operationally. The scheme has kicked off in 10 states.