2019 agenda: Fine on discoms for outages

States agree on 24x7 power for all, direct benefit transfer

The government plans to fine distribution companies (discoms) from April 2019 for power outages deemed avoidable and will push for Direct Benefit Transfer (DBT) of electricity subsidy, as with cooking gas, in the states.
 
DBT would, Power Minister R K Singh said on Thursday, make for a more competitive sector, besides helping to control a rise in supply rates.
 
Centre will move an amendment to the Electricity Act for making power supply and DBT a legal obligation.
 
DBT in power was introduced by Bihar this year, while raising tariffs by 25 per cent across all slabs. DBT introduced subsidy for some poorer sections and farmers.
 
The central government launched a Rs 16,000-crore project in September to provide the rural population with power by the end of 2018.
 
Most of the states, said Singh, have also agreed on 24x7 power for all, 90 per cent prepaid meters, and to make it mandatory for the firms to install prepaid or smart meters to prevent electricity theft.
 
Singh was speaking at the All States Power Ministers Conference. “Our vision is that we want 24x7 power for all by March 2019. Now, it will be a legal obligation. After March 2019, if there is any load shedding without any reason, there will be penalties, except in case of technical issues or act of God,” Singh said.
 
The Centre, he said, would also like states to reduce cross-subsidy charges to 20 per cent for industrial and commercial consumers.
 
The Centre has urged all states to reduce the number of billing slabs and cap the cross-subsidy charge for industries at 20 per cent, as proposed in the National Tariff Policy-2016. Currently, there are as many as 60-90 slabs in some states. The aim is to curtail these to 12-15.
 
Business Standard had reported earlier that the Centre was looking at ways to usher in ‘pay as you use’. This entails changing the method of calculating rates, setting standards, and optimising the high price paid by industries.
 
“For giving a push to Make In India and domestic industrialisation, we have to make quality power affordable for all and all states have to ensure that power purchase agreements are honoured, tariffs are sustainable, and the element of cross-subsidisation remains below 20 per cent,” said Singh.
 
Cross-subsidy charges are levied by discoms on heavy buyers, such as manufacturers and commercial users, to recover their cost of supply in giving subsidised power to others. Industries are also allowed to purchase from outside the state their units are in and in the spot market — the open access category. The subsidised population is mostly in rural areas and poorer sections.
 
Open access is supposed to be allowed for all, but this is yet to happen. It is also proposed that this be made free of any additional charges, to entail a uniform power market across the country.
 
To allow multiple power suppliers in a state and allow choice to consumers, Singh said separation of content and carriage had been proposed as an amendment to the Electricity Act. He further said there would be 100 per cent metering (of electricity supply) and 90 per cent of this would be prepaid meters.
 
“To decrease the losses of the discoms and make them viable, the Centre is proposing to do away with human interface in meter reading and billing of consumers. Mandatory installation of prepaid meters for small consumers and smart meters for large ones, with every connection in the future in each state, would prevent corruption and increase compliance in bill payments,” said Singh.
 
Asked about the deadline for achieving the goal of 90 per cent prepaid meters, he said there is no deadline. “But we have to reduce losses by January 2019. It is agreed that the (distribution) losses would be reduced to below 15 per cent by January 2019,” he said.