This article has been written by Sujitha S, pursuing law at the School of Excellence in Law, Chennai. This article briefly explains the core aspects of the Electricity Amendment Bill, 2021. Towards the end, it tries to analyse the intricacies of the Amendment Bill.
This article has been published by Sneha Mahawar.
Table of Contents
Introduction
In a growing economy like India, fundamental resources such as power, technology, and human resources are highly crucial for stimulating its growth. Speaking of electricity production, India ranks third in the world. Isn’t it amazing? Right from generation to distribution to transmission to trading, everything is regulated by the Electricity Act, 2003. Recently, there has been an attempt to amend the Act by the Ministry of Power to establish the rights of electricity consumers for the first time. The recent modifications might be a fresh start in this situation by igniting the next wave of reforms that are in line with the profound shift the industry has undergone. Subsequently, it was amended again in 2021 and came to be known as the Draft Electricity (Rights of Consumers) Rules, 2021.
Furthermore, at the end of the article, every important aspect of the amendment rules is discussed in detail.
Draft Electricity (Rights of Consumers) Rules, 2021
There have been a series of amendments made to the Electricity Act, 2003 in recent times. The first Amendment Bill was passed in 2020, following which the Draft Electricity (Rights of Consumers) Rules, 2020 was passed. Later, in 2021, a few amendments were made to the Draft Electricity (Rights of Consumers) Rules, 2020, resulting in the Draft Electricity (Rights of Consumers) Rules, 2021. By the virtue of Section 176 of the Electricity Act, 2003, the Central Government has amended the Electricity (Rights of Consumers) Rules, 2020, pertaining to Rule 10 of Draft Electricity (Rights of Consumers) Rules, 2020. This amendment specifically deals with the standards of performance of the distribution licensee. This series of reforms in the power sector can be a turning point in the upcoming years. Before delving into the intricacies of Draft Electricity Amendment Rules, 2021, it is important to know the features of previous amendments.
Important aspects of Electricity Amendment Bill, 2020
- The Electricity Amendment Bill, 2021 establishes the Electricity Contract Enforcement Authority (ECEA). The Bill stated that ECEA will have a chairperson, at least two judicial members, and at least three technical members. Further, ECEA may have more than one bench, and each bench shall consist of a minimum of one judicial and one technical member.
- Moreover, with the Electricity Amendment Bill, 2020, the performance of agreements between a generation corporation and other licensees for the purchase, sale, or transmission of electricity would be decided by the ECEA. It will not decide any disputes regarding tariffs or matters relating to regulation or tariff determination.
- A uniform selection committee is suggested in the proposed bill to recommend appointments to all State Electricity Regulatory Commissions (SERCs), Central Electricity Regulatory Commissions (CERCs), Appellate Tribunal For Electricity (APTELs), and ECEAs.
- According to the Act, the energy retail sale tariff must progressively take into account the cost of supply. This is modified by the Draft Bill to mandate that the tariff must account for the cost of supply.
- According to the Bill, the government subsidy must not be taken into consideration when determining the rate for power retail sales.
- According to the Act, state governments are required to pay the distribution licensee or any other party involved in implementing the subsidy in advance. This clause is removed from the Bill, which mandates that subsidies be given to consumers directly.
- As per the Act, a distribution licensee may provide a franchisee permission to distribute electricity on its behalf. A franchisee will be appointed using the information provided to the SERC, according to the Bill.
- The Draft Bill also adds a new organisation called a Distribution Sub-Licensee, which a Distribution Licensee may authorise to distribute power on its behalf. Authorising a Sub-Licensee will require prior approval from SERC. Operating as a Franchisee or a Distribution Sub-licensee won’t need a separate licence.
- The Act establishes load dispatch centres at the state, regional, and national levels. According to the Act, the Union Government has the authority to specify the duties of the National Load Despatch Centre (NLDC). According to the Draft Bill, the NLDC’s duties will also include:
(i) monitoring grid operations,
(ii) exerting supervision and control over the interregional and interstate transmission network, and,
(iii) managing real-time grid operations.
- As per the Bill, the supply contract between a generator and a distribution licensee may need sufficient payment security. The Bill forbids the Regional Load Dispatch Centre (RLDCs) and State Load Dispatch Centres (SLDCs) from dispatching power if the distribution licensee has not given sufficient payment security as stipulated in the contract.
- According to the Draft Bill, the Union Government has the authority to create a national renewable energy policy after consulting with the state governments. The goal of the strategy will be to support renewable energy sources. The government may set a minimum threshold for the procurement of power from hydroelectric and renewable energy sources.
- The Act gives the SERCs the authority to require that a certain percentage of the electricity they purchase come from renewable sources (Renewable Purchase Obligation). According to the Draft Bill, SERCs will designate RPO as determined by the Union government. The Draft Bill also stipulates specific sanctions for licensees who fail to meet RPO.
Points to know about the Draft Electricity Amendment Rules, 2020
| Subject-matter | Relevant changes |
| Rights and duties | Every distribution licensee is required by the Rules to provide electricity upon request from the owner or occupier of any premises in accordance with the provisions of the Act. Consumers are required to get a minimum level of service from the distribution licensee while supplying them with electricity. |
| New connections and modifications | Transparent, easy-to-use, and time-limited procedures. An applicant has the choice to apply online. In order to create new connections and alter an existing connection, a maximum time period of 7 days was identified for major cities, 15 days for minor municipal areas, and 30 days for rural areas. |
| Metering arrangement | There can be no connections made without metres. Metres must be prepayment or smart prepayment metres. Metre testing services are offered. Specific provisions are made for replacing damaged, burned, or stolen metres. |
| Billing and payment | There will be transparency in consumer tariffs and bills. Both online and offline bill payment options must be available to consumers. There will be a provision for payment of bills in advance. |
| Reliability | All consumers must receive power from the distribution licensee around-the-clock. For some consumer groups, such as agriculture, shorter supply hours might be established. The licensee for distribution must set up a system for tracking and correcting outages, preferably one that uses automated techniques. |
| Prosumer | A prosumer is someone who produces as well as consumes.Prosumers will still be considered consumers with the same rights as regular consumers, but they will also be allowed to install renewable energy (RE) generation equipment, such as rooftop solar photovoltaic (PV) systems. |
| Standards of performance | There will be notification of the distribution licensees’ performance requirements. Amount of compensation must be paid to customers by distribution licence holders if there is any violation. |
| Compensation | Consumers who can have their performance metrics remotely checked will automatically receive reimbursement. |
| Consumer Grievance Redressal Forum | Representatives of consumers and prosumers will be included in the Consumer Grievance Redressal Forum (CGRF). By making it multi-layered and adding four consumer representatives instead of just one, it has been made simpler. The licensee must stipulate how long different types of complaints from various levels of forums must wait before being handled. A 45-day maximum time frame has been provided for grievance resolution |
| Consumer services | A centralised, non-stop, a toll-free call centre must be established by the distribution licensee. To get a unified picture, licensees must make every effort to deliver all services through a single customer relationship management (CRM) system. |
Key concepts of Draft Electricity Amendment Rules, 2021
Uninterrupted power supply in metros and large cities
The distribution licensee shall maintain a continuous 24×7 power supply to all consumers in light of the rising pollution levels, particularly in metropolises and large cities, so that diesel generating sets are not necessary. As a result, the State Commission must provide a trajectory of the cities’ System Average Interruption Frequency Index (SAIFI) and System Average Interruption Duration Index (SAIDI).
Separate reliability charge
If the distribution agency needs money to invest in the infrastructure to guarantee the consistency of supply to the consumers, the State Commission may take into consideration a special reliability charge for the company.
Provision of penalty
If the distribution company does not adhere to the established requirements, the State Commission must additionally make provisions for penalties.
Shift from diesel generating to cleaner technology
In five years from the date of publication of this amendment, or within the time frames specified by the State Commission for such replacement based on the reliability of supply by the distribution company in that city, consumers who are using diesel generating sets as essential backup power shall attempt to switch to cleaner technology such as RE with battery storage etc.
Temporary connections
The distribution licensee shall streamline the procedure for providing temporary connections to customers for construction projects, any temporary usage, etc. These connections must be provided urgently and within 48 hours.
This will prevent the temporary usage of diesel generator sets in the territory of the distribution licensee. Only a prepayment metre shall be used for the temporary connection.
Analysis of the Draft Electricity Amendment Rules, 2021
- The extent of the rules and the answer to who the consumer is should be among the first things to be looked at. Any individual who receives power for personal use is referred to as a ‘consumer’, and this term also includes any individual whose premises are now connected to the grid to receive electricity. Customers who use electricity include ‘regular’ customers who receive their supply from the DISCOM and open access customers who purchase their energy from the power market. The guidelines seem to be restricted to ‘typical’ consumers, and open access is not addressed.
- Even if allowing occupiers to apply would promote inclusivity, the real legal difficulties in putting such measures into practice should not be disregarded. The subsequent provisions of the rules do not contain any explicit clauses illustrating how the addition of an occupier will affect the current procedures.
- No connection may be granted according to the laws without a metre, hence the requirement of metering is a crucial and positive move. Prepaid metres or smart prepaid metres are the only two types of metres that are mentioned. In India, prepaid metres are currently well-liked as a solution to systemic issues including enhancing billing and collection effectiveness and transferring subsidies. Prepaid metres are now deployed sparingly and are not regarded as a legal need. These should have been left to the customer.
- It is indicated that the distribution companies (DISCOMs) must give information on outages, System Average Interruption Duration Index (SAIDI), and System Average Interruption Frequency India (SAIFI) in order to provide dependable electricity supply 24×7 to all users. As SAIFI and SAIDI are average system indices, alternative recommended indices may be employed to reflect reliability. The Momentary Average Interruption Frequency Index (MAIFI), for instance, can be used to measure the impact of interruptions that last under five minutes.
- Additionally, it said that distribution licensees must install automated methods for monitoring and resolving problems. Better network visibility will arise from this, and appropriate decisions may be made using the data gathered for future planning as well. Additionally, giving clients access to the SAIDI, SAIFI, and MAIFI statistics of the specific feeders to which they are connected will be useful.
- The regulations regarding the Standard of Performance include clauses for compensation that the distribution licensee must pay to consumers in the event that the SoP is broken.
- The consumer receives automatic compensation for the following parameters:
- no supply for longer than a predetermined period of time;
- interruptions that exceed predetermined limits, and
- time is taken (connection, disconnected, reconnection, shifting, change of consumer category, load, consumer details, replacement of metres, billing period).
- Online claims for compensation are accepted, and the amount will be modified to reflect current and upcoming costs. Penalties will motivate DISCOMs to improve their performance, which will benefit consumers. It is important to take care to prevent future tariff petitions from allowing the recovery of such penalties paid by the DISCOM by transferring them through the consumer.
- This amendment is likely to cause a considerable impact on the centricity of the consumers, sustainability of the power sector, enhancement of the powers of specific authorities, and promotion of renewable and green power. The impact can either be positive or negative, depending on the practical and effective implementation of the bill.
Current scenario of the Electricity Amendment Bill
- The states raised many issues with this Bill. Following this, at least four significant provisions were removed by the Union Government as a result of opposition from several parties, including farmers, state-owned distribution firms, and employee groups for power utility corporations.
- The clauses removed the provision of direct benefit transfer (DBT) on power subsidies, the provision of creating a new Electricity Contract Enforcement Authority, the idea of distribution sub-licensee and the provision dealing with the Single-Selection Committee for appointment of the Chairman and the Members of SERCs and CERCs.
- However, the Union Ministry maintains its position to pass the remaining reforms to the Electricity Act, 2003, stating that reforms including licensing distribution and strengthening the dispute resolution mechanism will increase the sector’s financial viability.
- The legislation aims to make it possible for private companies to enter the distribution market, bringing with it the advantages of competition. Only cities like Mumbai, New Delhi, and Ahmedabad presently practice this.
Way ahead
- The amendment rules are crucial in two ways. First of all, it harmonises the laws governing consumers across India. All energy consumers will be subject to the same set of rules if the consumer rules are implemented. Secondly, the new rules meet the sector’s shifting needs as it goes through a period of transition.
- In addition to giving consumers more options, the steps would increase the efficiency of the electricity distribution system. Additionally, the provisions relating to prosumers, prepaid metres, etc., reflect the most recent trends in the industry.
- Looking into the positive effects it might cause if enacted, includes an increase in private player investment, increased market competition, increased versatility, and giving consumers more options, resulting in enhancing the distribution of power in terms of quality, efficiency, and service delivery. Taking everything into account, these reforms would be effective if their practical nuances are met.
Conclusion
In the pursuit of a greener grid, as well as accessible and affordable power for all, the proposed revisions ought to energise the power industry. However, execution on the ground will be crucial, and this can only be feasible if the Union Government as a whole engages with the states and guides them in the genuine spirit of cooperative federalism. In the interest of a sustainable, effective, and forward-looking power sector, it will be achievable if the states align themselves with the larger goal and extend their full cooperation.
FAQs
What are the clauses that were removed from the Electricity Amendment Bill, 2021 after the raising of objections by the stakeholders?
The following are the clauses removed from the amendment:
- The provision of direct benefit transfer (DBT) on power subsidies.
- The provision of creating a new ‘Electricity Contract Enforcement Authority’.
- The idea of distribution sub-licensee
- The provision dealing with the Single-Selection Committee for the appointment of the Chairman and Members of the SERCs and CERCs
How many times has the Electricity Act, 2003 been amended?
The Electricity Act, 2003 has been amended twice before.
Is the Electricity Amendment Bill, 2021 passed in the Parliament?
No, the Electricity Amendment Bill, 2021, has not been passed yet. However, it is expected to be introduced in the monsoon session of Parliament.
Reference
- Amendments to Electricity Act could be tabled in monsoon session: R K Singh | Business Standard News (business-standard.com)
- Draft Electricity Amendment Bill: Delicensing distribution will ensure viability of Discoms, says Govt – The Hindu BusinessLine
- comments-on-draft-electricity-rules.pdf (aeee.in)
- Electricity Amendment Bill 2020: A Blessing Or A Curse? | International Journal of Advanced Legal Research (ijalr.in)
- Electricity Amendments Bill 2021: A game changer for the power sector (msn.com)
- Draft Electricity (Amendment) Bill, 2020 (prsindia.org)
- The Centre Likely To Amend The 2003 Electricity Act| Countercurrents
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