The proposed delicacy of the supply of electricity, allowing several distributors to operate in the same area, and ending the monopolies of public entities, is a big step towards reform of the electricity sector. Cabinet is expected to consider the proposal soon to allow consumers to switch electricity providers, following which the bill amending the electricity law will be presented to parliament, possibly in the session that begins. today. What is important is that the distribution infrastructure of a historic nightclub can now be used by a newcomer to provide electricity to the area. The bill proposes to restrict the powers of the SERCs in relation to cross-subsidies. Essentially, it aims to shift the responsibility for developing regulations relating to the cross-subsidy calculation to SERCs. The idea is to get them to determine the extent of the cross-subsidy using the national electricity tariff policy. The move was initiated because it is believed that the rate determined by SERCs does not reflect actual costs, as political considerations outweigh financial prudence. It is proposed to cap the maximum tariff paid by industrial consumers at 20% of the average supply cost; in some states, the commercial tariff is more than 20% over the ACS. Experts believe states could challenge this in court because electricity is a competing subject. They believe that SERCs are in a better position to calculate cross-subsidization since they would take into account factors that vary from state to state.
A long-awaited initiative to strengthen the Electricity Appeal Tribunal (Aptel) is being launched. Experts point out that Aptel has not been functioning properly for several years because the bench has almost always lacked members. There is also a movement to strengthen the SERCs. However, regulators are usually handpicked by state governments and therefore forced to make their offers. Unsurprisingly, they haven’t done their job of improving the health of discoms and they must share the blame for much of the mess in the electricity industry.
Bonds to purchase renewable energy could be onerous for nightclubs. They may still not have the financial means to purchase renewable energy; if they are to be forced to do so, they must be able to compensate for this with more modest purchases of thermal energy. Typically, thermal power producers like NTPC will not allow buyers to stop buying from them. It’s fine to pursue a green program, but penalizing discoms for not meeting their renewable energy purchase obligations is somewhat unfair. Another important measure proposed is that the retail price, in any state, be determined regardless of the subsidy to be provided by the government. Instead, just as happened with the LPG subsidies, consumers would have to pay the full price and receive the subsidy directly into their bank account. In this way, the nightclubs would receive the full tariff from the users.
Although the changes to the electricity law are a big effort, state governments must halt or reduce subsidies for retail users and farmers at the expense of industrial consumers. In order to keep prices affordable, dcoms must reduce the cost of electricity and minimize technical losses. State governments have been irresponsible for too long, in part because the Center always bailed them out. Taxpayers’ money must not be wasted.