The Electricity Act, 2003 (the “Electricity Act“) was enacted to consolidate the electricity laws in India. The Electricity Act, 2003 (hereinafter “Act”) has been the statutory paradigm which has governed the laws regarding the generation, distribution, transmission, trading and use of electricity, keeping in mind the interests of the state and central departments, producers and consumers of electricity, setting rules and regulations and regulatory authorities to govern a major component of the power sector.
n order to address some recurring issues, and to promote further commercial incentive for private players to enter the market in the generation, distribution and transmission of electricity, with some policy modifications, the Electricity (Amendment) Bill, 2020 has been introduced by the Ministry of Power on April 17, 2020 (“Amendment”). Following are major changes that this Amendment proposes to introduce in the Electricity Act, 2003:
Need for new amendment:
- Some of the provisions of the Act have become dated and archaic and needs an update.
- Policy modifications are needed to address some recurring issues and to promote further commercial incentive for private players to enter the market in the generation, distribution and transmission of electricity.
- Measures need to be augmented to ease the financial crunch of the Discoms.
- It is necessary to promote a legal and administrative ecosystem which harbours special attention to renewable energy.
- Though the ministry had brought the first draft in 2014 which had an option to consumers to change their service providers like they do for their mobile phone service, the bill lapsed after dissolution of the Lok Sabha.
- The 2nd and 3rd draft bills were brought in 2018 and 2019.
Important features of the draft:
- The Union power ministry has come out with the draft of Electricity (Amendment) Bill, 2020.
- It seeks to set up an Electricity Contract Enforcement Authority (ECEA) having power of a civil court to settle disputes related to power purchase agreements between discoms and power generation companies (gencos).
- The ECEA will have sole authority to adjudicate matters related to specific performance of contracts related to purchase or sale of power, between gencos and discoms.
- The decision of the ECEA can be challenged at the Appellate Tribunal For Electricity (APTEL) and subsequently, at the Supreme Court.
- The draft provides that the cross (power) border trade shall cover import or export of electricity from India and any other country. The transaction related to passage of electricity through India would be treated as transit between two other countries.
- The draft law provides for introduction of power distribution sub-licensee or franchisee, which would not require a separate licence from state commission.
- It calls for creating a National Renewable Energy Policy by the central government in consultation with state governments.
- The bill says that there would be no schedule or dispatch of electricity unless there is adequate security of payment as per the contract.
- The bill enables state as well as central power regulators to specify transmission charges under open access (earlier both functions were with the central commission).
- The Electricity Act would be applicable to the entire country, including the Union Territories of Jammu and Kashmir and Ladakh.
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