12/11/2020 - Energy

KEY POINTS

·       The Electricity Act of 2003 clearly defines the functions of the government and the regulators under the various statutes of the legislation. Under the Act, all state-specific rules and reforms have to be undertaken by the state electricity regulatory commissions (SERCs) after taking into account their own state’s specificities.

Adhere to the Electricity Act 2003 construct

·       Instead of intruding into state matters, the Centre must, indeed, focus on broader and critical aspects such as availability of round-the-clock affordable power supply to consumers without any load-shedding, adherence to merit order despatch, regulatory reforms and de-politicisation of the power sector.

·       The Ministry of Power must refrain from framing rules under Section 176 unless it is relatable to power provided under the Act. Instead of prescribing such specific rules, the central government should, instead, issue key guidelines for states, allowing them to come up with their own rules and framework applicable at the respective state level.

·       The Electricity Act of 2003 entrusts states to create prescriptive rules in the areas of power generation, supply, distribution and markets. The central government must also invest efforts to promote a fair and healthy competition in the power sector.

Guide regulatory reforms and competition in the right direction

·       A key reform that could be an ideal one would be to amend the Constitution and removing electricity out of the Concurrent List, as in the case of sectors like telecommunications, minerals, coal, hydrocarbons and many other infrastructure areas.

·       First and foremost, we must refrain from political interference in regulatory appointments. To create greater accountability on the part of the state regulators, the Appellate Tribunal for Electricity (APTEL) should be granted powers to issue guiding principles for state commissions and have powers to review their functioning. The Electricity Act of 2003 should be amended to give the APTEL a supervisory role to ensure fulfil their roles and responsibilities prescribed under the Act.

·       Building a healthy ‘competition’ across energy value chain can offer a win-win proposition for the customer, business and market development, as well as build an energy economy that is efficient and sustainable.

·       A free, fair and healthy competition, indeed, also acts as a self-regulating mechanism. The advent of competition in industries such as telecommunication, retail, travel, e-commerce, aviation, etc, has brought a paradigm shift and enormous benefits to industries, consumer choice and overall economic welfare.

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