The Central government’s draft amendment bill on the Electricity Act, if adopted in its present form, may compel the Tamil Nadu government to scrap the existing scheme of free power supply for farmers, hut-dwellers and sections of domestic consumers.

Proposing changes to Section 45 (power to recover charges) and Section 65 (provision of subsidy by State government), the draft bill specifically states that in respect of subsidy to any category or class of consumers, “it shall be through Direct Benefit Transfer [DBT].” This will be applicable regardless of who the provider of subsidy is, be it the Central government or the State government.

In Tamil Nadu, the scheme of free power supply for farmers and hut-dwellers has been in force for over 30 years. Over time, other categories, such as handlooms and powerlooms, were also covered. For the last two years, domestic consumers have been covered by the scheme. Their consumption of the first 100 units is exempted from bi-monthly power bills. The Central government has circulated the draft bill to States and other stakeholders for feedback.

Another aspect of the bill is its prescription on elimination of cross subsidy within three years. Besides, the overall extent of cross subsidy should not be more than 20% and the proposed annual reduction should not be less than 6%.

But in Tamil Nadu, a high tension consumer, i.e., an industrial unit or an educational institution, on an average, paid between ?7.5 and ?8 per unit, depending upon usage, as against the average cost of supply of ?5.85 per unit, (as worked out by the Tamil Nadu Electricity Regulatory Commission in its tariff order of August 2017), said a power expert. With a large number of consumers receiving subsidy, and despite the State government’s financial assistance of ?7,643 crore towards tariff subsidy, the Tamil Nadu Generation and Distribution Corporation was said to have suffered losses to the extent of ?3,000 crore during 2017-18. “This is why the reduction and eventual elimination of cross subsidy is extremely difficult in the State,” the expert said.

Electricity Minister P. Thangamani said the State government was yet to firm up its position on various provisions of the draft bill. “A high-level discussion, involving Chief Minister Edappadi K. Palaniswami, will take place. But I can assure you that the government would support only those provisions which are beneficial to our State,” he said.