It is learnt that the Union Power Minister has convened a meeting through video conferencing of Energy Ministers of all States & Union Territories on 03 July. Agenda of the meeting is Electricity (Amendment) Bill 2020 & some other points. Before this meeting the Ministry of Power has issued a press brief giving its response to various comments and objections received in response to draft Electricity (Amendment) Bill 2020 for amendment to Electricity Act 2003. The Minister of Power addressed an online press conference which was reported by the press on 25.6.2020. Following are the salient points of response by Govt. of India / Ministry of Power to the draft Electricity (Amendment) Bill 2020:
a) Govt. of India proposes to introduce the amendment in Parliament during the coming monsoon session.
b) The amendment contained in draft of 17.4.2020 has been amended on the basis of comments/ objections received and the amended draft has been sent to the Law Ministry for its clearance, submitting the draft to Parliament.
Summary of Changes/ Amendments made by MoP/ Govt. of India are as under:
i) Common Committee for Selection of SERC Members, CERC, APTEL Member and chairman. Govt. of India has considered or is considering continuing the present system whereby the State Governments select its own SERC Members/ Chairman but with the amendment that the Selection Committee would be headed by the Chief Justice of High Court. Instead of constituting a Selection Committee afresh every time, a Standing Selection Committee would be constituted with representation from State, Centre and chaired by Chief Justice so that the time delay in constituting Selection Committee is avoided.
ii) DBT AND PAYMENT OF SUBSIDY:
Govt. of India proposes that DBT should be implemented if the State Government makes direct payment to consumer a/c directly and if there is delay in subsidy payment (DBT), the consumer would not get disconnected for default in payment of Discom Bill. The proposal is that the Discom would raise a bill on the consumer for full tariff as determined by SERC and if there is delay in release of DBT subsidy, and if it leads to delay in bill payment, the Discom would not disconnect the consumer.
It is opined that the field conditions in every State are different so the State Government must have the freedom to adopt payment of subsidy as per its requirement and the DBT payment mode should not be made compulsory. Further as electricity is a concurrent subject, the Centre Government must not force or enforce its procedure since the State has equal rights to take its decision as per its prevailing requirement.
iii) INDEPENDENT FUNCTIONING OF SERCs
Govt. of India has verified that SERCs would be allowed to function independently in determining the retail tariff. However, the fact remains that the Govt. of India intends to dictate its terms to the SERC through the tariff policy and thereby enforce its will on the SERCs thereby making the SERC subservient to Govt. of India through the backdoor of tariff policy.
iv) Govt. of India has not clarified the clauses / terms and conditions by which it intends to ensure that SERCs determine full recovery of tariff without resorting to regulatory assets (i.e. cost reflective tariff).
v) PAYMENT SECURITY MECHANISM
Since the sale/ purchase of power between seller (generator) and buyer (Discom) is determined by the terms and conditions of PPA, and since the PPA itself contains all the details regarding payment security mechanism, Govt. of India has no jurisdiction and is going out of the way to interfere in a commercial – legal document i.e. PPA.
vi) CROSS SUBSIDY
This is another attempt by Govt. of India to dictate terms to SERCs and to encroach upon their independent working.
vii) ELECTRICITY TRIBUNAL / ECEA
Govt. of India has not taken any action to accommodate the objection raised by all the Discoms against the formation of ECEA. This proposal for constituting ECEA should be rejected outright.
viii) RENEWABLE HYDRO
This is a clear attempt by Govt. of India to force the State Discoms to purchase high cost hydro energy under disguise of RPO. The costly hydro energy which cannot find a buyer at market rate is now proposed to be sold to the Discoms through the RPO mechanism. This is not acceptable and should be rejected.
ix) DISTRIBUTION FRANCHISE AND SUB-LICENSEE
Most of the Discoms have serious objections to this proposal as it would result in cherry picking and the private parties would try to get the high revenue areas for maximizing their profit and this would increase the losses of State Discoms. Moreover the experiment of privatization in Odisha and Franchise experiment in many states has miserably failed. Thus it is like pushing a failed experiment. This proposal should be rejected outright.
PROPOSED FURTHER LINE OF ACTION:
With the issue of press release and press conference of 25.6.2020, the following situation emerges:
A. That Govt. of India has made only minor / minimum changes in the draft amendment and has not accommodated the majority of objections raised by State Discoms. This implies that Govt. of India has rejected majority of the amendments proposed by Discoms.
B. Only fundamental issue of federal structure of the country and concurrent subject of electricity, there is no change in Govt. of India response and Govt. of India is persisting with the earlier approach by treating electricity as if it was a Central subject and thereby going against the letter and spirit of the constitution.
C. FOLLOWING ISSUES NEED TO BE HIGHLIGHTED:
i) Whether the State should have the freedom to exercise their constitutional right and decide about mode of subsidy payment or whether this issue is justified to be dictated by the Centre. Whether the State should have the freedom to continue distribution in the state sector or whether privatization through distribution sub license and franchise will be imposed on states to the benefit of private houses.
ii) Whether the SERC should be allowed to function independently or whether the Central Govt. is justified in dictating the functioning of SERC through the tariff policy. If tariff policy is to be the deciding factor then what is the purpose of having SERC.
iii) When payment Security Mechanism is a matter entirely within the scope of PPAs, which is a signed legal contract between the supplier /generator and the purchaser/ Discom then why and on which basis Centre is trying to intervene on this issue through the RLDC provision for dispatching/ scheduling of electricity.
D. It is suggested that all the amendments now proposed by the Govt. of India should be further discussed and debated among all the stakeholders including the public/ consumers, engineers / employees, State Generator and Central Government. Even if the Govt. of India decides to table the proposed amendment in the coming session of Parliament, it is of utmost importance that the amendment should be referred to the Standing Committee for Energy which would give all the stakeholders an adequate opportunity to appear before the Committee and make their written and verbal submission. In a previous instance of amendment, the same was referred to 47th Standing Committee of Parliament. The same principle of referring to the Standing Committee must be followed in the present case also.
E. In the present circumstances of the deteriorated / critical crisis of CoronaVirus, the Govt. of India must wait for normal conditions to be restored before the amendments are submitted to Parliament. The Electricity Act has been enforced since 2003 and there is no emergency or crisis for its immediate amendment. The Govt. of India must wait for normal conditions to be restored before taking up the amendment in Parliament. Under the present circumstances of maintaining social distance, it would be physically impossible for all the Parliament Members to participate in the proceeding in Parliament because of the constraint of keeping social distance. On this account therefore, the submission of amendments to Parliament must be deferred.
Thank you with regards.
Yours Sincerely
Shailendra Dubey
Chairman