Comments on the amendments to the EA 2003

Projected as the Electricity Bill 2021.

 

Preamble

The All India Power Engineers Federation considers electricity as an essential service and   not as a commodity. Further, in the context of urbanisation and the internet electricity has become a fundamental right since all other services are dependent on electricity.  This should be the basis for all decision making in respect of electricity.

Preliminary Comments

Since independence until the beginning of the current century there was an impressive all round development of electricity, not merely in the extent and quality of service but in achieving a measure of self-sufficiency in support structures like manufacturing capacity. In 2003, the legislation changed and in its wake the entire structure of the industry was changed.

Eighteen years of experience with the legislation, the Institutions, and governance mechanisms needs to be examined thoroughly and based on that necessary changes need to be made. This is extremely important since India is not a homogenous nation. It is a federal country with vast differences, the socio-economic capacity and therefore the ability to pay the cost to serve varies drastically, the stage of development and investment made in industry also vary.

Unfortunately, instead of using this opportunity to review and rework, legislative changes are being made on a piece-meal basis. Since there was strong opposition to the Electricity Bill 2020, the Electricity Act 2003 is being modified in a moth-eaten fashion and presented as Electricity Bill 2012.  Such adhoc measures are dangerous, since electricity is a complex, inter-connected network system and making amendments to suit certain interests may cause more damage than good.

What is both serious and distressing is that the proposed Bill has not even been posted on the website of the Ministry of Power.  There should be sufficient debate both in public domain and in Parliament.

Objectives of the Amendments

The purpose of the amendments is:

·Facilitate multiple players into the distribution sector. Reducing DISCOMS to merely one of the players are par with a person or even an artificial judicial person. This opening up is prescribed without any details or working details. Just enabling clauses.

·Complete freedom to create franchisees with no public accountability.

·Artificial distinction between urban and rural when there can be no barriers in the flow of electricity.

·Ensure uncritical continuity of policy by enforcing the policy by restricting the selection of Chairman of the CERC to bureaucrats from the power ministry with little or no expertise in the power sector save a short stint in MOP, GOI

·Create a de-facto Contract enforcement authority by not only providing the commission to adjudicate in contracts but also give it powers of a civil court.

· Additional responsibility to load dispatch centres of ensuring payment schedules when load management is a continuous process.

What the Electricity Bill 2021 fails to address

·The inability of a majority of people, including farmers to pay the cost to serve.

·The experience of several franchisees being by the regulators due to fraud.

·The cost of metering inhibits retail (domestic) competition, making it unviable. Due to open-access there is already competition for the larger consumers.

·Failure of existing private distribution in modernising the network.

·Estimate the cost of metering and the alternate use of capital investment for the improvement of the distribution network in order to reduce the technical losses

·Reconsideration of AT&C losses, an index that is unique to India and does not reflect the need for improvement of technical losses and system improvement.

Amendment-wise comments

 

distribution company" means a company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person, registered under section 24B for the purpose of supply of electricity through its own distribution system or using the distribution system of other distribution companies to the consumers in its area of supply;".

 

Free for all with no accountability. DISCOMS at par with association or body of individuals, whether incorporated or not, or artificial juridical person

 

Provided also that a distribution company may propose to undertake distribution of electricity for a specified area through another person and such person shall not be required to register separately:

 

Free for all franchisee

Provided also that where a person intends to generate and distribute electricity in a rural area to be notified by the State Government, such person shall not require any registration for such generation and distribution of electricity, but shall comply with the measures which may be specified by the Authority under section 53:

 

Basis for distinction between urban and rural areas

 

"Provided that no electricity shall be scheduled or dispatched under such contract unless adequate security of payment, as agreed upon by the parties to the contract, has been provided.".

 

Why should load dispatch be linked to contract enforcement and payment schedules. LDC are neither commercially nor legally trained to interpret contracts/ and or adjudicate on disputes. Load dispatch is on an instant to instant basis and there is little or no possibility of enforcing payment schedules except in an adhoc and arbitrary manner.

 

In case any complaint is filed before the Appropriate Commission by any person or if that Commission is satisfied that a distribution company has knowingly failed to

 

Are regulatory commissions equipped or staffed to handle such complaints.

 

Provided that, if the tariff is not decided by the Appropriate Commission, on expiry of ninety days from receipt of such application, the proposed tariff shall be deemed to have been adopted."

 

What if there is collusion between both parties to delay?  Another form of regulating the regulator.

 

The Chairperson of the Central Commission shall be a person of ability, integrity and standing, having adequate knowledge of and experience in the power sector, or, is or has been Secretary or Additional Secretary for a total of at least two years in the Ministry or Department of the Central Government dealing with power sector.";

 

This ensures continuity of policy and practice with no scope for making amends. Narrows selection only to civil servants with administrative experience and no expertise wot work experience in the power sector. Putting it into law permanently restricts the choice.

 

adjudicate upon disputes including matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity, involving generating companies or licensee in regard to matters connected with clauses (a) to (d) of sub-section (l) and to refer any dispute for arbitration;”

after clause (f) in sub-section (l), the following shall be inserted, namely:

"(fa) to adjudicate upon disputes involving National Load Despatch Centre or Regional Load Despatch Centre in regard to matters connected with section 26, section 28 and section 29;";

 

 

Adjudication of disputes is a judicial function. Essentially CERC shall become a Contract Enforcement Authority and get bogged down with dispute resolution.

 

The Chairperson of the State Commission shall be a person of ability, integrity and standing, having adequate knowledge of and experience in the power sector, or, is or has been a Chief Secretary or equivalent for at least one year in the State Government and has experience of at least two years in power sector. ";

 

Unlike the Central Commission appointment of civil servants is not mandatory, but the entire emphasis of the law is to entrust regulation to bureaucrats rather than those who have devoted themselves to the sector and have expertise.

 

nominee of the Central Government, not below the rank of Joint Secretary to Government. Member.".

 

Those with no expertise in the power sector will select members of the State Commission.

 

to adjudicate upon disputes including matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity, involving generating companies or licensee and to refer any dispute for arbitration;"•

 

Same as the central commission, the state commissions adjudicate on disputes. Adjudication of disputes is a judicial function. Essentially, regulatory commissions shall become a Contract Enforcement Authority and get bogged down with dispute resolution.

 

 

An order made by the Bench of the Central Commission under subsection (l) of section 79 or the Bench of the State Commission under subsection (l) of section 86, shall be executable as a decree of civil court and, for this purpose the Bench of the Central Commission or the State Commission, as the case may be, shall have all the powers of a civil court including but not limited to powers of attachment and sale of property, arrest and detention in prison and appointment of a receiver,

 

Merely because there is a member with a legal background, does it qualify the commission to play the role of a civil court? Legal opinion on this should be obtained.

 

Penalty for contravention of the provisions of the Act

 

Are commissions qualified and have adequate staff and systems to determine violations and award such punishments. This is an encroachment of judicial functions.

 

 

Shailendra Dubey

Chairman