Power flows from the barrel of a Bill

The Electricity Bill will encourage competition, rationalise power tariffs and ensure a transparent policy regarding subsidies

New Delhi: After a three-year wait, controversies and confusion, the Indian Parliament finally passed the Electricity Bill last week. This Bill replaces the archaic Indian Electricity Act, 1910, Electricity Supply Act, 1948, and the Electricity Regulatory Commission Act, 1998. The Bill attempts to set in motion far-reaching reforms in the power sector by encouraging competition, rationalising power tariffs and ensuring a transparent policy regarding subsidies.

In the first place, the Bill recognises that the sources of generating power as well as the usage of power are different, say in a North Eastern state as compared to say Madhya Pradesh. The Bill allows each state to frame its own laws and chart their own reform path by instituting a suitable enabling framework.

The Bill envisages the 'open access' scheme, which will enable the consumer to choose the source from which he can obtain his power. Under the open access scheme, a group of consumers can get together and as bulk consumers, choose to buy power either directly from the generating company or intermediaries such as traders and distributing companies.

Currently, bulk consumers cannot choose their power source and are forced to purchase their power from the state electricity board (SEB) or its successor distribution licenses. The scheme will take over a year to be implemented, but once implemented it will encourage competition, help drive down power costs and improve services.