Draft Electricity Amendment Bill, 2020 

#GS2 #Acts&Amendments 

News : West Bengal Chief Minister Mamata Banerjee has written to the Chief Ministers of the States ruled by the opposition parties over the draft Electricity (Amendment) Bill, 2020. 

What is the issue? 

  • She has called the draft Bill a violation of the ‘spirit of cooperative federalism’ and accused the Centre of failure to consult the states on the Bill since Electricity is on the Concurrent List. 

What are the contentious provisions?. 

  • One of the sweeping changes proposed in the Bill is an end to subsidies. All consumers, including farmers, will have to pay the tariff, and the subsidy will be sent to them through direct benefit transfer. 
  • The draft “divests” the States of their power to fix tariff and hands over the task to a Central government-appointed authority. It is considered discriminatory, since the tariff can be tweaked according to the whims and fancies of the Central government. 
  • The bill is also criticised for the provision that makes it compulsory for the State power companies to buy a minimum percentage of renewable energy fixed by the Centre. It is said that this would be detrimental to the cash-strapped power firms.

Changes proposed in the ‘Draft Electricity (Amendment) Bill, 2020 

  • Renewable Energy : This Amendment seeks to promote a legal and administrative eco-system which harbours special attention to renewable energy. The said policy may also prescribe minimum percentage of purchase of electricity from renewable sources of production. 
  • Cross Border Trade : The Central Government has been delegated with the power to prescribe rules and guidelines to allow and facilitate cross border trade of electricity. 
  • Electricity Contract Enforcement Authority : The Amendment has inserted a new chapter in the Act which prescribes the creation and functioning of the Electricity Contract Enforcement Authority (“Authority”). This Electricity Contract Enforcement Authority has been proposed to be given sole jurisdiction to adjudicate upon matters on performance of obligations under a contract regarding sale, purchase and transmission of electricity, which exclusion of this specialised authority’s jurisdiction on determination of tariff or any other dispute regarding tariff. 
  • Payment Security : Lack of payment security mechanism has created a large pool of unpaid dues. To disrupt any future trickle down of such unrealised revenues, this Amendment proposes a mechanism wherein “no electricity shall be scheduled or despatched under such contract unless adequate security of payment as agreed upon by the parties to the contract, has been provided”. 
  • Grant of subsidy : The benefit of subsidy to be granted directly to the consumer and the licensee shall charge the consumers as per the tariff determined by the Appropriate Commission. The determination of tariffs shall be fixed by the commission without accounting for subsidies. Further, basis the tariff policies, surcharges and cross subsidies shall be progressively reduced. 
  • Time limit for adoption of tariff so determined : There had been the issue of lazy attempts from the commissions in adopting the tariffs determined, causing issues of cost escalation. To address this problem, the Amendment has prescribed a period of 60 days to adopt the determined tariffs. 
  • Inclusion of distribution sub-licensee and franchisee : To ease the burden of distribution licensees and in order to promote some form of demographic specialisation, the distribution licensees, can appoint another entity for distribution of electricity on its behalf, within its area of supply. 
  • Enhancement of the powers of the Appellate Tribunal of Electricity : APTEL is proposed to have the powers of a High Court to deal with wilful disobedience of persons and entities under the Contempt of Courts Act, 1971. Additionally, any person can appeal the decisions of the Authority which is introduced by this Amendment in front of the APTEL. The numbers of members at the APTEL have also been proposed to be increased by the Amendment. 
  • Applicable to the whole of India : The Act shall now be applicable to the territory which was erstwhile exempted from the State of Jammu and Kashmir. 
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