Centre mulls delicensing power distribution, bringing multiple DISCOMs in same area
W
ith the aim to facilitate consumers with alternative choices, the Centre proposed to delicense electricity distribution to reduce entry barriers in the power sector enabling multiple distribution companies to operate in the same area of supply.
In the Union Budget 2021-22, the Centre had said, "The distribution companies across the country are monopolies, either government or private. There is a need to provide choice to consumers by promoting competition. A framework will be put in place to give consumers alternatives to choose from among more than one Distribution Company."
Pursuant to the Budget announcements, the Centre held a series of consultations with various stakeholders including state governments, electricity regulators and industry players.
According to Centre's proposal, electricity distribution is to be delicensed to reduce entry barriers to this segment of the power sector. The existing distribution companies shall continue as they are and no change is proposed in the structure of the existing distribution company.
The Centre believes delicensing the sector will enable multiple distribution companies to operate in the same area of supply; leading to competition and choice to the consumers. There will be the requirement of only registration with the appropriate commission.
According to the Centre's agenda, distribution companies can use either their own distribution system or that of another company. Non-discriminatory open access will be provided. State Electricity Regulatory Commission (SERC) will set ceiling tariffs for each category. Discoms will be free to sell power below the ceiling tariff. This will lead to competition on the basis of consumer service.
The centre said the subsidy arrangement is to continue as of now. Only registration with the Commission will be required for supplying electricity. There will be a provision of a cross subsidy balancing fund to prevent cherry-picking.
In line with Supreme Court's order, SERC will be strengthened by conferring Civil Court powers to Appropriate Commission, increasing in the number of members in SERCs from two to three and suo motu determination of tariff by the Appropriate Commission and reducing the time required for tariff determination.
National Load Despatch Centre will ensure the economic and efficient operation of the power system in the country.
Under the vision of one sun one world one grid, cross border trade of electricity will be encouraged.
✔️ Centre mulls delicensing power distribution, bringing multiple DISCOMs in same area
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