The Electricity (Amendment) Bill, 2014 was introduced in the Lok Sabha on December 19, 2014 by the Minister of Power. The Bill seeks to amend the Electricity Act, 2003. Amongst the various changes that the amendment proposes, following seem to be the major thrust areas:

  • Introducing carriage and content separation, i.e. segregation of wires and the supply business
  • Further enabling open access, competition and markets
  • Greater impetus for renewable Energy
  • Greater accountability of the regulatory institutions

Amending the Electricity Act 2003, which is the central act governing the power sector structure and policy, is a crucial exercise with far reaching and long terms implications. It also is an opportunity to change the course of the policy direction, design and implementation, to address the critical issues currently faced by the sector. Therefore, while undertaking such a process it becomes extremely important to assess the immediate as well as long term challenges before the sector. Also, given the nature and extent of the changes that the amendment seeks to bring out, it was critical to have a larger framework to understand how and why these are useful and needed in the context of present challenges and past experience.

Unfortunately, there is no such background material that elaborates on the aims and objectives of the amendment or explains the analysis and reasoning behind introducing the new sector structure that it wants to create. In the absence of such background material, one is constrained to infer based on the limited insight provided by the statement of objects and interpretation of the proposed bare Act itself. Also, often it is not just the Act, but the associated policy formulation that lends clarity and helps to understand the broader policy vision. In this context, it was crucial to have drafts of the associated policy documents also in the public domain along with the proposed amendments. This would have helped to fully understand the policy direction, long-term objectives and the possible alternatives that have been considered for dealing with the potential implementation challenges. Unfortunately, though the amendment relies on several important issues to be dealt with through policy formulation, the same not being in public domain, makes it difficult to understand how exactly implementation is envisaged. This naturally puts serious limitations on undertaking a comprehensive analysis of the broader scheme of things proposed by the amendment, but cannot be helped in the present context.

It is with such limitations and constraints that this commentary puts forth a preliminary analysis of the key changes being proposed, their implications based on experience of the past ten years of the 2003 act implementation, along with a few alternativs and suggestions.