Cabinet approves changes to Electricity Act, 2003

The union cabinet Wednesday approved the various amendments to the Electricity Act, 2003 as per the power ministry's proposed amendment bill.

"The amendments will usher in much-needed further reforms in the power sector, promote competition, efficiency in operations and improvement in quality of supply of electricity in the country resulting in capacity addition and ultimate benefit to the consumers," an official release said.

Power Minister Piyush Goyal had said last week at an event here that the amendments would be tabled in the ongoing winter session of parliament.

The proposed changes envisage strengthening the penalty provisions, increasing the penalty manifold and making them more enforceable.

Changes to the tariff policy are also being proposed, the minister had said. To encourage more competition in power distribution, it is proposed to give consumers a choice of companies for power supply, a ministry source told IANS.

Goyal said that reforms are also being planned in the distribution sector whereby the entire discom set-up will be unbundled.

"While there will be a government distributor of power to ensure that power is provided to the weaker sections of society, competition will be introduced and a private sector role in the sector," Goyal said.

To boost the wind energy sector, the government proposes to bring in amendments to the act introducing stricter penalties for failing to meet renewable purchase obligation (RPO) targets, Goyal, who is also minister of new and renewable energy, had said here last week which launching the newly formed wind power producers and manufacturers' organisation - the Indian Wind Energy Alliance (IWEA).

Under the RPO system, the state power distribution companies have to mandatorily purchase electricity generated through renewable energy sources during the year.

The proposed changes will also introduce the renewable generation obligation (RGO), which will make it compulsory for thermal power producers to generate electricity through renewables, Goyal said.

Overall, the government was aiming at 2 trillion units of electricity generation by 2020, in which renewable sources are to account for 15 percent, Goyal said. The share of renewable energy is currently around 6 percent of a total base made up of 1 trillion units of electricity.