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The power ministry's proposal to separate 'carriage and content' in distribution has received support from the Forum of Regulators (FOR), a representative body of central state electricity regulators. The proposal is based on a recent Central Electricity Authority recommendation that the distribution system be separated from the supply of electricity, with two separate licences to two separate legal entities.
The ministry's move to amend the Electricity Act, 2003, is aimed at enhancing competition in retail electricity supply.
At a meeting on November 18, FOR said as electricity was a concurrent subject, such a model should be implemented after wide consultations with stakeholders, including state governments, state utilities, consumers and non-governmental organisations. Besides, smaller states, especially hilly states, might need separate treatment and the model might need to be modified accordingly. FOR also said consumers should not be burdened with dealing with two licensees separately.
According to the proposed amendment, the distribution licensee will have an obligation to provide a connection when demanded by any consumer, in its area of distribution.
Further, incumbent supply licensees will have an obligation to serve all consumers in its area of supply.
And, the subsequent licensee will need a service obligation to supply, on demand, to all consumers at the specified voltage level for which the supply licence has been granted to it. Existing intra-state traders will be treated as deemed supply licensees, with a service obligation to supply, on demand, to all consumers at the specified voltage.
R P Singh, former chairman, PowerGrid Corporation, told Business Standard, "The electricity sector will become viable through commercialisation of the distribution sector, which can only be feasible if content is separated from the carrier whereby the distribution network can be assigned to a licensee on similar lines as the central transmission utility and state transmission utility have been assigned for the development of transmission network. The content (sale of power) may be opened to competition at the taluka and district levels, while in towns and cities, there could be multiple players. The present form of privatisation of distribution replaces the government monopoly by a private monopoly, which would focus on maximising profits."
