Power Ministry's for separation of "carriage and content" in distribution has received support from the Forum of Regulators (FOR) which is a representative body of central state electricity regulators. Ministry's move to amend the Electricity Act, 2003 is aimed at the introduction of competition in retail electricity supply.
The ministry proposal is based on the Central Electricity Authority's recommendation in the recent report that the distribution system may be separated from supply of electricity with two separate licensees to two separate legal entities.
However, FOR at its recent meeting held on November 18 opined that electricity being a concurrent subject, such a model should be implemented after wide consultation with stake holders including state Governments, state utilities, consumers, NGOs. Besides, smaller States, especially, the hilly states may need separate treatment and the model may need to be modified accordingly. FOR also suggested that the consumers should not be burdened with dealing with two licensees separately.
As per the proposed amendment, the distribution licensee will have an obligation to provide connection on demand to any consumer in its area of distribution. Further the incumbent supply licensee will have universal supply obligation to serve all the consumers in its area of supply. The subsequent supply licensee will have to have service obligation to supply on demand to all consumers of the specified voltage level for which supply licensee has been granted to it. The existing intra-state traders will be treated as deemed supply licensees with service obligation to supply on demand to all consumers of specified voltage level.
However, FOR has suggested that the subsequent supply licences should be granted for the entire area co-terminus with the incumbent supply licensee, with the obligation to supply electricity to all the consumers in its area of supply.
RP Singh, former chairman, PowerGrid Corporation told Business Standard ''The electricity sector will become viable through commercialization of the distribution sector which can only be feasible if content is separated from the carrier whereby the distribution network 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) be opened to competition may be at the taluka and district levels while in the towns and cities there could be multiple players. The present form of privatization of distribution replaces the government monopoly by a private monopoly which would focus on maximizing the profit.''
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