In a revolutionary step, the union Ministry of Power (MoP) has proposed for the Nagpur city to separate distribution and supply of electricity. If this model is implemented you may be able to choose your power supplier, the one which offers you the most attractive tariff. This model has been successful in United Kingdom (UK) and there are six supply companies that compete with each other in offering best packages to consumers.
The possible future scenario can be understood by an example. At present, the city is supplied power by MSEDCL and SNDL. However, SNDL is only a franchisee of MSEDCL and its tariff is the same. Their area of operations are different. A SNDL consumer does not have the choice of opting for MSEDCL supply and vice-versa.
If the proposed model is implemented MSEDCL will become only the owner of power network in the city. Various power companies like Tata, Reliance, Torrent, etc will use this network to supply power to consumers. A consumer will have the option of choosing any of them. MSEDCL can also supply power but for that state government will have to constitute a separate power supply company - say Maharashtra State Electricity Supply Company Limited (MSESCL) - that will compete with private players.
The supply companies will provide new connections, install their own meters, issue and collect bills. They will attend to billing complaints. But, the power breakdowns will be attended by the distributor MSEDCL.
If the model is seriously implemented it will break the monopoly of state-run discoms which have become extremely inefficient due to lack of competition. Many of them might improve their services like public sector banks did to survive. Due to poor financial health of these discoms power generation companies too are in a bad shape.
Commenting on the draft amendment power expert RB Goenka said while the step was welcome it had several flaws and grey areas. "The draft proposes to continue cross subsidy. This will come in way of offering a competitive tariff. Instead government should make it compulsory for generating stations and supply companies to provide it certain quantum of power at subsidized rates and then supply it to farmers.
"Secondly, the tariff of the suppliers will be determined by electricity regulatory commissions. This is even more illogical. How can suppliers offer competitive tariff if somebody else decides it for them. I am opposing these provisions in my submission to MoP. Unless these provisions are removed the new model won't be successful," he said.
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