December 9, 2015

In India, Final Touches to Recommendations for Amending Electricity Policy on Friday

The panel tasked with review of the National Electricity Policy is meeting on Friday to finalise its recommendations.The review is meant to address problems relating to integration of renewable energy which is intermittent by nature, financial viability of distribution companies, setting up of peaking and reserve power plants, scaling up of energy efficiency projects, improvement in reliability and quality of power supply, training of utility personnel and market competition.Similar changes are also being introduced in the National Tariff Policy.

The purpose of this exercise is to align the Electricity Policy with proposed changes in the Electricity Act 2003.India has envisaged adding 1,75,000 MW generation capacity by 2022. When this capacity becomes operational, it will pose serious challenges to grid stability. This calls for setting up peak and reserve power plants which can be switched on when renewable power supply to the grid dips.Making discoms viable by getting state governments to accept a financially accountability is another challenge. Encouraging market competition by ensuring implementation of open access provisions in the true spirit of the Electricity Act 2003 also remains an unfinished business. 

The power ministry has moved the Electricity Act (Amendment) Bill, 2014, seeking legislative changes to pave the way for separation of wore ownership from power supply business. The idea is to encourage competition in power distribution business. That would enable state electricity regulatory commission to issue multiple licences for power supply in the same circle.The Bill also proposes to create an Electricity Distribution Code which will provide for the recovery of electricity charges, intervals for electricity billing, disconnection of services on non-payment of bills, among others.The legislative exercise is also to define renewable energy. It provides for additional Renewable Energy Policy.The Bill also proposes to enhance the penalty ceiling for non-compliance with directives issued by regulatory commissions.The draft legislation also defines Smart Grid as an electricity network that uses information and communication technology to generate, transmit and distribute electricity efficiently.

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