A decade after the Electricity Act promised to bring in sweeping changes in the way the electricity business was run in the country, state governments have ensured not too much has changed on the ground. While the Electricity Act promised to bring in competition at the consumer level through what is called open access, literally allowing consumers to buy power from suppliers other than the ones who owned the power lines going into their premises, no state electricity regulator enforced this. If this wasn’t bad enough, state governments have been misusing Section 11 of the Electricity Act to force power producers within their jurisdiction to sell at low prices to power utilities within the state. The Electricity Act envisaged a situation where power company A would be allowed to sell electricity to power utilities in state B if the power utilities in state A were not able to pay it on time, or if it had surplus power beyond what it had already contracted to sell within the state through a power purchase agreement.
Yet it was found that many state governments were either not giving power producers access to power transmission lines to transfer the power outside the state; in other cases, various reasons like the public interest were cited to stop sale of power outside the state. The power ministry has now put out a discussion paper on this, asking for comments from all stakeholders. What is proposed is a 30-day period in which any objections/hurdles will have to be heard by the state electricity regulatory commission, including the power company’s right to get compensation. Once all comments come in, the power ministry’s proposed changes to the Electricity Act will be sent to Parliament for ratification. Hopefully, Parliament will accept the changes that will usher in competition in a sector which, being a natural monopoly, is not going to see any serious reduction in costs or improvements in quality of service unless this happens. You have to only see the revolution in telecom, in the quality of service as well as in tariffs, to know what competition can achieve.