Aims of the bill:
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To de-license power supply to increase competitiveness.
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Allows multiple distributors in the same area
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Gives consumers the option to switch power suppliers.
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The bill also proposes appointing a member with a legal background in every electricity regulatory commission and strengthening the Appellate Tribunal for Electricity (Aptel).
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It also spells out penalties for any failure by power distribution companies to meet renewable purchase obligations. DISCOMs are required to buy a fixed amount of renewable energy to reduce their reliance on fossil fuels.
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In addition, the Electricity (Amendment) Bill also lays down the rights and duties of electricity consumers.
What needs to be done further to improve the electricity market?
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Apart from the above-said reforms, issues related to high levels of cross-subsidy, losses, and poor infrastructure will also need to be resolved.
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The success of de-licensing or retail competition will critically depend on its ability to address the core issues relating to:
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the high level of cross-subsidies in retail tariffs;
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inefficiencies in the form of T&D (transmission and distribution)/ AT&C (aggregate technical and commercial) losses; and
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poor state of T&D infrastructure
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Imposition of restrictions to address existing tariff distortions or imposition of universal supply obligation on new suppliers would defeat the objective of creating a market-driven industry structure.