Govt proposes parallel power distribution licensing for consumer choice

The Power Ministry's Consultative Committee discussed a new framework for parallel distribution licensing. The proposal aims to give consumers a choice of electricity supplier, improve service, and ensure efficient use of existing infrastructure.

The Consultative Committee of the Ministry of Power discussed a proposed framework for parallel distribution licensing aimed at promoting consumer choice, improving service quality and ensuring efficient utilisation of electricity distribution infrastructure. The meeting was chaired by Union Minister for Power and Housing & Urban Affairs Manohar Lal and attended by Minister of State for Power Shripad Yesso Naik, Members of Parliament who are part of the Consultative Committee, the Secretary of the Ministry of Power and senior officials of the Ministry.

Addressing the meeting, the Union Minister said the Electricity Act, 2003, had successfully introduced competition in electricity generation, transmission and trading, while electricity distribution continues to remain the only major segment where competition is limited. He said that as India progresses towards the vision of Viksit Bharat @2047, consumers will increasingly expect a reliable, affordable and high-quality electricity supply comparable to global standards.

During the discussions, it was noted that the existing legal framework permits more than one distribution licensee in the same area. However, each licensee is currently required to establish its own distribution network, leading to duplication of poles, power lines and substations. According to the Ministry, this increases capital expenditure, discourages fresh investment and results in inefficient utilisation of resources.

New Framework to Boost Competition

To address this, the Committee discussed a proposed framework that seeks to enable competition in electricity supply without requiring duplication of the physical distribution network. Under the proposal, existing distribution licensees will continue to own, operate and maintain their networks. New distribution licensees will be allowed to use the existing network by paying regulated wheeling charges, while retaining the option to develop their own network wherever permitted by the concerned State Electricity Regulatory Commission.

Implementation and Safeguards

The Minister said that the detailed implementation framework would be developed by the State Electricity Regulatory Commissions to ensure fairness, transparency and non-discriminatory access to the network. He added that the proposal also protects the interests of existing distribution licensees and their employees. The Ministry said all distribution licensees will continue to be bound by the universal service obligation under the Electricity Act, while the regulatory framework will prevent selective supply only to profitable consumers.

Consumer-Centric Reforms

Highlighting the consumer-centric nature of the reform, Manohar Lal said consumers would have the freedom to choose their electricity supplier, similar to the choices available in sectors such as telecommunications and aviation. He said increased competition is expected to encourage better consumer service, improved reliability, greater innovation and operational efficiency, while ensuring optimal utilisation of existing infrastructure and avoiding unnecessary expenditure.

Mumbai Model as Precedent

The Minister also noted that the concept has already been implemented successfully in Mumbai for several years, where consumers have exercised supplier choice while the distribution network continues to be developed in a coordinated manner under the supervision of the State Electricity Regulatory Commission.

Members of Parliament actively participated in the discussions and offered suggestions on various aspects of the proposed framework. Minister of State for Power Shripad Yesso Naik thanked the Members for their constructive inputs and reaffirmed the government's commitment to carrying forward reforms that place consumers at the centre of India's power sector while ensuring efficiency, transparency and sustainable growth. (ANI)

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