Multiple discoms may supply power through existing distribution networks
New Delhi: The consultative committee of the power ministry discussed a proposed framework to allow multiple power distribution companies (discoms) to supply power through existing
New Delhi: The consultative committee of the power ministry discussed a proposed framework to allow multiple power distribution companies (discoms) to supply power through existing distribution networks across states, an official statement said on Friday. The current legal framework permits more than one distribution licensee in the same area, but it requires each licensee to establish its own distribution network. The statement noted that this results in duplication of poles, lines and substations, increases capital expenditure, and discourages fresh investment, ultimately leading to inefficient utilisation of resources. “The proposed framework seeking to enable competition in electricity supply without requiring duplication of the physical distribution network was discussed in detail. Under the proposal, existing distribution licensees will continue to own, operate and maintain their networks,” the statement said.
Also Read | Houthi blockade may lift Saudi oil freight costs to India by 50% New distribution licensees will be able 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, it added. The move would allow private players to enter the power distribution space in states where only public sector companies are catering to the demand. Consumer choice and safeguards Chairing the meeting on Thursday, Union power minister Manohar Lal 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”, and that the proposal also “fully protects the interests of incumbent distribution licensees and their employees”.
The minister said that after the implementation of the proposed norms, all distribution licensees will continue to be bound by the universal service obligation under the Electricity Act, and the regulatory framework will prevent selective supply only to profitable consumers. The minister said that consumers will have the freedom to choose their electricity supplier, similar to the choices available in sectors such as telecommunications and aviation. Also Read | India eyes UAE ports to skirt Hormuz risks for energy cargoes 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, the minister added. Opposition to the proposal The draft bill to amend the Electricity Act, 2003, released in October last year also revived the government's plans to open up India's power distribution sector, and allow multiple discoms to cater to a single area through the existing distribution infrastructure.
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