Another anti-people measure proposed by the government which will make electricity unaffordable to many people


Report by Kamgar Ekta Committee (KEC) correspondent


The key objective of the Electricity (Amendment) Bill (EAB) 2022 was to privatise electricity distribution all over the country and curtail the role of state-owned distribution companies (discoms). Private companies are interested in electricity distribution only if it is profitable. To enable this, the Bill made two important provisions.

One, the private company does not have to invest large capital for creating new distribution infrastructure. The discoms will be obliged to provide their existing infrastructure to private operators for distributing electricity by them.

Two, electricity rate should be so fixed as to recover “all prudent costs” of electricity from consumers plus the assured profit. In other words, the government wants tariffs to reflect the full cost, including the impact of variation in fuel prices, of power procured by discoms.

However, the government failed to get the EAB 2022 passed immediately and was forced to refer it to the Parliamentary Standing Committee for Energy due to the strong opposition by power sector employees. The government is still going ahead with the privatisation of distribution in Union Territories. The distribution in Daman, Diu & Dadra-Nagar Haveli has already been handed over to Torrent company. The privatisation of distribution in Chandigarh has been finalised but power employees have challenged it in the High Court.

Private operators want the power rate fixation system to be changed immediately so as to make electricity rate profitable for them. The central government therefore has now proposed to change the rules under the Electricity Regulations 2005 so as to implement automatic monthly revision in electricity tariffs.

A draft of the amendments to the regulations has been circulated for comments by 11th September 2022. The objective of changing the existing Regulations is for “timely recovery of power purchase cost by distribution licensee”.

The draft of the Electricity Regulations 2022 says, “The appropriate commission shall, within 90 days of publication of these rules, specify a price adjustment formula for recovery of costs arising on account of variations in fuel price or purchase cost. The impact in the cost (of power) due to such variation shall be automatically passed through in the consumer tariff on a monthly basis using the formula.”

“Section 176 of the Electricity Act 2003 gives the Centre powers to frame rules for the sector. Since the amendment bill is delayed, the Centre is changing the regulations to implement this anti-people provision under the existing Act,” All India Power Engineers Federation Chairman Shailendra Dubey said.

Once the proposed Regulations are implemented, the power rate will keep going up and vary from month to month as has we have seen with other energy sources like petrol, diesel, LPG. Electricity will become unaffordable to many people in the country. We will also witness rise in prices of most of the goods and services as electricity is an essential input for them.

It is once again clear that the present system is interested only in taking care of interests of big capitalists. The unity of workers and consumers, cutting across all divisions, alone will be able to resist these continued attacks people’s livelihoods. Working people have to think about the system that we have today where the government has no accountability and responsibility to people.



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