The Politics Of Statism Over The Electricity Amendment Bill Needs To Stop

The passage of the Electricity Amendment Bill 2022 in the Lok Sabha has been met with widespread resistance, within and outside parliament, with many politicians and former bureaucrats declaring it ‘dangerous’, ‘an assault on state rights’ and much more.

For now, it is the Delhi State Government which seems to be leading in its brickbats, even as other state governments, especially Tamil Nadu, West Bengal and perhaps even Bihar, will no longer latch on soon.

It is time the discussions were held on more specific issues, rather than generalities like these. The Bill, quite simply, seeks to fix three things. Uncontrolled subsidies that have brought the related power distribution system to its knees, stifling investment into grid strengthening, more competition in the sector to provide consumers more choice and rights, and finally, ease the way for faster adoption of renewables, now that they are competitive with legacy fuels like thermal and gas.

One simply cannot see what is wrong with these objectives. Yes, detractors do have a point and reason to worry about the cut down of powers at the state level, particularly when it comes to the power to give away free electricity, or starve state DISCOMs of payments for years altogether. But these powers have been misused to reduce most DISCOMs to financially weak and corrupt entities, or push out industries even from states.

Delhi is a special case. For one, the myth of free power for all is increasingly costing those who do pay, an ever higher amount. It says something for the shortage mindset of politicians of a certain era, that their first instinct is to tax higher consumption. In this case, consumers at the top tier in Delhi are paying in excess of Rs 10 per unit, when the average purchase price of the local DISCOMs is less than 50% of that figure. The figure payment is going to fill up the subsidy gap, rather unfairly, many would say. And this when the state has a relatively affluent populace, able to support the government in raising funds relatively easily for other schemes. Repeating this experiment in poorer states is bound to lead to not just slippages, but unintended consequences like pushing industry (highest paying consumers) out of the states.

It is perhaps this same desperation to extract from higher consuming households that explains the tardy progress of the rooftop solar push in the national capital, which has achieved barely 10% of its targets laid down by the same state government. It’s the same story across key metros, from Mumbai to Chennai, where DISCOMs are perhaps wary of seeing their highest paying consumers, who would naturally have the highest interest and ability to install rooftop solar, produce their own power.

The claim of an attack on state regulators powers, and hence federalism  would perhaps hold more weight of the relevant state regulators actually sat down to regulate. We have too many state regulators that are guilty of sitting on the job by well, not sitting for hearings at all. Be it lack of quorum, or a willingness to give new dates for hearings, this needed to change in the new environment.

A power system groaning under a Rs 110,000 crores loss can simply not be fixed without fixing underlying causes, as multiple governments and their bailouts  have proved over the past two decades.

Let’s hope the standing committee that will take up the Bill now allows for a more balanced, nuanced discussion on the way forward. For instance, issues like keeping possible new entrants out of USO (universal service obligations) seem unfair to existing DISCOMs at first glance, and definitely need discussion. Similarly, there is also an urgent need to control further long term PPAs that state DISCOMs might sign with thermal power producers, when the country claims to be energy surplus and pushing hard for renewables.  Long term thermal PPAs at this stage will be like poison pills for the long term push for more renewable energy.