MoP Extends Deadline for Comments on Draft Electricity Bill 2020

MoP has extended the deadline for submission of comments/ suggestions by the industry stakeholders on the draft Electricity (Amendment) Bill 2020.

The Ministry of Power (MoP) has written to all interested stakeholders i.e. CEA, CERC, state governments, Discoms, etc. informing them of the extension in the deadline for submission of comments/ suggestions on the draft Electricity (Amendment) Bill 2020 that was first issued on April 17, 2020, with a 21-day deadline i.e. by May 8, 2020, for the comments.

However, in this new notice, the ministry has extended that deadline until June 5, 2020. Stating that it had “received requests from various stakeholders for extension of time for submission of comments on the draft Amendments. Accordingly, it has been decided to extend the time period for submission of comments/ observations/ suggestions on the draft Electricity (Amendment) Bill 2020 to this Ministry till 5th June 2020.”

As per our previous coverage, the bill is of particular significance for the renewable sector, as it promises to tighten up enforcement of orders made previously, be it on Renewable Purchase Obligations (RPO’s), enforceability of PPA’s and payment conditions from discoms to generators. The focus, as observed from reading through the bill, is on pushing through both better efficiencies on the Discom side, and higher participation and protection for private sector investments on the renewable energy front by protecting payment commitments better.

MNRE secretary (at the time) Anand Kumar had indicated that the final act would be passed at the earliest after feedback, including an option to do it via the ordinance route if required.

Some of the key proposed amendments highlighted in the draft bill are:

Viability of  Electricity Distribution Companies (Discoms)

1. Cost reflective Tariff: To eliminate the tendency of some Commissions to provide for regulatory assets,  it is being provided that the Commissions shall determine tariffs that are reflective of cost so as to enable Discoms to recover their costs.

2. Direct Benefit Transfer:  It is proposed that tariff be determined by Commissions without taking into account the subsidy, which will be given directly by the government to the consumers.

Sanctity of Contracts

3. Establishment of Electricity Contract Enforcement Authority: A Central Enforcement Authority headed by a retired Judge of the High Court is proposed to be set-up with powers of the Civil Court to enforce the performance of contracts related to purchasing or sale or transmission of power between a generating, distribution or transmission companies.

4. Establishment of adequate Payment Security Mechanism for scheduling of electricity – It is proposed to empower Load Dispatch Centres to oversee the establishment of adequate payment security mechanism before scheduling dispatch of electricity, as per contracts.