The draft Electricity (Amendment) Bill, 2020, seeking an amendment to the Electricity Act, 2003 proposed by the Centre has apparently rubbed states the wrong way. The NDA government is preparing the ground for passage of the bill in the Parliament by seeking comments from the stakeholders before June 2.
It was Telangana Chief Minister K Chandrasekhar Rao (KCR) who first raised a voice of dissent, which is expected to be followed by the other Chief Ministers from opposition parties sooner or later. The Telangana CM said the move goes against the country’s federal spirit.
“We will do our best to stall the draconian bill,” KCR vowed at a media conference recently.
Andhra Pradesh Chief Minister YS Jagan Mohan Reddy is yet to voice his opinion. It was his father the late YS Rajasekhar Reddy who, as Chief Minister of undivided Andhra Pradesh, introduced free power for agriculture in 2004. Jagan swept the state elections last year with a promise to continue his father’s pet scheme.
Why the bill raises the hackles of states
Electricity is presently under the Concurrent List, which gives states a free hand in its generation, transmission and distribution. By using this leeway, states have been supplying power to the households of marginalised communities at subsidised rates.
In an apparent bid to stop farmer suicides, the state governments of Telangana and Andhra Pradesh have been extending free power for agriculture. They got the distribution companies to fulfil this commitment and make up the difference in cost by way of subsidies and cross-subsidies.
KCR said the union government headed by Prime Minister Narendra Modi is trying to “centralise” the subject of power. The bill, by seeking to establish the Electricity Contract Enforcement Authority (ECEA), overriding the existing state electricity regulatory commissions, seems to be breeding apprehensions.
Notwithstanding anything contained in this Act (Electricity Act, 2003) or any other law in force, the so-called ECEA shall have the sole authority and jurisdiction to adjudicate upon matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity, says the draft bill.
The bill seeks to put an end to cross-subsidies by creating a level playing field for all the consumers cutting across social and economic status. It also proposes cost reflective and uniform tariff with ‘one nation, one tariff’ – the buzzword of the NDA government.
It’s a clear indication of increase in power charges, said A Punna Rao of Praja Energy Audit Cell. The generation cost per unit is Rs 7 in Andhra and Telangana. But power is supplied at Rs 1.75 per unit for domestic consumers and free for agriculture. The bill aims to ensure that the power tariff reflects the true cost of supplying electricity, i.e. cost reflective tariff, Rao explained.
Telangana’s power story
Telangana, after bifurcation from Andhra Pradesh in 2014, made rapid strides in the power sector. In a short span, the fledgling state overcame deficit and did a turnaround in the generation of power.
When the state was created, the power deficit was 2,700 MW, and the demand was more in Telangana than in AP. With Hyderabad being a hub of major industries and business establishments, the state capital alone required 2,000 MW of power. Similarly, there are around 24.4 lakh pumpsets in Telangana, which needed 3,500 MW power.
The state government came up with plans to set up new power generation units to produce 28,000 MW of power. This included 5,000 MW from solar source.
Concerns over free power for agriculture
Power became a critical source for the country’s youngest state to address distress conditions in the farming sector, marked by a spate of farmer suicides. A study jointly conducted by the Tata Institute of Social Sciences (TISS) and Rythu Swarajya Vedika, a non-profit that works for agricultural communities, indicated that more than 60% of suicides in the sector before the state formation was due to lack of adequate and uninterrupted power supply. As a remedy, the state government ensured round-the-clock free power for agriculture.
The state is criss-crossed with the perennial Krishna and the Godavari rivers, but it failed to harness the river waters for irrigation in view of the location of its unfavourable terrain. Yet, the government proposed several mega irrigation projects such as Kaleswaram and Palamuru-Rangareddy to lift the river waters into water-starved areas, for which power is a critical source.
The draft bill raises serious concerns over the viability of the lift schemes and 24x7 free power for agriculture. But it allows for transfer of subsidies through direct benefit transfer under which the farmers shall pay first from their pocket before they receive subsidy from the government. However, failure to pay the bill in time will lead to disconnection of power supply by DISCOMs or their licensees.
M Thimma Reddy of People Monitoring Group on Electricity Reforms told TNM that it may be a difficult proposition for DISCOMs to take readings from unmetered agriculture pumpsets. Installing meters for 24.4 lakh pumpsets is a near impossible task, he remarked.
Gali Nagaraja is a freelance journalist who writes on the two Telugu states. Views expressed are the author’s own.