Electricity Amendment Bill: Will it put out light from lives of poor?
Renuka (50) living in Nayarambalam in Kochi worked as a cleaner in a bank. She has been jobless for a couple of years following the pandemic. She lives with her 82-year-old mother suffering from age-related ailments. Renuka pays an average of ₹ 400 a month as electricity charges. She says it was affordable when she had a regular salary. There are four-five bulbs, two fans, a motorized water pump, mixer-grinder and a TV set at home. The TV is switched on almost all day as her mother has nothing else to do to kill time.
Suhara is a domestic worker in Kochi. Her monthly electricity bill is around ₹800. Suhara lives with her son, his wife and children. She uses a refrigerator, washing machine, a mixer-grinder, bulbs, fans and a water pump. Suhara does domestic work in three-four houses a day and earns around ₹25,000 a month. The electricity bill is not a huge worry for Suhara if he is a little careful about the power consumption.
In Kerala, electricity is supplied free to domestic consumers in BPL category having their average monthly consumption up to 30 units with a connected load of up to 500 watts. Electricity to domestic consumers under the same category with a connected load 1000 watts is given at a rate of ₹1.50 up to 50 units. The tariff for consumers above these categories begins at a rate of ₹3.15 per unit. Altogether, 75 lakh people in Kerala are covered under various subsidies.
Unlike Tamil Nadu, Kerala is far from self-reliance as far as power production is concerned. The state produces only 30 per cent of the electricity that it requires. The rest is purchased from other States. At present the cross-support to the domestic and agricultural sector through tariff comes to around ₹ 2,500 crore annually.
Tamil Nadu, self-reliant in power generation, provides a far wider coverage of subsidies. For instance, 50 units of electricity for a domestic consumer a month generate no bill. The state covers various sections of people under a diverse range of subsidies. The subsidies provided to the domestic and agricultural consumers come to around ₹6,687 crore annually for the state according to the figures provided by TANGEDCO (Tamil Nadu Generation and Distribution Corporation Ltd).
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According to experts, the de-licensing clause in the proposed Bill is a death knell to the elaborate subsidies being provided by states. The Bill calls for the entry of more private players from which the consumer can choose. The idea is that the distribution companies will compete to bring down the tariff. “As we all know, the consumer belonging to the poor and the marginalized sections that rely on subsidies will not be given any choice. The industrial and commercial consumers would choose a distribution company that provides a lower tariff which will cause an adverse impact on cross-subsidy system” says K Krishnankutty, the Kerala cabinet Minister for Power.
Kerala argues that such a competition will put the KESB eventually in crisis and will have a huge set back on the cross-subsidies being given to the poor.
The draft note of objections submitted by the Kerala government to the Centre dated March 15, 2021, argues how the proposed Electricity Amendment Bill is going to put the light out of the life of the economically weaker sections. According to the claims made by the government, Kerala achieved total electrification in 2017. The AT&C (aggregate technical and commercial) loss is very low (around 12%) and the state has achieved 100% energy metering, according to the Kerala State Electricity Board. The people of the state have not experienced load-shedding for seven years.
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To understand how the proposed amendments would put the poor in the dark, it is pertinent to know how states like Kerala and Tamil Nadu have achieved universal electrification at an affordable price. The Kerala State Electricity Board is spending an average amount of ₹6.54 per unit to provide electricity to a household in Kerala. The Board provides power to an average household (except the BPL and other categories covered under special subsidies) for ₹3.15 per unit. For the next slab (51 to 100 units), the rate per unit is ₹3.70. According to the officials of KSEB, the Board is capable of providing electricity to the common people at an affordable rate by implementing the cross-subsidy system.
Commercial and industrial consumers have been given power at a higher rate and the profit is being used to subsidize the poor. “When private players enter, they would catch the commercial and industrial consumers by offering a lower price. The KSEB will be forced to reduce the price and the Board will be in loss,” says the Minister for Electricity.
As far as Kerala is concerned, the domestic consumer group constitutes around 80% of the consumer base of the state and they consume about 50% of the electricity distributed within the state. A substantial portion of the consumption in the domestic sector is in the low-income group consuming around 1 to 3 units a day and this group constitutes around 75% of the domestic consumers. As much as 52% of the consumption in the domestic sector is contributed by the people in this category who need the subsidy support.
The Electricity Amendment Bill 2021 proposes that any distribution company can distribute electricity after registering with the state commission concerned. The draft defines a distribution licensee as a company or a body corporate, registered under section 24 B for the purpose of supply of electricity through its own distribution system or using the distribution system of other distribution companies to the consumer in its area of supply. The draft permits any company to start distribution operations in any part of the country, even across states after registering with the regulatory commission concerned.
The draft as such envisages no screening system, including that of public hearing required for grant of registration. Section 24(B) proposes the registration of two or more distribution companies in an area. The power to decide and notify the eligibility criteria for distribution companies is rested with the Central government (Section 176 (2)(c)). Section 42(4)(a) & (b) of the draft places an obligation upon the existing licensee to provide access to the new companies to the existing power distribution infrastructure.
As far as Kerala is concerned, the flip side of this reform initiative is that the incoming distribution company can savour the fruits of the system without having to be a part of the toil. “We are afraid that long -standing investments in the transmission and distribution sector may not elicit the money value when the new entrant is obliged only to provide the wheeling charges” says B Ashok, chairman and managing director of KSEB.
While talking to The Federal he expressed the concern that the private sector would be allowed to do piggy-riding over the already developed infrastructure of KSEB. “Another worry is that the new entrant would be having access to cheaper generators, but the state would be stuck with agreements that run for 25 to 50 years. This will certainly give advantage to the new players.” B. Ashok fears unfair competition. “Someone who enters the market can cherry-pick and offer competitive tariff temporarily. Large-volume customers will be attracted to it,” he says.
