Elec Bill 2003 – From Crisis to Disaster

People’s Democracy

Organ of the Communist Party of India (Marxist)


No. 18

May 04,

The Electricity Bill 2003 – From Crisis
To Disaster

Prabir Purkayastha

THE Electricity Bill 2003 was passed by
the Lok Sabha on April 9 after being tabled in its current forum on April 6,
thus ensuring no debate in the country. While all the old ills of this
legislation which has been on the anvil for the last 3 years remain, some more
new ones have been added ensuring that the electricity sector faces a disaster
in the near future. As the Congress and the BJP have similar views on the
legislation, only cosmetic changes can be expected from the Rajya Sabha. Before
we look at the underlying “vision” of this piece of legislation and
its implications for the country, particularly the rural sector, let us briefly
examine some clauses of the Bill which can only have come from minds of persons
who look upon all consumers as potential criminals.



This Bill, by virtue of clause 126-6, and clause 135, allows
an officer of the government or a private “licensee” to break open any
premises, seize any material or equipment, take away accounts and documents on
not only suspicion of theft of electricity but also its “unauthorised
use” and “likely to be used unauthorisedly”.
In other words,
a private licensee has more powers under this Act than the police, and the tax
authorities. And to cap this draconian power against consumers, they are
completely indemnified against any action. The POTA mindset continues with
government. Even the need of the private licensee is seen to override any right
of the individual.

This may be contrasted with the provision
of penalties for the licensee. The licensee, can cause havoc in the system by
not acceding to the directions of Load Despatch Centres. The maximum penalty for
this is Rs 15 lakh for inter state lincesees, and Rs 5 lakh for the state
licensees. The consumers obviously do not count in this Bill. For the consumer,
if any demand is made on him through a bill, he has to pay the amount
immediately before he/she can appeal. And if he/she does not, even his/her
property can be sold as electricity dues are now to be treated as revenue



Let us now take up the underlying assumptions of the
Bill and its distinct difference with Electricity Act of 1948, which was piloted
in the constituent Assembly by Dr Ambedkar. In the earlier Act, it was
recognised that Electricity was a vital necessity for agriculture, industry and
domestic consumption and should be provided at the lowest possible cost. It
should not be used for profiteering. It was also recognised that it would not be
possible to extend rural electrification through existing private utilities and
therefore put the task of rural electrification on the state leading to the
formation of the State Electricity Boards. The current Bill proposes that
electricity should be regarded purely as a commercial, market driven activity
with regulators ensuring removal of cross subsidies and creating the market. For
rural electrification, it is no longer anybody’s baby.
To add a sop for the
rural sector, it has been delicensed for NGO’s, co-operatives, Panchayats etc.
They can now become self-reliant while the government looks after Reliance.

The key to the Act, and this is where the BJP and the
Congress are singing the same tune is “open access”, that is the
generators should have the right to supply electricity to any bulk consumer or
distributing company using the transmission system. Thus, the generating sector,
the transmission system and the distribution areas are to be seperated. The
costs are supposed to come down as the generators “compete”, while the 
transmission companies get “wheeling” charges and the
distribution companies make profit by selling the generators’ power to the

Again, I am not going to discuss the myth
about competition bringing down prices. Apart from this not happening any where
reforms have been tried, the central argument that no competition can take place
if there is a scarcity has yet to be answered by the proponents of competition.
The key issue I will address here is under this open access, who looks after the
integrity and balance of the electrical system? The Bill is totally silent on
this question.



The problem with this open access model, is that it
demands a built in surplus capacity of transmitting electricity. If we only have
as much capacity as is currently being used, then all supplies will have to be
done through existing transmission lines, prohibiting alternate sources of
supply. However, as the SEBs have no money to expand their system, therefore
open access is to force them to go to private licensees for transmission as
well. And this brings us to the central problem of the new Bill.

In any electrical system, the generation of electricity
has to match the consumption, without which voltage and frequency can rise or
fall damaging equipment, not only of the consumers but of the electrical system
as well. Wherever reforms are being thought of, the electrical system’s
integrity is being maintained by the Transmission System being kept under one
entity who the works with the Regulator and Load Despatch Centres to maintain
the system. In this Bill, anybody can become a transmission licensee, thus
fragmenting the electrical system. In such a fragmented system there is no way
for the transmission to take place as contracted. And in the absence of at least
an integrated Transmission System – State Gridcos or Regional Gridcos – the
electrical system will be open to anarchy. The Bill then has a situation in
which either there will be no open access as there is limited transmission
capacity or will see a fragmental transmission system that cannot maintain
system stability.

The other problem of the Bill is that it
provides a definition of captive generator that allows anybody to set up a plant
anywhere, supply to anybody in the system and be treated preferentially from
generators. Given that the SEBs and the distribution companies are losing their
best paying customers, this step makes them completely unviable. Giving
incentives to captive generators to sell to the grid is one issue, allowing them
“open access” to sell anywhere will only accentuate the current crisis
of the system.



The last part is that the rural sector does not figure
in the Bill anywhere except as a responsibility of the rural people themselves.
I can understand that co-operatives, Panchayats, etc, take responsibility of
distribution in rural areas through rural utilities. The question is who will
take electricity upto the substation and the HT transformer? At what price will
they get electricity? And if they are not electrified, who invests in the
generating facilities?

It is clear that no private utility/licensee will do
rural electrification. They did not do so earlier in the US, nor have they done
so in Orissa now.
electrical lines and equipment that were damaged in the Orissa Cyclone have yet
not been repaired in rural areas. In the US only after Roosevelt and the New
Deal came into being in 1935, was rural electrification taken up in the US,
something the private utilities had not done. The Bill 2003 has no place for the
rural sector reserving electricity now only for the rich. The Bill 2003
differs from the 1948 Act that it sees electricity sector as another one for
making profits.
Unfortunately for those who expect to benefit from the Bill,
it does not even have a coherent understanding of the sector. Unlike 
Ambedkar who matched his vision with meticulous craftsmanship, the
Bill’s shallow vision is matched only by its shoddy drafting. This Bill only
will accelerate the downward trajectory of the power sector, which is already in
a crisis.