To provide consumers with options and improve financial sustainability, regulations are being proposed to add private players to state power distribution centers. In August 2022, an Electricity Amendment Bill was proposed in Lok Sabha to bring about significant changes in discoms utilities. This bill will help to enhance the power distribution network. If the measure is approved, section 62 of the functioning act would be changed to allow for progressive tariff changes within a year. According to the Electricity Act 2022, the authorized commission will also determine the highest and lowest tariff. Additionally, if the discoms don't provide bank guarantees, national and state dispatch centers are permitted to shut off the electricity. It has also been said that it would benefit private businesses and harm government discoms. It is also asserted that the bill reduces the authority of the state.
This Electricity Amendment Bill 2022, may lead to indirect privatization due to which several players would get distribution licenses. This could lead to neglection of loss-making areas. Additionally, the lack of bank guarantees would cause power outages that will interrupt the supply of electricity, weaken networks, and put a strain on already struggling discoms. The act also requires discoms to cooperate with Renewable Purchase Obligations and provides for the termination of regulatory body members who disobey regulations or intentionally break the law.
In order to manage power purchases and cross-subsidies when there are many distribution licensees in the same supply region, the bill suggests adding a new provision to the act. Additionally, it would modify Section 26 of the Act to improve how the National Load Dispatch Center operates. This will guarantee the grid's security and the effective running of the nation's electricity system. The government believes that the drive for Renewable Purchase Obligations (RPOs) contained in the law will increase India's demand for electricity, which the country aims to reach 50% of by FY2030.