Amendment to Act will change power
sector: Dr. D Shina
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| Dr D Shina |
The amendment to Electricity Act 2003, tabled in Parliament,
will cause drastic changes in the electricity sector and hence it warrants
discussions among stakeholders, electricity finance expert D. Shina has said.
“The change will destroy the distribution companies which are
mostly in the public sector and will pave the way for increase in the tariff.
The amendments will only add to complexities and will affect the power
industry, which is already limping, in the country,” she said.
In a study report, Dr. Shina of Sree Narayana Guru College of Legal Studies, Kollam said the major change was a
provision for supply companies that do not own distribution lines. Instead they
will have mandatory access to the existing lines owned by ‘discoms.’
Theoretical
Theoretically, consumers would be free to purchase electricity
from multiple suppliers operating in their area. The terms of access would be
decided by the regulatory commissions. Despite severe criticism from consumers
and trade unions the Union government had opted to go ahead with the amendment.
Dr. Shina said the government blindly believed that the new
amendment would pave way for free competition in the sector resulting in tariff
reduction. Supporters of the amendment ignored the fact that when demand
exceeded supply, which was the case in the country, free competition would lead
to increase in price. “It is unwise to reduce demand of electricity through
price elasticity as reduction in electricity demand will arrest the country’s
economic growth.”
The amendment, if passed, would affect the existing power set-up
in Kerala because KSEB Limited was cushioning losses in the distribution sector
through surplus in generation. The government now managed to reduce tariff for
household consumers by generating higher income from other categories like
commercial consumers.
If new supply companies were allowed, “cherry picking” of the
attractive set of consumers would result, and a steep increase in tariff of
household consumers would follow, she said.
· Amendment may
hit the existing set up
· It could ring
in free competition and price rise
Source: The
Hindu
