The Consultative Committee of the Ministry of Power recently met under the chairmanship of Union Minister for Power and Housing & Urban Affairs, Manohar Lal, to deliberate on the proposed framework for parallel distribution licensing aimed at promoting consumer choice, improving service quality and ensuring efficient utilisation of electricity distribution infrastructure. The meeting was attended by Shripad Yesso Naik, Minister of State for Power, Members of Parliament who are members of the Consultative Committee, Secretary, Ministry of Power and senior officials of Ministry of Power.
Addressing the Committee, the Union Minister stated that the Electricity Act, 2003 had successfully introduced competition in electricity generation, transmission and trading, while distribution remains the only major segment where competition continues to be limited. He emphasised that as India moves towards becoming a developed nation under the vision of Viksit Bharat @2047, consumers will increasingly expect reliable, affordable and high-quality electricity supply comparable to global standards.
It was discussed that while the existing legal framework permits more than one distribution licensee in the same area, it requires each licensee to establish its own distribution network. This results in duplication of poles, lines and substations, increases capital expenditure and discourages fresh investment, ultimately leading to inefficient utilisation of resources.
The proposed framework seeking to enable competition in electricity supply without requiring duplication of the physical distribution network was discussed in detail. Under the proposal, existing distribution licensees will continue to own, operate and maintain their networks. New distribution licensees will be able to use the existing network by paying regulated wheeling charges, while retaining the option to develop their own network wherever permitted by the concerned State Electricity Regulatory Commission.
