You may have power to choose — the power that light up your home and life.
If a government plan comes into force, retail consumers will be able to buy power from more than one supplier. You may even be able to buy electricity the way you buy a telecom plan.
For example, if a customer is not at home all day and wants to use electricity only at night, he will be able to choose such a plan.
What’s more, if power traders start selling electricity directly to consumers, tariffs may come down by as much as 20 per cent.
At present, only distribution companies have the right to supply power to consumers. Open access to electricity is restricted to those buying 1MW or more.
A senior power ministry official said: “We have been trying to introduce open access to electricity ever since the Electricity Act came into force. However, conceptually this is possible only when there is competition in the market. There isn’t any at the moment. Consumers can take electricity only from the available distribution company in their area.”
The entry of power traders would change all that.
For instance, in Mumbai, power traders would end the monopoly enjoyed by Reliance Infrastructure and Tata Power in most of the western and central suburbs. BEST will lose its monopoly in South Mumbai.
Similarly, BSES discoms in East, West and South Delhi and NDPL in North Delhi would face competition.
Such a move would require amendments in the Electricity Act, 2003. The Union ministry of power plans to make the changes in the Act and has proposed amendments to all stakeholders.
When power traders enter the scene, distribution companies will only be allowed to provide infrastructure for transmission. They will be paid fixed wheeling charges, irrespective of the ultimate cost of power. The proposal aims to separate wire (distribution infrastructure) from content, which is power.
“Such a concept will allow consumers to choose power plans according to their requirement. For example, if a customer is not at home all day and wants to use electricity only at night, he can buy such a plan from power traders, said Vishal Biraia,” an analyst with Batliwala and Karani Securities India.
If distribution companies want to continue selling power, they will have to float new companies. Existing distribution or generation companies are most likely to apply for trading licences once the government announces the changes, Biraia said.
Though the move will open up the market, it may also give birth to cartels.
“If the plan goes through, tariffs will come down. The only catch is that distribution companies should agree to the proposal as the open access policy has not been implemented in its essence due to their monopolistic practices,” Biraia said.
Another criticism of the proposal is that it may not be successful unless the government deals with the issue of cross-subsidy charges paid by distribution companies.
“The power trader may choose to supply power only to those who can buy expensive power.
Distribution companies will then be forced to supply power to slum-dwellers and other price-sensitive consumers who cannot afford expensive electricity,” said Debasish Mishra, senior director, Deloitte India.
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