The document summarizes key proposed amendments in the Electricity (Amendment) Bill, 2020. Some of the major changes proposed include establishing a National Renewable Energy Policy, introducing a payment security mechanism before scheduling electricity dispatch, allowing cross border electricity trade through rules prescribed by the central government, constituting a selection committee for regulatory commissions and authorities, establishing an Electricity Contract Enforcement Authority to settle contract disputes, reducing surcharges and cross subsidies progressively, and requiring state governments to pay in advance any electricity subsidies through a direct benefit transfer mechanism.

1. Electricity Amendment Bill, 2020
CA Divakar Vijayasarathy

2. Research Credits
Sundar Rajan S
CA Jugal Gala

3. Legends used in the Presentation
Act Electricity Act, 2003
Bill Electricity (Amendment) Bill, 2020
CERC Central Electricity Regulatory Commission
CG Central Government
ECEA Electricity Contract Enforcement Authority
NLDC National Load Despatch Centre
Sec Section
SG State Government

4. Presentation Schema
Overview Summary of Changes
National Renewable
Energy Policy
Payment Security
Mechanism
Cross Border Trade
of Electricity
Constitution of
Selection Committee
to Recommend
Members
Electricity Contract
Enforcement
Authority
Cost Reflective Tariff
and Direct Benefit
Transfer of Subsidies
Distribution Sub-
license and
Franchise
Deemed Adoption of
Tariff Discovered
through Competitive
Bid
Enhancement of
Penalties and Other
Proposals in the Bill
Way Forward

5. Overview
Electricity is one of the most critical components of infrastructure which is essential for sustained growth of the
economy of the country
The Electricity Act, 2003 (the Act) has been the statutory paradigm which has governed the laws regarding the
generation, distribution, transmission, trading and use of electricity
But the electricity sector is seized with few critical issues (like surging losses of State-owned power Companies, lack of
private investments, inadequate public infrastructure, etc.) which have weakened the commercial and investment
activities in the electricity sector that needs to be addressed immediately to ensure sustainable growth of the country
The average Transmission and Distribution loss (T&D Loss) of electricity generation in India is around 21.76% [from
2013-2014 to 2018-19]
Around 40% of Power Generation/ Power Generation and distribution companies are loss making [Source: Prowess
Database, March 2019 – population of 57 companies]
In order to address some recurring issues (as mentioned above), and to promote further commercial incentive for
private players to enter the market in the generation, distribution and transmission of electricity, along with some
policy modifications, the Electricity (Amendment) Bill, 2020 (the Bill) has been introduced by the Ministry of Power
on April 17, 2020
In this presentation, significant amendments proposed in the Bill are only covered

6. Summary of Changes

7. Changes Proposed in the Bill
Power of CG to prepare and notify
a National Renewable Energy
Policy
Power of CG to prescribe Rules for
Cross Border Trade of electricity
Creation and functioning of the
Electricity Contract Enforcement
Authority
Constitution of Selection
Committee to recommend
members for all Regulatory
Commissions/ Authorities
Payment security mechanism
before scheduling dispatch of
electricity
Determination of cost reflective
tariff and direct benefit transfer
of subsidies
The Bill proposes, inter alia, the following changes

8. National Renewable Energy
Policy

9. Notifying National Renewable Energy Policy - Sec 3A
CG may, from time to time, after consultation with the SGs, as may be
considered necessary,
prepare and notify a National Renewable Energy Policy for the promotion of
generation of electricity from renewable sources of energy and
prescribe a minimum percentage of purchase of electricity from renewable
and hydro sources of energy
• Compared to the Act, this Sec is a new insertion in the Bill
• It is mainly for the purpose of encouraging the use of renewable sources of energy

10. Payment Security Mechanism

11. National Load Despatch Centre
Sec 26(4)
• National Load Despatch Centre (NLDC) shall
• be responsible for optimum scheduling and despatch of electricity in the country across different
regions in accordance with the contracts entered into with the licensees or the generating
companies
• monitor grid operations
• exercise supervision and control over the inter-regional and interstate transmission network; and
• have overall authority for carrying out real time operations of the national grid
Sec 26(5)
• NLDC may give such directions and exercise such supervision and control for the safety and security
of the national grid and for ensuring the stability of grid operation throughout the country
Sec 26(6)
• Every Regional Load Despatch Centre, State Load Despatch Centre, licensee, generating company,
generating station, sub-station and any other person connected with the operation of the power
system shall comply with the directions issued by NLDC

12. Contd.
• No electricity shall be scheduled or despatched under the contract unless
adequate security of payment, as agreed upon by the parties to the contract, has
been provided
Sec 28(3)(a) and
32(2)(a)
The following proviso is inserted after the respective Sections mentioned below
 Compared with the Act, the above provisions were newly inserted in the Bill
 The main purpose of inserting the above provisions in the Bill is to provide for an adequate
payment security mechanism for dispatch of electricity, which was not prevalent earlier
 Adequate payment security mechanism would protect the revenue of electricity producers
from any defaults made by distributors and ensure continuous business operations

13. Cross Border Trade of
Electricity

14. Cross Border Trade - Sec 49A
CG may prescribe rules and issue guidelines for allowing and facilitating cross border trade of electricity
(trading of electricity across the globe)
CG may require the Central Electricity Regulatory Commission (CERC) to make regulations for cross border
trade of electricity
 The above provision is a newly inserted Sec in the Bill
 CERC has issued regulations for the cross-border trade of electricity vide notification dated 8th March,
2019 in accordance with the provisions of Sec 178 read with Sec 66 of the Act
 Sec 178 deals with the powers of CERC to make regulations and Sec 66, inter alia, deals with CERC’s
endeavour to promote the development of a market (including trading) in power

15. India’s Cross-Border Electricity Trade
India currently trades electricity with four countries – Bhutan, Bangladesh, Nepal and Myanmar. It imports power from
Bhutan while it exports to the other three
2150 4269 5124 6444 7203 8407 9641.54 942.03
5555
5109
5557
5864
5611
4699
6069.24
1356.33
-840
-433
580
1592
3708 3572.3
-414.3
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21*
Netexchange(inMUs)
Electricitytrade(FiguresinMUs)
Exports Imports Net exchange
Note: Large part of electricity export is made to Bangladesh followed by Nepal and Myanmar, and Bhutan rarely.

16. Constitution of Selection Committee to
Recommend Members

17. Selection Committee – Sec 78
CG shall, for the purposes of selecting the Members of the Appellate Tribunal and the Chairperson and
Members of the CERC, Electricity Contract Enforcement Authority (ECEA), State Commissions and Joint
Commissions constitute a Selection Committee consisting of the following persons
• A Chairperson who is or should have been a Hon’ble Judge of the Supreme Court of India (nominated
by the Chief Justice of India)
• A member being the Secretary-in-charge of the Ministry of the CG (nominated by CG)
• 2 members each being a Chief Secretary of two different SGs appointed for a period of 1 year (States
being selected on the basis of alphabetical order (Andhra Pradesh, Arunachal Pradesh, etc.)
• A member being the Secretary-in-charge of the Ministry of the CG dealing with power (He shall also
be the Convener of the Selection Committee)
CG shall, within a
period of 1 month
from the date of
occurrence of any
vacancy by reason
of
death, resignation
or removal of a
Member of the
Appellate Tribunal,
or the Chairperson
or a Member of the
CERC or the ECEA
and
within a period of
12 months before
the superannuation
or end of tenure of
the Member of the
Appellate Tribunal
or Chairperson or
Member of the
CERC or ECEA,
make a reference
to the Selection
Committee for
filling up of the
vacancy

18. Contd.
SG shall, within a
period of 1 month
from the date of
occurrence of any
vacancy by reason of
death, resignation or
removal of the
Chairperson or a
Member of State
Commission and
within a period of 12
months before the
superannuation or end
of tenure of the
Chairperson or
Member of State
Commission,
make a reference to
the Selection
Committee for filling
up of the vacancy
Selection Committee shall finalise the selection of the Chairperson and Members and make a recommendation
for every vacancy referred to it within 3 months of the receipt of the reference
Selection Committee shall satisfy itself that the recommended person does not have any financial or other
interest which is likely to affect prejudicially his functions as the Chairperson or Member

19. Contd.
Proceedings of the Selection Committee shall be held in Delhi or such other places as the CG may notify
No appointment of the Chairperson or other Member shall be invalid merely by reason of any vacancy other
than that of the Chairperson in the Selection Committee
 Compared with the Act, Sec 78 was replaced with the new provision (as stated above and in the previous
slides) in the Bill
 The main purpose of this replacement is to bring uniformity in selection process of various regulators and
judicial body and to avoid multiple selection committees

20. Electricity Contract Enforcement
Authority (ECEA)

21. Establishment of ECEA
CG shall, by notification, establish ECEA to exercise the powers conferred on and discharge the functions
assigned to it under the Act
ECEA shall have the sole authority and jurisdiction to adjudicate upon matters regarding performance of
obligations under a contract related to sale, purchase or transmission of electricity, provided that it shall
not have any jurisdiction over any matter related to regulation or determination of tariff or any dispute
involving tariff
Every contract between a generation company and a licensee shall be filed with the Appropriate
Commission (CERC / State Commissions / Joint Commission) within 30 days of the said contract having been
concluded

22. Application to ECEA and Order thereon
Any person aggrieved in any matter covered under the scope of ECEA may prefer an application to ECEA within a
period of 6 months from the non-performance of the obligation under the contract
• If ECEA is satisfied that there is sufficient cause for not filing it within the period specified above, application
made after the expiry of the period of 6 months may be entertained
On receipt of an application, ECEA may, after giving the parties to the application an opportunity of being heard,
determine whether a valid contract subsists between the parties and whether any party is in violation of any of
its obligations under the contract
Upon finding of violation, ECEA shall direct that the said parties immediately perform their obligation under the
contract and may direct the payment of costs on account of the breach of contract or non-fulfilment of
obligations of the contract and any further amount it may deem fit as compensation
ECEA shall send a copy of every order made by it to the parties to the application as the case may be
ECEA shall deal with the application filed before it as expeditiously as possible and endeavour to dispose it finally
within 120 days from the date of its receipt
• Where any application could not be disposed off within the said period of 120 days, ECEA shall record its
reasons in writing for not disposing of the matter within the said period

23. Procedure and Powers of ECEA
• ECEA shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 but shall be guided by
the principles of natural justice
 summoning and enforcing the attendance of any person and examining him on oath;
 requiring the discovery and production of documents;
 receiving evidence on affidavits;
 issuing commissions for the examination of witnesses or documents;
 reviewing its decisions;
 dismissing an application on default or deciding it ex parte;
 setting aside any order of dismissal of an application on default or any order passed by it ex parte;
 pass an interim order (including granting an injunction or stay) after providing the parties concerned an
opportunity to be heard; and
 any other matter which may be prescribed by the CG
ECEA shall have, for the purposes of discharging its functions under the Act, the following powers:

24. Other Provisions
A person preferring an application to ECEA under the Act and any other party to the case may either appear
in person or take the assistance of a legal practitioner of his choice to present his case before ECEA
Any person aggrieved by any decision or order of ECEA, may, file an appeal to the Appellate Tribunal within
60 days from the date of communication of the decision or order of ECEA to him
Appellate Tribunal may, if it is satisfied that the appellant was prevented by sufficient cause from filing the
appeal within the said period, allow it to be filed within a further period not exceeding 60 days
 Compared with the Act, provisions on ECEA (Part XA of the Act) is newly inserted in the Bill
 The main purpose of this insertion is to have a separate regulatory body for settlement of disputes arising
from performance of power purchase contracts (contracts for supply and purchase of electricity)
 It has to be noted that there is no regulatory body under the Act to deal specifically with the issues related
to performance of the contracts

25. Cost Reflective Tariff,
Simplification of Tariff Structure
& Cross Subsidy

26. Proposed Changes in Surcharge and Cross Subsidy
• Open access* facility shall be given to the consumers on payment of the transmission
charges and a surcharge thereon as may be specified by the CERC / State Commission, as the
case may be
Existing
provision
• Open access facility shall be given to the consumers on payment of the transmission charges
thereon as may be specified by the CERC / State Commission, as the case may be, and a
surcharge, as may be specified by the State Commission, if required to be collected
Amendment in
the Bill
• Open access shall be allowed on payment of a surcharge in addition to the charges for
wheeling** as may be determined by the State Commission
• The surcharge and cross subsidies*** shall be progressively reduced in the manner as may be
specified by the State Commission
Existing
provision
• Open access shall be allowed on payment of a surcharge, and charges for wheeling, as may be
determined by the State Commission in addition to the charges for intra-state transmission
and inter-state transmission, as applicable
• The surcharge and cross subsidies shall be progressively reduced by the State Commission in the
manner as may be provided in the Tariff Policy
• Manner of payment and utilization of the surcharge shall also be specified by State Commission
Amendment
in the Bill
Amendment in Sec 42
Amendment in Sec 38(2) and Sec 39(2)

27. Contd.
 * Open access refers to the process which allow the customers to purchase electricity from a number of
competitive power companies, rather than being forced to buy power from the local utility monopoly which helps
in competitive pricing of electricity
 ** Wheeling means the operation whereby the distribution system and associated facilities of a licensee
(transmission or distribution) are used by another person for the conveyance of electricity on payment of charges
 *** Cross subsidy is the method of charging higher tariff as compared to the cost of supplying power, for certain
group of customers and utilising such excess amount in compensating the lower tariff charged as compared to the
cost of supplying power, to another set of customers
 The main purpose of the amendments in Sec(s) 38, 39 and 42 of the Act is to determine tariff in line with the cost
of supply of electricity (cost reflective tariff)
 Also, the amendment intends to reduce surcharge and cross subsidies in accordance with the Tariff Policy (earlier it
was State Commission) since it is also proposed in Sec 62 that the tariff shall be determined without subsidy
 Levy of surcharge shall hereafter be specified by the State Commission only
 Surcharge shall hereafter be levied only if it is required to be collected by the CERC / State Commission
 Corresponding amendment is made in Sec 61(g) of the Act which deals with tariff determination regulations

28. Direct Benefit Transfer of
Subsidy

29. Changes in Granting Subsidies – Sec 65
• If the SG requires the grant of any subsidy to any consumer or class of consumers
in the tariff determined by the State Commission, the SG shall, pay in advance
• and in such manner as may be specified, the amount to compensate the person
affected by the grant of subsidy in the manner the State Commission may direct,
as a condition for the licence or any other person concerned to implement the
subsidy provided for by the State Government
Existing provision under
the Act
• If the SG requires the grant of any subsidy to any consumer or class of consumers
in the tariff determined by the State Commission, the SG shall, pay in advance
• the amount of subsidy directly to the consumer and the licensee shall charge the
consumers as per the tariff determined by the Commission
Amendment proposed
in the Bill
 The main purpose of the above amendment is to enable direct benefit transfer of subsidies to the
consumers
 Hence, post this amendment, the State Commissions shall determine the tariff for retail sale of electricity
without any subsidy

30. Beneficiaries of DBT
As per the DBT Performance ranking of States/UTs based on few standards including Aadhaar Saturation, Savings
Reporting compliance, Savings expenditure ratio, DBT Per capita, etc., Haryana ranks first and West Bengal ranks last

31. Fund Transfer to DBT Schemes
239729.4
23425.08
141902.12
37066.22
28 34
59
142
361
369 362
342
76 71 64 59
0
50000
100000
150000
200000
250000
300000
0
50
100
150
200
250
300
350
400
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
FundTransfers(Rs.incrores)
No.ofschemes
Year Wise Fund Transfer
Cash In Kind Cash schemes In kind schemes
As on date, there are around 401 DBT schemes from 54 Ministries and a total of 44 crore transactions have
taken place under the schemes

32. Distribution of Sub-license and
Franchise

33. Proposed Changes in Distribution Agents – Sec 14
A franchisee* shall not be required to obtain any separate license from the appropriate State
Commission and such distribution licensee shall continue to remain responsible for distribution of
electricity in its area of supply – 7th proviso to Sec 14 (Substituted)
A distribution sub-licensee* shall not be required to obtain any separate license from the appropriate
State Commission – 8th proviso to Sec 14 (Inserted)
• * Franchisee and Distribution sub-licensee are persons authorised by the distribution licensee (person holding
license to operate and maintain distribution system for supplying electricity) to distribute electricity on its behalf
in a particular area within his area of supply
• However, permission of State Commission is required to operate as a distribution sub-licensee whereas mere
information to the State Commission is sufficient to operate as a franchisee
 The main purpose of the above amendment is to enhance the scope for private players in the power sector
 Hence, post this amendment, there are chances of more private players entering into the business of
distribution of power

34. Scope for Privatisation
The Bill gives wider scope for private players to enter into the power sector market
Government’s move towards privatisation of power sector comes against a backdrop of
surging losses faced by State-owned distribution utilities
Bringing more private players into the market would increase competition thereby resulting
in fair and lower prices to the end-users

35. Some Leading Private Players in Power Sector
Major Private
Players in
Power sector
Adani
Power
Limited
Tata
Power
Limited
Reliance
Power
Limited
JSW
Energy
Ltd
Torrent
Power
Limited

36. Deemed Adoption of Tariff
Discovered through Competitive Bid

37. Deemed Tariff Adoption – Sec 63
Appropriate Commission (CERC / State Commission) shall adopt the tariff so determined through
transparent process of bidding, in a timely manner but not later than 60 days from the date of
application
On expiry of 60 days from the date of application, if it is not decided by the Appropriate
Commission, the tariff shall be deemed to have been adopted by the Appropriate Commission
 Compared with the Act, the above provision is newly inserted in the Bill
 The main purpose of the above insertion is to have timely adoption of tariff discovered under competitive
bids which prevents cost escalations and ensure sustainability of the project

38. Enhancement of Penalties

39. Increase in Penalty
Sec 142 (1)
• Contravening any of the provisions of the Act or the rules or regulations made thereunder, or any
direction or order issued by the Commission attracts penalty of maximum Rs. 1 Crore
• In case of a continuing failure, an additional penalty of maximum Rs. 1 lakh for every continuing day
of default is levied
and at the rate of Rs. 2 per unit for the shortfall in purchase continuing after the second year
a sum calculated at the rate of Re. 1 per kilowatt-hour for the shortfall in purchase in the second successive year
default, 50 paise per kilowatt-hour for the shortfall in purchase in the first year of default
the Appropriate Commission shall after giving such person an opportunity of being heard in the matter, by order in
writing, direct that, without prejudice to any other penalty to which he may be liable under the Act, such person
shall pay, by way of penalty,
any person has not purchased power from renewable or hydro sources of energy as specified by it using its powers
under the Act,
In case any complaint is filed before the Appropriate Commission by any person or if that Commission is satisfied that
Sec 142 (2)

40. Contd.
• Failure to comply with any order or direction given under the Act, within such time as may
be specified in the said order or direction attracts penalty of maximum Rs. 1 Crore
• In case of a continuing failure, an additional penalty of maximum Rs. 1 lakh for every
continuing day of default is levied
Sec 146
 Compared with the Act, the above provisions, Sec 142 (2) of the Act is newly inserted in the Bill
 Whereas Sec 142(1) and Sec 146 are amended in comparison with the Act
 The main purpose of the above amendment is to enhance the penalties to ensure strict compliance of the
provisions of the Act
 Insertion of Sec 142 (2) results in mandatory implementation of HPO* along with existing RPO**
• * HPO (Hydropower Purchase Obligations) refers to the purchase of minimum percentage of electricity from
hydro power projects by the electricity traders
• ** RPO (Renewable Purchase Obligations) refers to the purchase of minimum percentage of electricity from
renewable energy sources by the electricity traders

41. Other Proposals in the Bill

42. Other Amendments
Additional powers are given to CG in view of the proposed changes in the Bill
with respect to minimum percentage of purchase of electricity from renewable and
hydro sources of energy,
allowing and facilitating cross border trade of electricity, payment security
mechanism, etc.
Sec 176

43. Statistics on Installed Capacity of Power Stations
All India Installed Capacity (In Mega Watts) of Power Stations located in the Regions of Main Land and Islands

44. Contd.
• *RES means Renewable energy Sources which includes Hydro project, Biomass and Urban & Industrial
Waste Power
• MNRE means Ministry of New and Renewable Energy
Islands cover Andaman & Nicobar and Lakshadweep

45. Responses to the Draft Bill
CG had invited comments from the stakeholders and the SGs on the draft Bill
It gave 21 days time from the date of release of the Bill (17th April 2020) for submitting the comments but
however the timeline was extended till 5th June 2020
Various SGs have raised their opposition to the Bill stating that it is against the interest of the weaker
sections of the society especially farmers
States which oppose the Bill, inter alia, include Tamil Nadu, West Bengal, Telangana, Andhra Pradesh,
Chhattisgarh, Bihar, Maharashtra, etc.
However, Ministry of Power has clarified the concerns of various SGs through a Press Meet held on 25th
June 2020 confirming that the Bill is not against the interest of consumers and also it does not propose to
reduce the powers of State Commissions

46. Conclusion
The Bill aims at achieving the key aspects of privatisation of power Companies, enhancing the revenue of
power Companies, simplifying the selection process of Regulators, providing specific dispute resolution
mechanism for performance related issues, etc.
However, privatizing the basic good (electricity) sector might affect the financially challenged people in
terms of higher tariff
Replacing the cross subsidy with Direct Benefit Transfer might streamline the process of providing
subsidies to the end consumers

47. Thank You!
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