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The distribution segment is one of the most important yet among the weakest links in the
electricity value chain. Over the years, the government has made several attempts to turn around
this segment. But while it has pumped significant money into it through various programmes and
tried to bail it out three times in less than 15 years, the segment continues to remain in the red.
The Electricity Act, 2003 laid the foundation for bringing in competition at the consumer end
through the introduction of concepts like open access and parallel distribution licensees.
However, the experience with both these concepts has not been quite successful. Almost 15
years after the passage of the Electricity Act, the distribution segment is still grappling with high
aggregate technical and commercial losses triggered by rampant power thefts, technical issues,
corruption involving suppliers and users, subsidised or free power, dilapidated networks,
inadequate metering, lack of consumer orientation, and poor operational and financial
management.
To resolve these issues and bring in competition in retail supply, the Electricity Amendment Bill,
2014 was introduced in the Lok Sabha in December 2014. The bill, among other things,
proposes the separation of the carriage (wires) and content (retail) businesses. With this, the
incumbent state utilities, which would be responsible for the wires business, can concentrate on
system strengthening while new retailers can compete amongst themselves to provide consumer
services. The separation is expected to empower consumers and allow them to buy electricity
from a power company of their choice.
As with most reforms, there has been significant opposition to the bill from various quarters,
particularly the states, discoms and unions. A major challenge has been, and will continue to be,
building a consensus with the states, which is necessary given that electricity features on the
concurrent list.
To understand the views of various stakeholders and suggest changes, the bill was referred to
the Parliamentary Standing Committee on Energy, which presented its report in the Lok Sabha in
May 2015. The centre has also been holding discussions with the states to reach a consensus on
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