Hyderabad: The supply of electricity could go into the hands of private parties, if a Niti Aayog proposal to the Centre is adopted.
Because of the aggregate debt, discoms often end up defaulting payments to power generation companies. Large volumes of power is lost during transmission and distribution loses due to theft and low efficiency leading to lower revenue.
It said the ultimate solution lay in ensuring that electricity distribution was subject to commercial pressure. This can be achieved by separating the distribution of electricity from ownership of the distribution grid, it said.
Discoms would continue to own the grid while distribution or sale of electricity would pass on to private agents.
The private firms would contract with generation companies to buy electricity and sell it to the final customers. Electricity would be supplied from the generating station to the point of consumption on the transmission and distribution infrastructure at charges to be determined by regulators. Under this arrangement, the Niti Aayog sees distributors competing for customers.
Niti Aayog said the separation of the grid from distribution of electricity could allow captive generation to turn into an effective source of power.
It said the Electricity Act, 2003 had freed captive generation from all controls including the licence requirement and techno economic clearance from the Central Electricity Authority. Once captive generation is offered smooth access to the grid, its potential can be fully exploited.
Niti Aayog said when discoms are in poor financial condition, generation companies fear that they would be unable to make good on their promised payments. In turn, generation companies refuse to enter into power purchase agreements with discoms.
The result is that the latter are unable to provide electricity even when customers are able and willing to pay for it. Sooner or later, the government has to step in to bail out the discoms the Niti Aayog said.
