Power Ministry panel mulls shared distribution network for suppliers

New Delhi: The Consultative Committee of the power ministry, chaired by minister Manohar Lal, on Thursday deliberated the reforms aimed at allowing multiple electricity suppliers to operate on a common distribution network. The panel, which is a parliamentary forum that advises and reviews the policies, legislative initiatives, and performance of the ministry, discussed measures to promote consumer choice, improve service quality and make better use of existing distribution assets, the ministry said on Friday.

Minister of state for power Shripad Yesso Naik, members of Parliament, power secretary Pankaj Agarwal and senior ministry officials attended the meeting.

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The proposed framework seeks to address a key limitation in the Electricity Act, 2003. The proposed amendments to the Act, brought out by the ministry earlier also proposes to bring the shared network norms.

While the current Act permits multiple distribution licensees in the same area, each licensee is currently required to build its own network of poles, lines and substations, increasing capital expenditure and discouraging competition.

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Under the proposal, existing distribution companies will continue to own, operate and maintain the distribution network, while new licensees will be allowed to supply electricity using the same network on payment of regulated wheeling charges.

The ministry said the detailed implementation framework will be developed by state regulators to ensure transparent and non-discriminatory access to the network. Existing distribution licensees will continue to discharge their universal service obligation under the Electricity Act, while safeguards will be put in place to prevent suppliers from serving only high-paying consumers.