Power Ministry Advisory Committee Discusses Parallel Distribution Licensing Framework
UPSC / SSC current affairs note · Economy
Why in news
The Ministry of Power's Advisory Committee met under Union Minister Manohar Lal to discuss a proposed framework for parallel distribution licensing. This aims to introduce competition in the power distribution sector, which remains the only major segment with limited competition under the Electricity Act, 2003.
Background
The Electricity Act, 2003 successfully introduced competition in generation, transmission, and trading, but distribution still lacks effective competition. Currently, multiple licensees in the same area must each build separate networks, leading to duplication of poles, lines, and substations, increasing costs and discouraging investment.
Key facts
The Advisory Committee meeting was chaired by Union Minister for Power and Housing & Urban Affairs, Shri Manohar Lal.
The proposed framework allows new distribution licensees to use existing networks by paying regulated wheeling charges, avoiding duplication of physical infrastructure.
Existing licensees will continue to own, operate, and maintain their networks; new licensees may also develop their own networks if permitted by the State Electricity Regulatory Commission (SERC).
The framework aims to give consumers the freedom to choose their electricity supplier, similar to telecom and aviation sectors.
All licensees will be bound by universal service obligations under the Electricity Act, preventing cherry-picking of profitable consumers.
The detailed implementation framework will be designed by SERCs to ensure fairness, transparency, and non-discriminatory access.
Mumbai was cited as a successful example where parallel distribution has been operating for years.
The reforms are aligned with the vision of Viksit Bharat @2047.
The proposal protects the interests of existing licensees and their employees.
Prelims pointers
- Electricity Act, 2003
- Parallel Distribution Licensing
- State Electricity Regulatory Commission (SERC)
- Universal Service Obligation
- Viksit Bharat @2047
- Ministry of Power
- Advisory Committee of Ministry of Power
- Wheeling charges
- Mumbai model of parallel distribution
Mains angles
- GS3: Infrastructure - Power sector reforms, competition in distribution, consumer choice.
- GS2: Government policies and interventions - Regulatory framework for electricity distribution.
- GS3: Economic development - Efficiency, investment, and innovation in power sector.