CAG

2021- 22 Q3

Report

CAG_Foreign Contributors_FY2021-22_Q3.pdf

Year

2021

Quarter

Competition and Electricity Commission

Electricity is an indispensable resource to the growth of a nation. From mighty corporations to modest domestic households, everyone needs electricity to survive in this rapidly digitizing world. Although the Electricity Act 2003 provides a comprehensive framework to regulate the production and supply of electricity, a majority of the consumers are in the dark regarding their rights and options in the sector. Owing to the lack of transparency and accessibility to the low tension industrial and domestic consumers, the system does not adequately protect their interests and redress their grievances. Further, the manifest domination of the public sector undertakings in the various segments of the production and supply of electricity severely impedes competition in the industry, which in turn adversely impacts the consumer interest in terms of quality of services and the choices available. Therefore, there is an urgent need to reform the electricity sector in India so as to enhance competition in the industry and improve consumer choices.

CAG is working on an initiative titled “Supporting Tamil Nadu in Accelerating Clean Energy Share in its Power Sector” for accelerating the transition to clean energy in Tamil Nadu and improving the quality of participation of stakeholders in supporting the same. As part of the initiative, CAG is researching competition and regulatory aspects and its role in enhancing consumer choice in the sector. The aim of the present initiative is to research the electricity sector and identify possible areas of development and reformation to enhance competition and improve the consumer choices in the industry.

The methodology of research undertaken is in the form of an explorative study of the legislative framework and the industrial setup of the electricity sector with a view to formulate viable solutions and recommendations to improve competition and consumer choices. It entails an in-depth analysis of the Electricity Act 2003 and its allied rules and regulations, viewed from the lens of competition and consumer protection policies of the country, and attempts to harmonize its provisions with the existing antitrust enforcement regime under the Competition Act 2002. It also examines the judicial pronouncements and jurisprudential developments relating to the inter-regulatory control over the sector between the authorities under the Electricity Act 2003 and other regulatory bodies. It further draws inspiration from foreign jurisdictions which are ahead in terms of privatizing the electricity sector and comparing their models of enforcing and regulating competition within the industry.

The hope for the research is to open up a more informed discourse in formulating India's policy towards promoting competition in the electricity sector and transitioning the system into a more consumer friendly model in order to meaningfully enhance the consumer choices in the electricity market.

It further aspires to facilitate the necessary legislative reforms with plausible recommendations and suggestions to remedy the existing impediments to a healthy competition in the electricity sector and provide low tension consumers with greater choice in choosing their preferred distributors from a pool of competitive service providers.

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