Key Highlights of State Electricity Distribution Management Responsibility Bill, 2013

Key Highlights of State Electricity Distribution Management Responsibility Bill, 2013

The new bill “State Electricity Distribution Management Responsibility Bill, 2013” aim at providing for responsibilities of the State Government to ensure financial and operational turnaround and long-term sustainability of the State-owned Distribution Licensee to enable adequate electricity supply to consumers through financial restructuring, support on sustainable basis in the areas of long term planning, corporate governance, regulatory compliances, and laying down of policy directives and various other measures. The Key highlights in the bill are discussed below.

Statement to be laid before the State Legislature

• The State Government shall lay, in each financial year during the Budget Session,  a State Electricity Distribution Management Statement on the measures taken by the State Government in relation to electricity distribution in the State including, in the areas of long-term planning, consumer protection, regulatory compliance, corporate governance, financial restructuring of the State Distribution Licensee, so as to bring about the operational and financial viability of the State Distribution Licensee, on sustainable basis.
• Prepare and action plan on long-term, medium term and short-term basis, laying down time bound programme to execute strategic priorities to achieve Key Performance Indicators, monitor and ensure compliance of the KPIs and strategic priorities

Long term Planning for sustainability of State Distribution Licensee

• The State Government shall take appropriate measures on Distribution Licensee estimates of demand, AT&C Loss and availability of electricity on long term basis and, contracts, with the approval of the State Commission, through long/ medium/ short term agreements for purchase of power to meet the demand.
• State Distribution Licensee undertakes energy accounting and auditing of all 33 kV feeders, 11 kV feeders and Distribution Transformers along with consumer indexing and time bound metering of each category of consumers.
• State Government shall declare the quantum of subsidy in advance categorically stating the consumer or the class of consumers to whom it is to be provided and also timely release of subsidies
• Ensure that there are no arrears of electricity charges for electricity supplied to various departments and institutions of the State Government on or before the date of coming into force of this Act.
• Ensure that the State Load Despatch Centre is operated within six months from the date of coming into force of this Act, by a Government company or any authority or corporation.

Financial Restructuring Plan for State Distribution Licensee

• State government to ensure that the trajectories of the operational and financial parameters in the Financial Restructuring Plan (FRP) are achieved within the stipulated time frame.
• State Government shall make FRP or such other financial scheme a part of the State budget statements for effective monitoring of its impact on the State finances.
• State Government shall ensure that the State Distribution Licensee does not resort to short term loans for funding operational losses except as provided in the FRP.

Accounting measures

• State government shall establish an Empowered Committee to ensure identification, provisioning and write offs of receivables and bad and doubtful debts.

Corporate Governance

• State Government to ensure that the Board of Directors of the State Distribution Licensee has an optimum combination of functional, nominee and independent directors.
• State Government shall lay down a code of conduct in line with the Guidelines on Corporate Governance for Public Sector Enterprises.

Regulatory compliance and tariff filings

• State Government shall ensure regular and timely filing of true-up petitions, Aggregate Revenue Requirement (ARR) and tariff petitions, and petitions for adjustments on account of fuel and cost of power purchased by the State Distribution Licensee.
• State Government to make fiscal provision or provision of grant to the State Distribution Licensee.

Memorandum of Understanding

• State Government and the State Distribution Licensee shall enter into a memorandum of understanding for setting targets for KPIs and performance evaluation.
• State Distribution Licensee shall submit every six months, a report to the State Government, on its operational and financial performance.

Monitoring Mechanism

• The State Government shall establish a Committee for effective implementation of this Act.

Measures to enforce compliance and Applicability

• The committee established shall review and recommend remedial measures, if any, every quarter, compliance of the obligations cast on the State Government under this Act and the State Government shall place before the State Legislature.
• Nothing in this Act shall apply to any Distribution Licensee that is not owned or controlled by the State Government

Source: Cerebral Business Research PVt. Ltd.