Why in news:

  • The gazette notification on the Electricity (Amendment) Rules, 2022, came out recently.
  • Ever since the Union Power Ministry shared the draft rules with the States last August, the CPI(M)­led government in Kerala had fiercely objected to Rule 14 of the new rules.
  • It permits distribution companies (Discoms) to automatically recover from consumers, on a monthly basis, the expenses arising out of variations in fuel price and power purchase costs.

More about new Electricity (Amendment) Rules, 2022:

  • The Centre introduced the Electricity (Amendment) Rules, 2022, to amend the Electricity Rules, 2005.

What is Rule 14 under the new rules?

  • It states that Rule 14 of the Rules requires the State electricity regulatory commission to specify a price adjustment formula for automatically passing on the costs through the consumer tariff on a monthly basis.
  • It also states that Fuel and power purchase adjustment surcharges shall be calculated and billed to consumers, automatically, without going through the regulatory approval process, on a monthly basis, according to the formula, prescribed by the respective State Commission.

Issues related to the Rule 14:

  • Endangers consumer interests:
  • Giving Discoms the freedom to automatically pass on the aforementioned costs through the electricity bill endangers consumer interests.
  • Unstable pricing mechanism:
  • The amendment tries to introduce an “unstable pricing situation’’ in the power sector, similar to that of petrol and diesel prices.
  • Consumers would be subjected, quite unfairly, to frequent price fluctuations.
  • Dilution of the power of regulatory commission:
  • It further observed that the crucial role played by the State Electricity Commission in fixing the surcharge would get diluted.
Syllabus: Prelims + Mains; GS3 – Power sector