Multiple discoms can supply power through existing distribution networks | Today’s news
New Delhi: An advisory committee of the power ministry has discussed the proposed framework to allow more distribution companies (discoms) to supply electricity through existing distribution networks across states, an official statement said on Friday.
The current legal framework allows more than one licensee to distribute in the same area, but requires each licensee to establish its own distribution network.
The statement said this results in duplication of poles, lines and substations, increases capital expenditure and discourages new investment, ultimately leading to inefficient use of resources.
“The proposed framework seeking to enable competition in the supply of electricity without the need for duplication of the physical distribution network has been discussed in detail. Under the proposal, existing distribution license holders will continue to own, operate and maintain their networks,” the statement said.
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The new distribution licensees will be able to use the existing network on payment of regulated charges while retaining the option to develop their own network wherever permitted by the concerned State Electricity Regulatory Commission, it added.
The move would allow private players to enter the power distribution space in states where demand is met only by public sector companies.
Consumer Choice and Warranties
Union Power Minister Manohar Lal, chairing Thursday’s meeting, said a detailed implementation framework would be drawn up by state electricity regulatory commissions “to ensure fairness, transparency and non-discriminatory access to the grid” and that the proposal also “fully protects the interests of distribution licensees and their employees”.
The minister said that once the proposed standards are implemented, all distribution licensees will continue to be bound by universal service obligations under the Electricity Act and the regulatory framework will prevent selective supply to only profitable consumers.
The minister said consumers will have the freedom to choose their electricity supplier, similar to the options available in sectors such as telecommunications and aviation.
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Increased competition is expected to promote better consumer services, better reliability, greater innovation and operational efficiency, while ensuring optimal use of existing infrastructure and preventing unnecessary expenditure, the minister added.
Opposition to the proposal
The bill amending the Electricity Act 2003, released in October last year, also revived the government’s plans to open up India’s power distribution sector and allow multiple discoms to serve a single area through existing distribution infrastructure.
The proposal of multiple distribution licensees operating in one service area has been a contentious issue, opposed by several states, power sector employees and central unions, including several amendments proposed by the government in the Electricity Bill 2025.
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Shailendra Dubey, president of the All India Power Engineers Federation (AIPEF) said that the proposed change may not, however, bring reliable power and ensure efficient use of infrastructure as the network will remain the same while the suppliers will increase.
