Resist the Anti-People Reforms

Resist the Anti-People Reforms

Protect and Advance the Right to Electricity

Electricity is the mother of all industry and the nerve and center of modern human civilization. Electricity is a service which affects every worker, peasant and citizen of our country. Still in India, electricity is perhaps the most important service whose price is still being regulated to some extent through some agencies, despite many limitations and dilution in them. India produced 1,624.158 Billion Units of electricity in 2022-23; with average Rs 6/Unit revenue generated, it is an ever increasing market of Rs 975 thousand crore per year. And so, Indian as well foreign monopoly-finance corporate groups are pouncing on the Indian electricity sector to commodify it completely, with an intension to establish monopoly control over the consumers through market.

Anti-people reforms unleashed upon India’s power sector: Undoubtedly, Indian power sector has gone through a long complex route of anti-people, anti-national reforms for last few decades.The Electricity Act, 2003 was enacted to distance government from regulation of electricity business with the obvious intention of privatization. Certainly, we can claim that, due to strong protracted nationwide resistance by the workers and people in general and electricity workers in particular, still the lion share of electricity distribution sector is in the hands of the state DISCOMs.

The heinous Electricity Amendment Bill of Modi government: As distribution is the end point of the electricity service chain with the revenue collecting mechanism, the anti-people Modi government tried to blow the deadliest death-nail on state DISCOMs by introducing Electricity (Amendment) Bill – just after taking charge in 2014; but, it was resisted. The BJP government desperately attempted to pass the Bill again and again – latest being the Electricity (Amendment) Bill 2022. Obviously, with a very clear intent to destroy the state DISCOMsand hence the remnant of the public service orientation still existing in the electricity sector.

Burden of taxes has raised the production cost: It is to note that, in the Modi regime, the gap between average cost of supply (ACS) and average revenue realization (ARR) i.e., ACS-ARR gap (which is a very crucial parameter to measure the economic sustainability and health of any utility) has increased grossly. This is solely due to the fact that multiple taxes and duties were levied on coal including royalty on basic price (14%), Goods and Services Tax (5%) and GST Compensation cess (Rs400 per tonne), corporate taxes and higher railway freight charges. These taxes get transferred via tariffs with a disastrous effect on end consumers.

Startlingly, Modi government’s pet think tank NITI Ayog’s 2021 policy paper has blatantly proposed to dismantle the state-owned DISCOMs. Whereas, the reality is, globally 70% of the distribution utilities are still public owned. While promoting de-licensnig and horizontal un-bundling of the DISCOMs and short-term power procurement, atrociously NITI Ayog has stated “the Act (Electricity Amendment Act) requires that cross-subsidies and surcharges be progressively reduced and eliminated.” Obviously the target is agricultural consumers and poor households. The government has planned to withdraw all form of subsidies in the name of direct benefit transfer (DBT) and raise the tariff. The deceiving case of DBT is apparent to everyone through the experience of mounting price of cooking gases.

Electricity Amendment Bill is the legislation for Privatization: In a nutshell, if the Electricity Amendment Bill 2022 is passed, then, private distributors will have to make no investment in creating own distribution infrastructure for having parallel license for electricity distribution; state DISCOMs will be forced to offer their infrastructure to their competitors; the responsibility of incurring expenditure on maintenance, losses and network development will remain with state DISCOMs. On the other hand, private distributors can demand compensation in case of breakdown; private generators will enjoy advantages as private distributors; new Power Purchasing Agreements can be made by private distributors at lower rate.

When there are multiple distributors in a territory, the private distributors will offer incentives to lure profitable and large customers initially like telecom sector (especially the example of JIO) and then will enhance the tariff as per their monopoly control over the supply-system. State DISCOMs will not be able to compete due to their universal supply obligation, vast customer base and costs associated with past regulatory gaps. State DISCOMs will be left with small and unprofitable and far-away customers. The losses of state DISCOMs will have to be made up by people’s money. Ultimately DISCOMs will be fully privatized at throw away prices and entire burden will be on people.

The clear objectives of this Bill are to privatize electricity distribution-which is the main source of generating revenue; to turn already financially stressed state distribution companies sick to gift-over at throw away price to corporate; and to destroy huge public service infrastructure of state DISCOMs built since independence with public money through blood and sweat of the electricity employees. But the attempts were opposed and fought valiantly by the power men and the people of India. The heroic electricity sector movements against privatization for last few years are resonance and reflection of CITU’s slogan of Resistance and Defiance. And the key to the success of all these movements is obviously the involvement of people, the consumers.

Market Based Economic Dispatch – another short route for Privatization: Being challenged to pass and implement the Electricity Amendment Bill 2022, the Power Ministry issued a Notification on 1st June 2021 to initiate the Market Based Economic Dispatch (MBED) programme. Under this framework, there will be a centralized Day-Ahead-Market (DAM) where the sellers and buyers of whole country have to mandatorily submit their offers and bids.The Power Exchange will then unilaterally fix the dynamic Market Clearing Price (MCP) without having any consultation or disclosing any mechanism to the stake-holders. Clearly the whole mechanism is to make the generators and state DISCOMs surrender to the Central-controlled market system,to pave a way for giant private players to manipulate and control the market in all possible criminal ways, to take-over the pricing mechanism of entire Indian public power sector and to push the state DISCOMs and State Load Dispatch Centres towards riskier high-priced need-based real-time purchase.

And the latest attack – most heinous hitherto – the Revamped Distribution Sector Scheme (RDSS): But this was not all but just prelude of a dangerous blue print. In the incessant course of the planned onslaught on public electricity sector and under the direction of World Bank (WB), the Ministry of Power, GoI launched the disastrously nefarious smart metering project. This scheme has been made mandatory with sudden compulsory withdrawal of all existing Central financial support schemes.

This dangerous Revamped Distribution Sector Scheme (RDSS) is devised to put the entire burden of the until now cumulative debt of the electricity sector upon the state distribution utilities, state governments and all consumers – which will practically lead to massive de-electrification in rural India. It will segregate the agricultural consumer lines from non-agricultural one, in order to antagonize one against the other and do away with the cross-subsidy. The farmers will run out of pump water and devastatingly it will impact upon the food security of our country.

It will finally make each and every consumer prey to the market forces in regard to their electricity bill. It will throw away the majority section of the electricity sector workers abolishing the jobs permanently. This scheme will facilitate the pushed sell of private renewable electricity (REs) in energy mix and will ensure the handover of entire state distribution infrastructure to private parties in throw away prices. This scheme is a desperate attempt to find alternate routes to implement the draconian clauses of this Electricity (Amendment)Bill without passing it in Parliament.

While the Revamped Reforms based and Results Linked Distribution Sector Scheme has an outlay of Rs3,03,758 crore with an estimated Gross Budgetary Support of Rs 97,631 crore from Central Government, it clearly imposes the huge burden of Rs 2,06,127 crore on the consumers and state DISCOMs.

Salient points of the scheme: Gruesome Attack on the People:The salient points of the reform guideline as stated in the document are – demarcating and accounting the exact electricity consumption by the subsidized categories, doing away with all forms of direct cross subsidies through regulating tariff (electricity charges) in the name of Direct Benefit Transfer (DBT) (we all know the impact of DBT in household LPG cost!), forcing State Electricity Regulatory Commissions to continuously enhance the tariffs to reflect the ever increasing electricity purchase cost promulgating in a tariff shock for the poor consumers, blatant introduction of market-profit driven corporate governance reforms, operation of part or whole area of supply of DISCOM through private participation, forcing the state governments to set up electricity police stations to torture and cut the lines of poor or sometimes defaulted consumers and installation of feeder, transformer and consumer meters by people’s money in total expenditure (TOTEX) mode.

The consumers, who have less approved contractual load, will be in problem if suddenly the consumption exceeds the sanctioned limit. For extension of sanctioned load, they have to run to the distribution offices. If there is some technical problem in the meter, or any over billing is appeared, the consumers have to complain to the third party smart metering agency; the DISCOM’s customer care centers will have no functioning. If power is cut due to no-balance in prepaid smart meters (even due to some technical fault of the metering agency), the consumers have to pay fine and the re-connection may take hours.  

Every individual consumer will have to pay Rs 7000-8000 per prepaid smart meter for installation. Its maximum life-time is around 7-8 years. With around 26 crore consumers in India, it is a direct loot of Rs 26 X 8,000 = Rs2,08,000 crore from people’s pocket.In India, the key players applying for installation of these smart meters are Adani and Tata! Practically, the conditions for approval of grant are framed to guarantee no fund assistance from the Central government. And at half of this total cost, entire infrastructural up-gradation of distribution system could be done.

Central government’s push towards electricity market: For last few years, the Central government is increasingly pushing the state DISCOMs to enter into virtual electricity market. In Power exchange mechanism, a real-time dynamic market price for electricity is fixed through some algorithm created by the market agencies. Shockingly the volume of electricity transacted through Power Exchanges has increased manifold over the years at a CAGR of about 25% from 2009-10 to 2021-22.

Actually about 77% of the financial burden over DISCOMs is the purchase cost of power alone. And the cost of Power is in a trajectory of unbridled rise! On 1st April 2022, the Commission had directed the power exchanges to set the bidding price in the range of Rs 0-12/Unit for the day ahead and real time market. But the market players created a supply scarcity by not submitting bid at even the highest sanctioned limit of Rs 12/Unit and the commission was compelled to enhance the bidding price in all segments. A Staff Paper on Pricing prepared by CERC in October 2022 revealed that in March 2022, India witnessed a period of demand surge coupled with supply shortage. The increased prices of fuel, particularly imported coal led to an abnormally high market clearing price, frequently touching Rs 20/Unit, i.e., the maximum quotable price. Significantly high market prices and apprehensions regarding super normal profits earned by the infra-marginal generators was the core of the problem.

And Modi government is pushing the consumers towards this dangerous path. Suddenly the Ministry of Power (MoP) proposed to introduce a High Price Market segment (HP-DAM). Taking plea of that order, Indian Energy Exchange (IEX) approached CERC to enhance the price cap up to Rs 99/Unit and consequently, in the Order dated 16th February 2023, CERC allowed the upper price limit of HP-DAM to be Rs 50/Unit. Certainly,market pricing is a devastating and cheating mechanism to plunder the consumers, imagine how they even have maliciously reached at a looting price of Rs 50/Unit! Generally, the market clearing price emerges as the highest bidding price. So, any company can put a very high priced bid through any of its sister or daughter/ subsidiary company and can amass windfall profit out this mechanism!

Handing over to the private DISCOMs – all data to choose the cherry picking regions for private players:Most dangerously,the prepaid smart metering, communicable smart feeder and DT level metering will provide the entire real time data in a systematic manner to the market players through SCADA mechanism. It will facilitate them to manipulate the speculative market price. It will enable the private competitors to cherry pick the most profiteering regions for supply. Just recall that how Adani and other private players are pouncing for the Parallel Distribution Licenses in most revenue generating areas of Maharashtra, UP and other states. With availability of the entire consumption and billing data of consumers (which will be in the possession of private smart meter companies like Adani!), they will apply for exactly the most lucrative areas! The enactment of Electricity (Amendment) Bill along with smart metering will complete the vicious cycle of destructing the public DISCOMs.

It will finally enable the mechanism for establishing a dynamic pricing system for each and every individual consumer directly linked with the real time demand of the household electricity. Moreover, the underlying technology controlling all data-smart operations introduces substantial IT and process impacts making it vulnerable to the cyber-attacks. Even World Bank in its survey paper on International Experience of Advanced Metering Infrastructure (AMI) clearly stated smart metering technology introduces a number of accidents leading to voltage surges that risk the health and safety of utility personnel and customers, can potentially subject electricity service delivery to prolonged, multi-year disruptions, can be used for political purposes (Imagine the dangerous role of BJP government on non-BJP states!) and breaches of customer data privacy can be utilized to attack customers residential or industrial networks and equipment!

Time of Day (ToD) Tariff: A win-win for corporate, lose-lose for consumers: While all the risks to link the smart metering scheme with the dynamic pricing of electricity was coming into public discourse and discussion, the Central government in a swift and sudden blow, amended the Electricity (Rights of Consumers) Rules vide a notification dated 14th June 2023. Practically our words are vindicated now!

Time of Day (ToD) tariff means that the tariff will be completely flexible and only the lower limit of the tariff will be fixed, i.e., the normal tariff. Dynamic tariff will be fixed as per the rules of the market – if demand is high, the consumers have to pay higher prices for availing electricity. As per this amended rule, immediately after installation of smart meters, all consumers will be brought under ToD tariff latest by 1st April 2025. As per the ToD tariff system, only 8 hours of the daytime will be off peak hours. It is obvious that, the household consumption is greater in night time and the irrigation is also done majorly after sunset. The consumption of electricity will be higher at peak time and as demand will be higher, the consumers have to pay higher and higher dynamic tariff for using electricity! Though the Power Minister has claimed that it is a win-win for the company and the consumers, the reality will be devastating for the households.Resist de-electrification – Rise in Rage: Now, with clear conviction, we must understand, it is the last course of attack on India’s public electricity distribution sector. It will lead to massive de-electrification and food security of our country will be jeopardized. It is an attack on federal structure of India. Already some State Governments have started refuting this scheme. Electricity worker of various states are coming into the streets against this imposition of smart metering scheme with its corollary projects. It is our time to act now – integrated and united! We have to take up these issues to the consumers, the workers, the farmers and the general people of our country. We have to launch wide campaign programme taking all section of affected consumers with us and have to build resistance and defiance at all possible levels. From today’s convention, CITU calls upon the entire workers, farmers and people to get united, rise and resist this most draconian forms of attacks on the right to electricity. Even if the state distribution utilities are compelled to surrender, resist and defy at the villages, slums, households. This not only for the present but for future of the Nation!

Published by Centre of Indian Trade Unions for the Convention against Privatisation of Railways and Electricity, held at H.K.S.Surjeet Bhawan, New Delhi on 18th July 2023.