The Bill aims to create efficiencies through competition – the more efficient suppliers will get customers. The idea is that efficient distribution companies (discoms) will, by virtue of getting more business, be financially sound, resolving the intractable problem of bankrupt discoms that plagues the system. The reforms outlined are about getting discoms into shape. That is, indeed, a worthwhile aim. But it may not be sufficient to build the power system required as the country transitions away from fossil fuels, particularly coal, to cleaner and renewable fuels. The Bill’s efforts to increase competition in distribution are important, though. But alongside, there is a need to address questions about the system of cross-subsidising residential consumers by commercial ones, a system that prevents wider use of electricity. It must also consider issues related to market design that creates a built-in preference for coal-based power.
Reforming the discoms is critical. Successive governments have tried and failed. Perhaps it is time to try a broader approach that helps transitioning the energy system.