The Delhi government has continued its power subsidy regime for residential consumers for the financial year 2020-2021. Under the extended regime, all residential consumers will get 200 units of free electricity in a month. The government will provide a subsidy of ₹800 per month for consumers with electricity consumption upto 400 units.

Till now these subsidies where discounted in the bills and were specified in separate columns. But this may undergo a change if the draft Electricity (Amendment) Bill get approved and notified.

The draft Electricity (Amendment) Bill proposes that tariffs will be determined by State Electricity Commissions without taking into account the subsidy, which will be given directly by the government to the consumers. This subsidy is to be disbursed through a Direct Benefit Transfer.

Further, the Bill proposes to eliminate the tendency of some Commissions to provide for regulatory assets. The proposed Act notes that the Commissions shall determine tariffs that are reflective of cost so as to enable Power Distribution Companies (Discoms) to recover their costs.

According to officials, there needs to be some clarity on the operations and subsidy disbursals under the new Act.

“Eliminating cross subsidy has been on the agenda of the Centre for a long time now. But whether this means eliminating cross subsidy on an overall level or on a slab level is to be understood,” a Discom official told BusinessLine .

“Generally, consumers with lower electricity consumption are in a lower slab and end up paying lower tariffs while those with higher consumption pay higher tariffs for power consumption. This is how Discoms and State governments ensure that power remains affordable for all,” the official added.

But the proposed changes in the Electricity Act, 2003 may rework this and all consumers will have to pay a higher upfront cost and then get the subsidy in their accounts. This is the approach adopted for disbursal of subsidy on cooking gas (LPG) in the country.