June 10, 2023

Making Discoms Accountable: Competition, Not Rules Will Do The Trick

By Ashwini Agarwal
First publised on 2020-12-23 09:52:25

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Apart from a few regions such as Mumbai and New Delhi, power distribution companies are geographical monopolies in most regions in India. This is a result of no reform in the power distribution sector (despite big talks about introducing the model of separation of carriage and content) which has left the consumer at the mercy of state-owned or private discoms. These near monopolies have a record of providing shoddy service and being unreceptive to consumer grievances. The consumer has no choice as there is usually no other service provider in the region.

To address these issues, the government has come out with The Electricity (Rights of Consumers) Rules, 2020 that seek to make power distribution companies more accountable to the consumer. From compensating consumers for long power cuts to providing a timeline for new connections, the rules try to provide the consumer with some muscle when facing these monopolies. But many similar rules have already been put in place by state electricity regulatory commissions, without any perceptible change in the working of the discoms. Hence, as long as the will to implement the rules in not there, they remain on paper.

The best way to make discoms accountable is to introduce competition. If the option to change the service provider exists, the consumer knows he or she has an option and the discom knows that providing shoddy service will not do. This has happened in the telecom sector and it keeps all players on their toes. But in the power sector, since there is no option, discoms very much do as it pleases them. These rules are also not going to change much. The best way is to allow multiple power distribution companies in each region. The government must seriously implement separation of carriage and content or think of other models to boost efficiency.