The power ministry is pushing the implementation of distribution-sector reforms with renewed vigour, in what is also expected to help reap political dividends, as the resultant competition could bring down power tariffs.

Sources said the ministry wants states to examine the possibility of separating the power supply business and network ownership to enable full open access to consumers. Advisories to this effect have been issued to the states. The ministry has also circulated model state electricity distribution responsibility Bill 2013 for enactment by state governments.

The changes being planned are many ? apart from open access, accountability for financial turnaround of power distribution companies is also stressed, given that majority of them are burdened by heavy operational losses due to inadequate recovery of electricity costs.

“The separation of wires and supply business is aimed at improving efficiency and customer service. Broadly, the wires business can continue to take advantage of government schemes and capital subsidy for access, while the supply business can be put to private sector competition,” explained Kameswara Rao, leader, mining and energy utilities, PWC, the consultancy firm which was involved in undertaking a feasibility study on this issue.

But separating wire and power supply is not going to be easy. “There are issues like how to segregate network assets and supply business and how to subsidise electricity supply to domestic and agricultural consumers, which needs to be resolved if this model is to be implemented,” said Pramod Deo, former chairman, Central Electricity Regulatory Commission.

‘Open Access’ allows a consumer with more than 1 Mw of load demand to draw electricity from sources other than the local discom. However, despite the Centre’s directive, states are dragging their feet on allowing open access for fear of losing well-paying commercial and industrial consumers, which helps discoms in subsidising electricity to consumers from economically weaker sections.

As part of the feasibility report, the consultant has studied surveyed power distribution practices in developed countries like the US, UK and Australia.

In these countries, multiple players supply electricity through the same network, which is usually owned by a state-owned entity without any interest in power distribution business.

In contrast, responsibility to supply electricity to consumers and ownership of local networks lie with the same entity in India, something that leads to conflict of interest when implementing open access provisions.

Rao added: “The model of separate wire and power supply business can be applied in situations where privatisation or distribution franchises or public-private partnership (PPP) is not easy to implement.”

Following the Centre’s advice, state governments are also expected to enact a legislation soon to take over the responsibility to ensure financial and operational turnaround of their loss-making discoms.

The proposed legislation, the state electricity distribution responsibility Bill 2013, will be modelled on the lines of Fiscal Responsibility and Budget Management ( FRBM) Act, sources said.

The ministry has proposed the act to ensure that discoms do not slip back into complacency over tariff revision.