Shared Network Access in India’s Power Distribution

The Centre has proposed major changes to the electricity distribution framework by enabling distribution licensees to share existing networks. The aim is to reduce infrastructure duplication, lower costs and improve efficiency. The initiative, part of amendments to the Electricity Act, 2003, seeks to promote competition and give consumers a choice of suppliers while maintaining state flexibility to offer subsidies.

Objective of the Proposed Amendments

The amendments focus on legalising shared network access for all distribution licensees. At present, multiple licensees must maintain separate parallel networks, which increases capital expenditure and operational redundancies. By permitting network-sharing with regulated wheeling charges, the government intends to build a more cost-effective and competitive distribution market.

Implications for Consumers and States

Consumers stand to gain from a wider choice of suppliers, improved service quality and potentially lower tariffs. The proposal allows states to continue providing subsidies to specific consumer groups such as domestic and agricultural users. This ensures vulnerable categories are not adversely affected by competitive restructuring within the sector.

Current Framework and Market Experience

The Electricity Act, 2003, already provides for multiple distribution licensees in the same area to promote efficiency. However, duplication of infrastructure has limited practical implementation. Mumbai remains the only notable example where competing distribution companies operate in parts of the city, enabling consumer choice across suppliers.

Exam Oriented Facts

• The proposal mandates non-discriminatory open access for all distribution licensees.
• Mumbai is currently the only city with multiple active distribution licensees offering consumer choice.
• Shared network access aims to reduce redundant infrastructure and lower overall system costs.
• State subsidies for domestic and agricultural users will continue under the amended framework.

Funding Under the Revamped Distribution Sector Scheme

The Centre has released about ₹37,000 crore to states under the revamped distribution sector scheme covering 2023–26. The scheme targets improved reliability and financial sustainability of the distribution sector. States and distribution companies must meet predefined milestones under a customised evaluation framework to qualify for further fund releases.