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India's power sector might be in for a big change. A proposed electricity bill of the Union government will free power generation from licensing and change the status of the state electricity boards (SEBs) into one or more companies within a year. Discussions regarding the proposed bill are being held between the government and the labour ministry ( Down To Earth , Vol 9, No 13).

If the bill is passed, new electricity generation projects would not require 'techno-economic clearance' from the Central Electricity Authority (CEA), though they would have to follow the National Power Plan. They will be expected to work in accordance with the technical standards and conditions set by the CEA. But overall, setting up power plants could be a simpler process.

The private sector could benefit from the proposed changes and the government run agencies may become more efficient. Instead of queuing up for licenses, those who want to set up a plant would have to inform the regulatory commission and the CEA about the project. The regulatory commission will direct the power plant's development and suggest modification regarding technical issues. Another feature of the bill is that captive power generating plants can be set up 'freely'. But when they supply power to the grid, they would be subject to the regulatory commission at par with other generating stations. Hydroelectric projects would also require state governments' clearance along with the sanction from the Union government. Power generation from non-conventional energy sources like wind or substitute fuels would be promoted by the commission. The bill says that though SEBs have to be transformed, the state governments can continue with them. The states would have the flexibility to create two or more companies from the SEBs.