11.Electricity Act

8/10/2019 11.Electricity Act

1/9

THE ELECTRICITY ACT, 2003


2/9

BACKGROUND

Three erstwhile Acts that regulated the electricity sector:

The Indian Electricity Act, 1910

The Electricity (Supply) Act, 1948

The Electricity Regulatory Commissions Act, 1998


3/9

THE INDIAN ELECTRICITY ACT, 1910

It created basic framework for electric supply industry in India.

It envisaged growth of the sector through private licensees.

Licence by State Govt.

It provided for licence for supply of electricity in a specified area.

It created legal framework for laying down of wires and other

works relating to supply of electricity


4/9

Mandated creation of SEBs.

Need for the State to step in (through SEBs) to extend

electrification (so far limited to cities) all across the country.

THE ELECTRICITY (SUPPLY) ACT, 1948


5/9

Background

Over a period of time, the performance of SEB has deteriorated.

For Example:

Power to fix tariffs rests with SEBs. However, they are unable

to take decisions on tariffs in a professional and independent

manner and practically tariff fixation has been done by State

Governments

Cross subsidies have reached unsustainable levels.

To address the above issues, and to provide for distancing of

Governments from determination of tariffs, ECR Act was enacted in

1998.

It created the CERC and has an enabling provision through which

State Governments can create a SERC

So far sixteen states have notified/created SERC either under

the central Act or under their own reform Act.

THE ELECTRICITY REGULATORY COMMISSIONS

ACT, 1998


6/9

Electricity Bill, 2001

Background:

To encourage private sector participation in generation,transmission and distribution.

Objective of distancing the regulatory responsibilities from

Government to regulatory commissions.

For the above, the following needs arised:

Harmonising and rationalising the provisions in Electricity Act

1910, 1948, ERC act 1998.

To provide for newer concepts like power trading and open access.

To get rid off the requirement of each State Government to pass itsown reforms act.


7/9

ELECTRICITY BILL, 2001

MAIN FEATURES:

Generation delicensed.

Captive generation freely permitted.

Hydro projects need approval of State Government and

clearance from CEA

(Reasons: Dam safety, optimal utilisation of water resources)

Transmission utility at Central and State level which would be

a Government company.

Provision for private transmission licensees.

Open access in transmission with provision for surcharge to

take care of cross subsidy.


8/9


Main features (contd):

Distribution licensees free to undertake generation and generation

companies free to take up transmission licensees.

Stand alone systems for generation and distribution permitted for

rural and remote areas.

Trading recognised with the safeguard of ERC authorised to fix

ceiling on trading margins, if necessary.

Where there is direct commercial relationship between a consumers

and a generating company or a trader, the price of power would

not be regulated and only the transmission and wheeling charges with

surcharge would be regulated.


9/9


Main features (contd):

State Governments have the option of continuing with SEBs

which under the new scheme of things would be a distribution

licensee and State transmission utility which would also be

owning generation assets.

An Appellate Tribunal has been created for disposal of appeals

against the decision of CERC and SERC. SERC is a mandatory

requirements.

Provisions relating to theft of electricity have a revenue focus.

Act 36 of 2003

The electricity bill having been passed by both the houses ofParliament received the assent of the President on 25thMay 2003.

It came on the Statute Book as Electricity Act, 2003.

Documents

11.Electricity Act