THE ELECTRICITY ACT 2003

by
Indu Maheshwari
Dy. Director

Centre for Advanced Management & Power Studies

National Power Training Institute

Draft of the Electricity ACT prepared by: National Council of Applied Economic Research (NCAER) Content resting with the Ministry of Power

THE ELECTRICITY ACT 2003

Passed by Lok Sabha on 9th April 2003 and Rajya Sabha on 5th May 2003 NOTIFIED on 10th June 2003 Replaces the three existing Electricity Acts The Indian Electricity Act , 1910 The Electricity Supply Act , 1948 & The Electricity Regulatory Commission Act , 1998

THE ELECTRICITY ACT 2003

LIMITATIONS OF THE PRESENT STRUCTURE
SEBs cannot mobilize the requisite resources Private investors can only invest through the SEBs SEB monopoly restricts competition and efficiency Inadequate concern for the consumer

THE ELECTRICITY ACT 2003

WHY THE ACT ?
For taking measures conducive to Electricity Industry
Rationalization of Electricity Tariff Promoting competition Ensuring Transparent Policies regarding Subsidies Protecting interests of consumers

Promotion of Efficient and Environmentally benign

policies

The ACT
Sets the blueprint for Power Sector Reforms in India Will send important Signals to Domestic and International Financial Communities Attracts additional investment to boost the Indian Economy Will relieve the stressed financial position of state Electricity Boards

THE ELECTRICITY ACT 2003

Consolidate the laws relating to Generation, Transmission, Distribution, Trading & Use of Electricity

Constitution
Central Electricity Authority Regulatory Commissions Establishment of Appellate Tribunal

THE ELECTRICITY ACT 2003

Contents
PART - II PART -III PART -IV PART - V PART - VI PART -VII PART - VIII PART - IX
PART - I Preliminary National Electricity Policy and Plan Generation of Electricity Licensing Transmission( Interstate & Intra State) Distribution of Electricity Tariff Works Central Electricity Authority

THE ELECTRICITY ACT 2003

Contents
PART PART PART PART PART PART PART PART PART X Regulatory Commissions XI Appellate Tribunal for Electricity XII Investigation and Enforcement XIII Reorganisation of the Board XIV Offences and Penalties XV Special Courts XVI Dispute Resolution XVII Other Provisions(Protective Clauses) XVIII Miscellaneous Schedules and Enactments

SALIENT FEATURES OF THE ACT

Central Govt.. to prepare National Electricity Policy in Consultation with State Govt..
The Central Government shall, from time to time, prepare the National Electricity Policy (including tariff policy), in consultation with the State Governments and the Authority for development of the power system based on optimal utilization of resources including conservation thereof and the use of renewable sources of energy. The Authority may review or revise the National Electricity Plan in accordance with the National Electricity Policy.

Thrust to Complete Rural Electrification

Provide management of Rural Distribution by Panchayats, Cooperative societies, Non Govt. organisations, Franchisees etc. The Appropriate Government shall endeavor to supply electricity to all areas including villages and hamlets.

SALIENT FEATURES OF THE ACT

Generation
Generation delicensed and Captive Generation freely permitted.

Any generating company may establish, operate and maintain a station without obtaining a license under this Act if it complies with the technical standards relating to connectivity with the grid referred to in clause (b) of Section 73. Hydel Projects needs State Govt. approval and CEA clearance Every company referred to in sub-station (1) shall prepare and submit to the Authority for concurrence, a scheme estimated to involve a capital expenditure exceeding such sum, as may be fixed by the Central Government from time to time, by notification.

SALIENT FEATURES OF THE ACT

LICENSING
No person shall
a) Transmit electricity b) Distribute Electricity

c) Undertake Trading in Electricity

unless a License is obtained

THE ELECTRICITY ACT 2003

Transmission of Electricity
Transmission Utility to be a Govt. Company at the centre and state level both s with responsibility for planned and coordinated development of transmission network Provision for Private Transmission licensees.

THE ELECTRICITY ACT 2003

Transmission of Electricity
National Load Despatch Centre Regional Load Despatch Centre on the basis of region wise demarcation of the country State Load Despatch Centre

THE ELECTRICITY ACT 2003

Technical standards of O& M of Transmission lines to be maintained in accordance with the Grid Standard specified by the CEA. Open Access in Transmission with provision of surcharge for taking care of current level of subsidy. Distribution Licensees would be free to take Generation Generating Cos. Free to take Distribution Licenses Provision for License free Generation and Distribution in Rural Areas.

THE ELECTRICITY ACT 2003

Provision for Payment of Subsidy through Budget. For Rural and Remote areas Stand Alone systems for Generation, Distribution Permitted. Decentralised management of distribution through Panchayats, cooperatives or franchisees would be permitted The Regulatory Commission being authorised to fix ceilings on trading margins if necessary When there is a direct commercial relationship between a consumer and Gen. Company price of electricity shall not be regulated and only transmission and wheeling charges with surcharge would be regulated

THE ELECTRICITY ACT 2003

The Act does not prescribe any model of Reform
instead provide Flexibility to the State Govt. to choose the model suiting them SERC is a Mandatory Requirement State Govt. has Flexibility to unbundle the SEBs or continue with them as Distribution Licensees and State Transmission Utility.

THE ELECTRICITY ACT 2003

Metering of all Electricity Supply made Mandatory. Appellate Tribunal to hear appeals against the decisions of the CERC & SERCs. The CEA shall provide Provisions related to Safety and Electricity supply

THE ELECTRICITY ACT 2003

SALIENT FEATURES OF THE ACT
Provision Relating to Theft of Electricity made more Stringent.(imprisonment up to 3 years or both)

THE ELECTRICITYACT 2003

Tariff
The Regulatory Commissions shall specify the tariff in such a manner that The Generation, Transmission and Supply of Electricity is conducted on commercial principles
Encourage Competition and Efficiency Safeguarding of Consumers Interests Tariff Progressively Reduces and reflects the Cost of Supply of Electricity

THE ELECTRICITY ACT 2003

Functions of the Central Electricity Regulatory Commission To Regulate the Tariff of the Generating Companies owned or controlled by the Central Govt. or having a scheme of

generation & sale of Elect. in more than one state

Regulate Interstate Transmission of Electricity Determine Tariff for Interstate Transmission of Electricity

THE ELECTRICITY ACT 2003

Issue Licenses to Function as Transmission Licensees and Electricity Traders Settle Disputes between Generating Companies and Transmission Licensees To Specify the Grid Code To Specify the Standards and Enforce the Standards with respect to Quality and also has an Advisory Role to the Central Govt.

DRAFT Electricity BILL 2001 has been scrutinized by:

PARLIAMENTARY STANDING COMMITTEE ON ENERGY 5 Legal Consultants of NCAER CERC,CEA,SERCs State Govt. , SEBs, World Bank staff and Consultants International Consultants, Industry Associations(CII, FICCI,ASSOCHAM) IPPs Private Distribution Companies Legal experts Technical/Financial experts, Apex Consumer Organizations Other stakeholders and experts

THE ELECTRICITY ACT 2003 Conclusions

The Act recognizes the present industry structure, based on state owned monopolies and creates an enabling framework for the states to pursue a cautious yet definite path towards restructuring and liberalization of the electricity industry that is essential to achieve an annual growth rate of 7-8%

Perspectives
The one duty we owe to history is to rewrite it Oscar Wilde Laws and Institutions are constantly tending to Gravity. Like clocks they must be occasionally cleaned, wound up and set to the time Henry Ward Bucher