LECTURE 4

ELECTRICITY ACT 2003

This was notified in the Gazette of

India on 2nd June, 2003
 BACK GROUND
• Before Electricity Act, 2003, the Indian Electricity sector was
guided by
• The Indian Electricity Act, 1910
• The Electricity(Supply) Act, 1948
• The Electricity Regulatory Commission Act, 1998.
• The generation, distribution and transmission were carried
out mainly by the State Electricity Boards in various States.
 Need of Electricity Act 2003
• The Need for enactment of Electricity Act 2003, was
felt by the Central Government in the backdrop of the
on going Economic Reforms in the country coupled
with power sector reforms in various States.
• Poor performance of SEBs which were formed and
operating under IE Act 1910 and Electricity Supply Act
1948 forced the Govt. of India to bring out a uniform
and unified law to take care of the current needs of
power sector in the areas of Generation, Transmission,
Trading and Distribution of Electricity
 Significance of Electricity Act 2003

• It is a single legislation which addresses all the key

areas of Electricity in the country.
• It provides a road map for over all and uniform
development of electricity sector in the country
• It takes care of interests of consumers belonging to
various sectors
• It also aims to reform the sector to suit the needs of
the present day requirement , in the light of
globalization.
• Through specific provisions it aims to bring in
financial and commercial viability for power sector
utilities
 Section wise overview of the Act
Part I- Sections 1-2 Title, Commencement and
definitions
Part II – Sections 3-6 National Electricity Policy,
tariff Policy and NE Plan
Part III – Sections 7-11 Generation of Electricity –
including captive plants
Part IV- Sections 12-24 Licensing provisions

Part V – Sections 25-41 Transmission of electricity

Part VI – Sections 42-60 Distribution of electricity

Part VII- Sections 61-66 Tariffs

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 Section wise overview of the Act
Part VIII- Sections 67-69
Part IX – Sections 70-75
Part X– Sections 76-97
Sections 98-109
Part XI- Sections 110-125
Part XII – Sections 126-130
Works of licensees
Provisions relating to Central
Electricity Authority ( CEA)
CERC and SERCs
Grants, Funds, Accounts and
Reports of Central / State
Governments
Establishment and
operations of ATE
Investigation and Enforcement

Part XIII – Sections 131-134 Reorganization of Board

Part XIV- Sections 135-152 Offences and Penalties
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 Section wise overview of the Act

Part XV- Sections 153-157 Special Courts

Part XVI – Sections 158 Dispute Resolution

Part XVII – Sections 159-165 Other Clauses – Protective

clauses

Part XVIII- Sections 166-185 Miscellaneous

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 Salient features of the Electricity Act,
2003
• Role of Government
• Rural Electrification
• Generation
• Transmission
• Distribution
• Consumer Protection
• Trading / Market Development
• Regulatory Commission / Appellate Tribunal
• Tariff Principles
• CEA
• Measures against Theft of electricity
• Restructuring of SEBs
 Role of Government
• Central Government to prepare National Electricity
Policy and Tariff Policy(Section 3)
• Central Govt. to notify a National Policy for rural areas
permitting stand alone systems based on renewal and
Non-Conventional energy sources in consultation with
States(Section 4)
• Central Govt. to formulate a National Policy in
consultation with the concerned State Govt. for bulk
purchase of power and management of local
distribution through Users’ Association, Cooperatives,
Franchisees and Panchayath Institutions etc. (Section 5)
 Rural Electrification
• Appropriate Govt to endeavor to extend supply
of electricity to all villages/hamlets. (Section
6)
• No requirement of licence if a person intends
to generate and distribute power in rural
area(Section 14)
 Generation
• Generation free from licensing. (Section 7)
• Requirement of TEC for non-hydro generation done away
with. (Section 7)
• Captive Generation is free from controls. Open access to
Captive
generating plants subject to availability of transmission
facility. (Section 9)
• Clearance of CEA for hydro projects required. Necessary due
to concern of dam safety and inter-State issues. (Section 8)
•Generation from Non-Conventional Sources / Co-generation to
be promoted. Minimum percentage of purchase of power from
renewable may be prescribed by Regulatory Commissions.
(Sections 61 (h), 86 (1) (e))
 Transmission
• There would be Transmission Utility at the Centre and in the States
to undertake planning & development of transmission system.
(Sections 38 & 39)
• Load despatch to be in the hands of a govt company/organisation.
Flexibility regarding keeping transmission Utility and load despatch
together or separating them (Sections 26, 27,31, 38, 39)
• Transmission companies to be licensed by the appropriate
commission after giving due consideration to the views of the
Transmission Utility. (Sections 15(5)(b))
• The Load Despatch Centre/Transmission Utility / Transmission
Licensee not to trade in power. Facilitating genuine competition
between generators(Sections 27, 31, 38, 39,41)
• Open access to the transmission lines to be provided to distribution
licensees, generating companies(Sections 38-40) .This would
generate competitive pressures and lead to gradual cost reduction.
 Distribution
• Distribution to be licensed by SERCs.
• Distribution licensee free to take up generation & Generating co. free to
take up distribution licence. This would facilitate private sector
participation without Government guarantee/ Escrow. (Sections 7, 12)
• Retail tariff to be determined by the Regulatory Commission. (Section 62)
• Metering made mandatory. (Section 55)
• Provision for suspension/revocation of licence by Regulatory Commission
as it is an essential service which can not be allowed to collapse. (Sections
19, 24)
• Open access in distribution to be allowed by SERC in phases (Section 42)
• In addition to the wheeling charges provision for surcharge if open access
is allowed before elimination of cross subsidies, to take care of
(a) Current level of cross subsidy
(b) Licensee’s obligation to supply. (Section 42)
- This would give choice to customer.
 Consumer Protection
• Consumer to be given connection within
stipulated time. (Section43(1))
• Penalty in the event of failure to give
connection (Section 43(3))
• Payment of interest on security deposit.
(Section 47(4))
• Regulatory commission to specify Electricity
supply code to be followed by licensees.
(Section 50)
 Consumer Protection(Contd.)
• Redressal forum for redressal of grievances of
consumers, to be appointed by every distribution
licensee within six months. Ombudsman scheme
(Section 42)
• Standards of performance
➢ Licensees required to meet standards of performance
specified by Regulatory Commission. Failure to meet
standards makes them liable to pay compensation to affected
person within ninety days.
• Licensee to furnish to the Commission periodical
information on standards of performance (Section 57)
 Consumer Protection(Contd.)
• District level committee –
(a) to coordinate and review extension of
electrification in each district
(b) to review quality of power supply and
consumer satisfaction, etc. (Section 166 (5))
 Trading/ Market Development
• Trading distinct activity permitted with
licencing. (Section 12)
• Regulatory Commission may fix ceiling on
trading margin to avoid artificial price
volatility. (Sections 79 (2) (b) & 86(2) (b))
• The Regulatory Commission to promote
development of market including trading.
(Section 66)
 Regulatory Commissions/Appellate
Tribunal
• State Electricity Regulatory Commission to be constituted within six
months. (Section 82)
• Provision for Joint Commission by more than one State/UT. (Section
83)
• Provision for constitution of Appellate Tribunal consisting of
Chairman and three Members. (Section 110, 112)
• Appellate Tribunal to hear appeals against the orders of CERC/SERC,
and also to exercise general supervision and control over the
Central/State Commissions. (Section 111)
• Appeal against the orders of Appellate Tribunal to lie before the
Supreme Court. (Section 125)
• Appellate Tribunal considered necessary to-
➢ Reduce litigation and delay in decisions through High Court.
➢ Provide technical expertise in decision on appeals.
 Central Electricity Authority
• CEA to continue as the main technical Advisor of
the Govt. of India/State Government with the
responsibility of overall planning. (Section70)
•CEA to specify the technical standards for
electrical plants and electrical lines. (Section73)

❑ CEA to be technical adviser to CERC as well as

SERCs.(Section73)
❑ CEA to specify the safety standards. (Section 53)
 Tariff Principles
• Regulatory Commission to determine tariff for supply
of electricity by generating co. on long/medium term
contracts. (Section 62)
➢ No tariff fixation by regulatory commission if tariff is determined through competitive
bidding or where consumers, on being allowed open access enter into agreement with
generators/traders.
• Consumer tariff should progressively reduce cross
subsidies and move towards actual cost of supply.
(Section 61 (g), (h))
• State Government may provide subsidy in advance
through the budget for specified target groups if it
requires the tariff to be lower than that determined by
the Regulatory Commission. (Section 65)
 Tariff Principles(Contd)
• Regulatory Commissions may undertake
regulation including determination of multi-
year tariff principles, which rewards efficiency
and is based on commercial principles.
(Section 61 (e), (f))
• Regulatory Commission to look at the costs of
generation, transmission and distribution
separately. (Section 62 (2))
 Measures Against Theft of Electricity
• Focus on revenue realisation rather than criminal
proceedings.(Sections 126, 135)
• Penalties linked to the connected load and
quantum of energy and financial gain involved in
theft. (Section 135)
• Provisions for compounding of offences. (Section
152)
• Assessment of electricity charges for
unauthorised use of electricity by the assessing
officer designated by the State Government.
(Section 126)
 Measures Against Theft of Electricity
• Theft punishable with imprisonment.
(Section135)
• Punishment provision for abetment of theft.
(Section 150)
• Special Courts (Sections 153-158)
 Restructuring of SEBs
• Provision for transfer scheme to create one or
more companies from SEB. (Section 131)
• Provision for continuance of SEBs (Section172)
• States given flexibility to adopt reform
model/path.
 Electricity act 2003
• Some Relevant Extracts:
Licensing
“12. No person shall -
(a) transmit electricity; or
(b) distribute electricity; or
(c) undertake trading in electricity,

unless he is authorised to do so by a license issued

under section 14, or is exempt under section 13.”
 NATIONAL ELECTRIC CODE
• Regionally adoptable standard for safe installation of electrical
wiring and equipment
• It is a part of National Fire Codes series published by National
Fire Protection Association (NFPA)
• NEC unifies practices, procedures and safety requirements to
be compiled within the design, execution and
inspection/maintenance of electrical installations in the
country
• NEC is formulated to elaborate Indian Electricity Rules and
serve as a compilation document on electrical practices in our
country
 Objective of NEC

• To complement Indian Electricity Rules by

elaborating and recommending practices to
comply with their requirements
• NEC provides information in a consolidated
form to the electrical engineers and
contractors who are concerned with the
design and operation of electrical installations
 Scope of NEC
• Standard good practices for selection of part of power
systems
• Recommendations concerning safety and related
matter in the wiring of electrical installations of
buildings or industrial structures, promoting
compatibility between such recommendations and
those concerning the equipment installed
• General safety procedures and practices in electrical
work
• Additional precautions to be taken for use of electrical
equipment for special environmental conditions like
explosive and active atmosphere
The information in NEC is presented in 8 parts according
to NEC 2011. They are
• General and common aspects
• Electrical installations in standby generating stations
and substations
• Electrical installations in non industrial buildings
• Electrical installations in industrial buildings
• Outdoor installations
• Electrical installations in agricultural premises
• Electrical installations in hazardous areas
• Solar photovoltaic power supply system
 The Code applies to electrical installations such as

• Standby/emergency generating plants and building substations

• Domestic dwellings
• Office buildings, shopping and commercial centres and institutions
• Recreation and other public premises
• Medical establishments
• Hotels
• Sports buildings
• Industrial premises
• Temporary and permanent outdoor installations
• Agricultural premises
• Installations in hazardous areas
• Solar photovoltaic installations
• Circuits other than internal wiring of apparatus
 The code does not apply to

❖ Traction, motor vehicles, installations in rolling-stock, on board-

ships, aircraft or installations in underground mines

❖ Lightning protection aspects from structural safety point of view

❖ Systems of distribution of energy to public

❖ Power generation and transmission for such systems

❖ Guidelines on the payment for electrical work done in installations

 SAFETY ASPECTS OF ELECTRICAL
SYSTEM DESIGN
• Two important aspects of electrical system
design are
❖ To provide proper functioning of the installation for the use
intended by the designer
❖ To provide safety to persons, livestock and property against dangers
and damages that may arise in the use of electrical installations
• Two major risks exposed to end users by every
electrical installations
❖ Electric shock current
❖ Very high temperature due to sparking which causes burns, fires
etc.
 Protective measures incorporated in
the system
1. Protection against direct contact
➢ Prevent persons and livestock coming in direct contact with live parts of the
installation
➢ This is achieved by preventing a current from passing through the body of
any person/livestock or by limiting the magnitude of the current passing through the
body to a value lower than the perceptible shock current

2. Protection against indirect contact

➢ Protected against dangers from contact with exposed conductive parts of the
electrical installations
➢ Protection against indirect contact can be achieved by
1. Preventing fault current from passing through the body of any
person/livestock
2. Limiting the magnitude of the fault current which can pass through the body
to a low value
3. By automatic disconnection of the supply
3. Protection against thermal effects
➢ No risk of ignition of flammable material due to high
temperature of conductive parts or due to an electric arc
➢ During normal operation there shall be no risk of
persons suffering from burns due to thermal effects
4. Protection against overcurrent
➢ Automatic disconnection of the supply in the event of
an overcurrent before it reaches a dangerous value taking
into account its duration
➢ By limiting maximum value of overcurrent to a safe
value and duration
5. Protection against fault currents
➢ All parts intended to carry fault current shall be
capable of carrying the fault current without
reaching excessive temperature levels
6. Protection against over/under voltage
➢ Over voltage protective devices like rod gap,
surge diverter, overhead earth wires are used for
protection
➢ Undervoltage protective devices are installed in
the system
•QUESTIONS?????????
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THANK
YOU