electricity act & role of er authorities

7/31/2019 Electricity ACT & Role of ER Authorities

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ELECTRICITY RELATED

ACTS


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2

Acts that regulated the electricitysector :

IndianElectricity Act, 1910 Electricity supply act,1948

Electricity Regulatory CommissionAct,1998

The Electricity Act, 2003

(with Amendment in 2003 & 2007)

Electricity Related Acts


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The Indian Electricity Act, 1910 Provided basic framework for electric supply

industry in India. Growth of the sector through private licensees.

License provided by State Govt.

Provision for licence for supply of electricity in a

specified area. Legal framework for laying down of wires and other

works.

Legal framework for laying down of undergroundcables.

For any digging work notice to be served one monthprior to any digging work

Provisions laying down relationship betweenlicensee and consumer.


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The Electricity (Supply) Act, 1948

Power to Central Govt. to make rule by notification in the

Official Gazette

Mandated creation of SEBs.

Formation of the Central Commission in case of inter-State

transmission system and State Commission in case of intra-

State transmission system to determine the charges payable

to the Central Transmission Utility or State Transmission

Utility for the use of transmission system by SEBs, its

successor entity, generating company, licensee or any other

person.

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

electrification (so far limited to cities) all across the

country.


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The Electricity (Supply) Act, 1948

Terms, conditions and tariff for sale of electricity byGenerating Company

A generating company may enter into a contract for the

sale of electricity generated by it with the Board

constituted by the State (SEB) in which a generatingstation is located.

Compliance of directions of the Regional Electricity

Board, etc., by licensees or generating companies


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Main amendments to the existing Acts

Amendment in 1975 to enable generation in Central

sector (NTPC & NHPC) Amendment to bring in commercial viability in the

functioning of SEBs

Section 59 amended to make the earning of a

minimum return of 3% on fixed assets a statutoryrequirement (w.e.f 1.4.1985)

Amendment in 1991 to open generation to private sectorand establishment of RLDCs (WRLDC)

Amendment in 1998 to provide private sectorparticipation in transmission, and also provision relatingto Transmission Utilities.


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The ElectricityRegulatory

Commissions Act,

1998


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Need for TheRegulatory

Commissions


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9

Traditionally, electricity utilities were owned and managed by the government as

vertically integrated monopolies

Characteristics

The existence of vertically integrated monopoliescould be in the form of

Single monopoly as vertically integrated

throughout generation, transmission and

distribution

There is no competition and no consumer choice

The utility is tightly regulated through price control

Existence of subsidies and cross-subsidies burden on

Govt.

Unable to identify the problem at which stage.

Poor development in Power Sector

No Pvt. Participation in Power sector

Vertically Integrated Monopoly

Logically developed to deal with rapid industrialisation and growth in supporting infrastructure

Due to high marginal costs, technical and financial risks, private investment is not forthcoming

Generation

Transmission

Distribution

Customers

Note: Single State Owned Entity

Source: Project Disha Phase-1 reports


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Need for the new legislation

Requirement of harmonizing and rationalizing the provisions inthe existing laws to

Create competitive environment to enhance quality andreliability of service to consumer.

Distancing regulatory responsibilities of Govt. Reform legislation by several States separately.

Need for individual States to enact their own reform laws.

Need for individual States to divide state power sector inthree part.

Requirement of introducing newer concepts like powertrading, open access, Appellate Tribunal etc.

Special provision for Electrification in the Rural areas.


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Features of The Electricity Regulatory CommissionsAct, 1998

Provision for setting up of Central / State ElectricityRegulatory Commission having powers to determinetariffs.

Powers and function of the central commission

to regulate the tariff of generating companies ownedor controlled by the Central Government and other than

to regulate the inter-State transmission of energyincluding tariff of the transmission utilities

to frame guidelines in matters relating to electricitytariff


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Features of The Electricity Regulatory CommissionsAct, 1998

to arbitrate or adjudicate upon disputesinvolving generating companies ortransmission utilities in regard to matters

connected

to aid and advise the Central Government onany other matter referred to the Central

Commission by that Government. Constitution of SERC optional for States.

Distancing of Govt. from tariff determination.


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13

The Electricity

Act, 2003


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Important Features of EA-2003 andtheir Sections & Sub Sections

Section

SubSection

Matter

31 National Electricity policy and Tariff policy.

4National Electricity Plan.

4-

National policy on stand alone systems (notconnected with grid) for rural areas and nonconventional energy systems.

5 -

National policy on electrification and local

distribution in rural areas.

6 - Obligations to supply electricity to rural area.

7 -Generating Company and requirement for setting up

of generating station.

8 - Hydro-Electric Generation.


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Important Sections,Sub Sections of EA-2003

Section

SubSection

Matter

9

- Captive Generation.

2 Owner of CPP shall have the right to carryelectricity from his captive generating plant tothe destination of his use.

12 -License required to transmit, distribute andundertake trading in electricity,

13 -

No License required for any local authority,Panchayat Institution, users association, co-operative societies, NGOs, or franchisees totransmit, distribute and undertake trading inelectricity.

25 - Inter-State, regional and Inter-Regional


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Section

SubSection

Matter

26 - Formation of National Load Dispatch Centre.

27 - Formation of RLDC.

42

2 Empowering SERC to introduce Open Access in aphased manner.

5Establish a forum for redressal of grievances of theconsumers.

43

1Duty of Distribution Licensee to supply on requestwithin one month.

3 Penalty to Distribution Licensee for failing to supply.


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Section

SubSection

Matter

50 - The Electricity Supply Code.

61

- Tariff Regulation

(a)Determination of Tariff to Generating &Transmission Licensee.

(c)

The factors which would encourage competition,efficiency, economical use of the resources, goodperformance and optimum investments

(f) Multi Year Tariff.

(g) To reduces and eliminates cross-subsidies.

62 (1) ERCs shall determine the tariff.


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Section

SubSection

Matter

63 - Determination of Tariff by bidding process.

66 - Development of Electricity Market.

70 1 Constitution of CEA.

76

1 Constitution of CERC.

5 One Chairman and three other members in CERC.

77 1 Qualifications of CERC Chairman, members.

78 1

Constitution of selection Committee to

recommend members of Appellate Tribunal,CERC.

79 1 Functions of CERC.


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Section

SubSection

Matter

80 1 Establishment of Central Advisory Committee.

81 - Objects of Central Advisory Committee.

82 1 Establishment SERC.

83 1 Constitution of Joint Commission.

84 1Qualifications of Chairman & members Joint

Commission.

85 1 Constitution of selection Committee torecommend members of SERC.

86 - Functions of SERC.

87 Establishment of State Advisory Committee.


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Section

SubSection

Matter

135 - Theft of Electricity.

136 - Theft of Electric Lines and Materials.

166 Co-Ordination Forum.

178 - Powers to CERC to make Regulations.

179 -Rules and Regulations made by Central Govt.,CERC to be laid before Parliament.

180 - Powers to State Govt. to make Rules.

181 - Powers to SERC to make Regulations.

182Rules and Regulations made by State Govt.,

SERC to be laid before Legislative Assembly.


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Role of Government

Central Government to prepare (Section 3) -

National Electricity Policy

Tariff PolicyPolicy on development of non-

conventional energy sources.

Rural Electrification


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Features related to Generation

Generation free from licensing. (Section 7)

Requirement of (Techno Economic Clearance) TEC for non-hydrogeneration removed. (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 due to concern of

dam safety and inter-State issues. (Section 8)

Generation from Non-Conventional Sources / Co-generation to bepromoted. Minimum percentage of purchase of power from

renewable may be prescribed by Regulatory Commissions. (Section

61(h),86 (1) (e))


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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 separate. (Sections 26, 27,31, 38, 39)

Private 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)

Features related to Transmission


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istribution :

Distribtution 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)


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Features related to Open Access

Open access to the transmission lines to be provided todistribution licensees & generating companies. (Sections 38-40)

This would generate competitive pressures and lead to

gradual cost reduction. Open access in distribution to be allowed by SERC in

phases. (Sections 42)

This would give choice to customer.


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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)

R l C i i /A ll


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Regulatory Commissions/AppellateTribunal

State Electricity Regulatory Commission to be constitutedwithin six months. (Section 82)

Provision for Joint Commission by more than one State/UT.(Section 83) (WRPC)

Provision for constitution of Appellate Tribunal consisting ofChairman and three Members. (Section 110, 112)

Appellate Tribunal to hear appeals against the orders ofCERC/SERC, and also to exercise general supervision andcontrol over the Central/State Commissions. (Section 111)

Appeal against the orders of Appellate Tribunal to lie beforethe 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.


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CEA to continue as the main technical Advisor of theGovt. of India/ State Government with the responsibility of

overall planning. (Section 70)

CEA to specify the technical standards for electrical plants

and electrical lines. (Section 73)

CEA to be technical adviser to CERC as well as

SERCs.(Section 73)

CEA tospecify the safety standards. (Section 53)

Central Electricity Authority


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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 throughcompetitive bidding or where consumers, on being allowed open accessenter into agreement with generators/traders.

Consumer tariff should progressively reduce cross subsidies and movetowards actual cost of supply. (Section61 (g))

State Government may provide subsidy in advance through the budgetfor specified target groups if it requires the tariff to be lower than thatdetermined by the Regulatory Commission. (Section65)

Regulatory Commissions may undertake regulation includingdetermination of multi-year tariff principles, which rewards efficiency andis based on commercial principles. (Section61 (e), (f))

Regulatory Commission to look at the costs of generation, transmissionand distribution separately. (Section62 (2))


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electricity act & role of er authorities

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