INTRODUUCTION TO

THE ELECTRICITY ACT,

2003

By
Kumar Mihir
 ELECTRICITY
• Electricity is a form of energy resulting from the existence of
charged particles (such as electrons or protons), either
statically as an accumulation of charge or dynamically as a
current.
• 2(23) Electricity means Electrical Energy –
a) generated, transmitted, supplied or traded for any purpose,
or
b) Used for any purpose except the transmission of a message
• Electricity is “ Goods” – State of AP vs NTPC Ltd (2002) 5
SCC 203 (follows Commissioner of Sales Tax, Madhya
Pradesh, Indore v. Madhya Pradesh Electricity Board, Jabalpur -
[1969]2SCR939.
 THE PECULIAR FEATURE OF
ELECTRICITY
• Electricity cannot be stored (limited through charging of batteries)

• Generation and consumption of electricity-instantaneous

• Generation, sale, supply and consumption take place without any hiatus.

• Electrons have no identity

• Electricity generated is injected into the power system.

• Electricity is conveyed only through physical wires

• Electricity to be used in a specified frequency range (49.9 Hz to 50.02Hz)

IT IS LIKE WATER POURED INTO A SWIMMING POOL AT

DIFFERENT PLACES AND TAKEN OUT AT DIFFERENT
PLACES

• Need for maintaining frequency and adjustment of overdrawal,

underdrawal under-injection, over-injection in the system
 LEGISLATIVE HISTORY
INDIAN ELECTRICITY ACT, 1910

• Provided basic framework for electric supply industry in

India.

• Growth of the sector through licensees. License by State

Govt.

• Provision for license for supply of electricity in a specified

area.

• Legal framework for laying down of wires and other works.

• Provisions laying down relationship between licensee and

consumer
 LEGISLATIVE HISTORY
THE ELECTRICITY (SUPPLY) ACT, 1948
• Mandated creation of SEBs.
• Need for the State to step in (through SEBs) to extend
electrification (so far limited to cities) across the country.
THE ELECTRICITY REGULATORY COMMISSION
ACT, 1998
• Provision for setting up of Central / State Electricity R
egulatory Commission with powers to determine tariffs.
• Constitution of SERC optional for States.
• Distancing of Government from tariff determination.
 mAIN FEATURES OF THE
ELECTRICITY ACT, 2003
• Enacted by the Parliament as a Central Legislation

• Came into force on 10.06.2003

• Repeals and consolidates the earlier Electricity Laws:

• Indian Electricity Act, 1910
• Electricity (Supply) Act, 1948
• Electricity Regulatory Commissions Act, 1998
Section 185

• Saves the State Electricity Reforms Act (Odisha, Haryana,

A.P., U.P, Karnataka, Rajasthan, M.P., Delhi and Gujarat)
• to the extent they are not inconsistent with the Electricity Act,
2003
 cONCEPTUAL CHANGES IN
ELECTRICITY ACT, 2003

• Distribution and Trading- Licensed activity

• Generation- De-regulated on many aspects
• Captive Generation & Use- Liberalized and freely allowed
• Open Access- Choice to source electricity from person other
than Distribution Licensee allowed
• Trading in Electricity- Recognized
• Power Market Development including Power Exchanges-
Recognized
• Promotion of Co-generation and Renewable Power
stipulated
 cONCEPTUAL CHANGES IN
ELECTRICITY ACT, 2003
• Re-organization of Electricity Board and formation of
Corporate Entities to carry out generation and licensed
function
• Electricity Board to cease to undertake licensed function
within a specified time
• Constitution of State Regulatory Commission made
mandatory
• Continuation of the Central Commission and State
Commission in States already constituted under ERC Act,
1998
• Definitive functions for the Central and State Commissions-
instead of allowing State Commission to decided various
functions to be assigned to the State Commissions.
 cONCEPTUAL CHANGES IN
ELECTRICITY ACT, 2003
• Transmission Licensee- CTU and STU- prohibited
from trading
• CTU prohibited from undertaking generation
• Provisions for cross-subsidy surcharge and additional
surcharge to compensate distribution licensee for
allowing open-access.
• Constitution of Appellate Tribunal as expert body to
hear appeal from the Regulatory Commission.
• Tariff determination through competitive bid process
as per GOI guidelines specified
Agencies and functions

• Central Government
• Issue of National Electricity Policy and Tariff Policy
(Section 3)
• Issue of Policy directives to Central Commission under
Section 107.
• Issue of rules under Section 176 on various aspects.
• Issue of Guidelines under Section 63 for transparent
competitive bid process to determine tariff
• ____
• _____
Agencies and functions

• State Government
• Issue of Policy Directives under Section 108
• Issue of Directions to Generating Companies under
Section 11 in extraordinary circumstances to generate
electricity.
• Grant of subsidy under Section 65
• ________
• ___-_
Agencies and functions

• Central Commission
• Regulating tariff and other matters concerning generating
company owned or controlled by the Central Government or
generating companies having composite scheme for generation
and sale in more than one state , inter-state transmission etc.
including the grant of license for inter-state transmission
activities
• Specifying Grid Code for Grid operation
• Determination of Trading Margins
• Standard of Performance by the Licensee under license granted
by the Central Commission
• Adjudicating of disputes involving Generating Companies
whose tariffs are determined by Central Commission and/or
Inter-State Transmission Licensees.
• Aid and advise the Central Government on electricity matters
Agencies and functions

• Central Electricity Authority

• To formulate perspective plan for development of the
Electricity activities.
• Deciding on technical standards for Electricity industry
including safety, security etc.
• Deciding on the Grid Standards for operation and
maintenance of transmission lines, installation of meters,
collecting and maintaining datas on electricity industry
• Preparation of National Electricity Plan
• Aid and advise the Government, the Regulatory
Commissions on electricity matters.
Agencies and functions

• State Commission
• Exercising regulatory functions on matters other than falling
under the function of the Central Commission
• Determination of tariff under Section 62 for procurement of
electricity by the distribution licensee and retail supply to end
user/consumer, transmission of electricity and trading margin
• Issue licenses for distribution, intra state trading and intra state
transmission
• To specify standards of performance for licensees in the State
• To adjudicate on disputes between gen companies and/or
licensees
• To specify intra state grid code, subject to the Grid Code
specified by the Central Commission
• Aid and advice the State Government
Agencies and functions

• Role of NDLC/RLDC
• To monitor and regulate the integrated operation of the
power system, as a whole
• To regulate scheduling and dispatch of electricity
• To undertake real time operation
• To supervise and control the activities of the State Load
Dispatch Centre and also all licensees, Generating
Companies, Generating Station and others connected
with the operation of the power system in regard to its
smooth working
Agencies and functions

• RPC (Regional Power Committee)

• To assist in improving Grid performance, planning,
coordination with various agencies
• To undertake planning for maintaining power voltage
• To evolve consensus amongst the participant in the power
system

• CTU (Central Transmission Utility)

• Undertake transmission of electricity
• Undertake planning and coordination on inter-state
transmission of electricity for smooth flow of electricity
from the generating station to load centre
Agencies and functions

• SLDC (State Load Dispatch Centre)

• Responsible for optimum scheduling and dispatch of
electricity in the state
• Real time operation of intra state grid

• STU (State Transmission Utility)

• Undertake intra-state transmission of electricity,
development of intra state transmission network
Agencies and functions

• ASSESSING OFFICER SECTION 126

• To assess the unauthorized use of electricity and compensation
to the distribution licensee

• Appellate Authority (Section - 127)

• To hear Appeal against the Order of assessment under Section
126

• Adjudicating Officer
• a member of the State Commission designated to act as the
adjudicating officer to decide on specific function delegated to
him

• Consumer Redressal Forum [Section 42(5)]

• Ombudsmen
• FORUM FOR REGULATORS
• Advisory Committee

• Appellate and Judicial Forums

• Special Court to deal with Theft of Electricity
• Appellate Tribunal to hear Appeals from Regulatory
Commissions (Centre and State) as well as
adjudicating officer
• Hon’ble Supreme Court to hear Second Appeal from
Orders of the Appellate Tribunal on question of Law
• Extraordinary Writ Jurisdiction of High Court
Scheme under electricity act
on division of functions

• Central and state governments (executive) to divested of

regulatory powers.
• Regulatory powers to be vested in an independent body and
not in the department of government
• Control of various functionaries namely licensees,
generating companies, and other statutory bodies such as
RLDC, SLDC, CTU, STU, licensees, RPCs (other than
CEA) to be given to the regulatory commissions.
Regulatory commissions to decide on aspects in a
transparent manner (departure from administrative
decisions)
• Role of central and state government restricted to policy
matters
 Basic objective of
electricity law
• Focus on the end-user/consumer
• Safeguarding consumer interest- supreme
• Consumer/end-user to get electricity at competitive rate and with
proper quality-Standard of Performance
• The regulation of electricity industry is to achieve the above goal.
• Generation, Transmission, Distribution, Trading, Scheduling and
Dispatch etc. is to aid the achievement of the above goal.
• Touchstone of deciding the fairness in the electricity activities is
sub-serving the interest of consumers.
• Consumers being a large body of public at large, not in a position
to commercially negotiate with Utilities, Regulatory Commission
is a body constituted to act on behalf of consumer and protect
their interests
 Basic objective of
electricity law
• Generation, Transmission, Distribution, Trading are
activities of commercial entities and are in position to
protect their respective interests on their own.

• Electricity Industry cannot be left to be governed

completely by market force:
• Monopolistic position of wires and networks
• Electricity is an infrastructure industry and a necessity
• In India, Electricity is still a scarce commodity in many
areas
• Affordability in case of majority of the public is restricted
• Avenues for competition restricted
Thank you!