INTRODUCTION
The Electricity Act 2003, (hereinafter ‘the Act’) being in nature of consolidating as well as codifying statute, was passed in May 2003 to replace all previously existing statutes regulating electricity in India. The Act presently governs the CERC (Central Commission) and SERCs (State Commissions), with an additional mandate of establishment of an appellate body, the APTEL (Appellate Tribunal for Electricity) and certain other institutions for effectively regulating the electricity sector.
Electricity is included as part of ‘concurrent list’ of the Indian Constitution. As a result, both the Union government as well as State legislatures are eligible to pass laws on this subject (provided, Central laws will take precedence over State laws). Prior to implementation of the Act, operations of generation and distribution of electricity were carried out by state-controlled organisations. However, such an arrangement proved fatal for national interest as some states became power surplus and some faced acute supply. The Act aims to promote competition via permitting private sector participation in electricity generation, supply, and distribution. India is a Union of States, and each State has their own advantages and limitations for generation of electricity. The Act is provisioned in such a manner to provide such regulators and institutions with authority which can help in maximisation of generation, transmission, distribution, trading etc. not only within the state of production but around the entire country through co-ordination. Under The Act, there are institutions to regulate, advise, co-ordinate and resolve disputes, about whom we shall discuss in brief in this blog.
REGULATORS: THEIR FUNCTIONS & JURISDICTION
Various institutions which regulate electricity in India are as hereinunder:
I. CENTRAL ELECTRICITY AUTHORITY (CEA)
The Central Electricity Authority (CEA) is established under Section 70 (1) of the Act and is headquartered in New Delhi. To effectively perform its functions and duties, it has set up sub-ordinate offices. At present, CEA has 14 sub-ordinate offices being: (A) 5 Regional Power Committees (RPCs) (B) 4 Regional Power Survey Offices (RPSOs) (C) 5 Regional Inspectorial Organisations (RIOs)
Members and Qualifications:
CEA can consist of maximum fourteen members, (including the ‘Chairperson’), of whom only eight can be full-time members. First member, the Chairperson is appointed by Central Government and is the ‘Chief Executive’ of CEA. Members of Central Authority are required to be persons of ability and integrity who have knowledge and adequate experience in dealing with problems relating to engineering, finance, commerce, or industrial matters. There are six (6) Wings in CEA namely ‘Planning wing,’ ‘Hydro wing,’ ‘Thermal wing,’ ‘Grid Operation wing,’ ‘Distribution, Economic & Commercial wing’ and ‘Power System wing’ each headed by a member of the Authority. Final member acts as Secretary to the Chairperson, and is appointed under Section 72, after approval of Central Government.
Functions and Objectives:
The operations of CEA include planning, specifying technical standards and facilitating timely completion of schemes and advising the Central government, State governments, and regulatory commissions as well as other stakeholders on technical matters to ensure sustainable power sector development.
CEA has two primary duties to perform:
- Planning Regulation: CEA regulates the metering system, grid standards and difference between the supply and demand of power.
- Construction Regulation: Construction of thermal power systems and facilities based on gas, hydro and other fuels is regulated by CEA by setting standards to approval.
Additionally, based on S.73(a), CEA has significant role in formation of National Electricity Policies and short-term and perspective plans for development of current electricity regime. Based on S.73(k), CEA is responsible for promoting research in matters affecting generation, transmission, distribution, and trade of electricity.
Under Section 177(2), CEA has power to issue regulations on various issues like metering, installation of power plants, transmission lines, grid standards etc. and by exercising such powers it has issued the following regulations:
| Metering Regulations (external link) |
| Construction Standards (external link) |
| Transaction of Business(external link) |
| Statistics and Returns Standards (external link) |
| Safety Regulations (external link) |
| Grid Standards (external link) |
| Grid Connectivity (external link) |
| Communication Regulations (external link) |
Further, CEA offers consultancy services to various State Electricity Boards (SEBs) and power utilities for design and engineering of power projects.
For detailed functioning of CEA, one may click here. CEA is mandated to publish annual reports, most recent of which can be read by clicking here.
II. CENTRAL ELECTRICITY REGULATORY COMMISSION (CERC)
The Central Electricity Regulatory Commission (CERC) is established under Section 76 (1) of the Act, with its head-office at New Delhi. CERC determines tariff for transmission and trade of electricity in more than one state. To perform its functions in an effective manner, CERC is divided into seven (7) wings being the Legal Division; Engineering division; Finance Division; Regulatory Affairs division; Economics division; MIS division and the Administrative division. For detailed information about the working of divisions, one may click here.
Members and Qualifications:
According to S.76(5), CERC is composed of a Chairperson, three full time members, and Chairperson of CEA (acting as member, ex officio). These members are chosen by Central Government based on the Selection Committee’s recommendations. Term for Chairperson and members is of five years or until they reach the age of 65, whichever comes earlier.
According to S.77(1), Chairperson and members of CERC can be persons having adequate knowledge and experience of handling problems involving engineering, law, economics, commerce, finance or management. Further, based on S.77(2), Central Government has power to appoint anyone who is or has been a Supreme Court Judge or Chief Justice of a High Court as the Chairperson. However, Chairperson can only be appointed after consultation with Chief Justice of India.
Functions and Objectives:
In order to reduce disparity between supply and demand of power, CERC aims to boost electricity market’s economy and efficiency by encouraging investment and competition. It focuses on improving the quality of electricity supply and advises governments on minimising entry barriers for a smooth inter-state flow. CERC is responsible for protecting both, consumer and supplier interest, while remaining fair to all stakeholders. Further, CERC is supposed to remain impartial when resolving disputes. On one side, it is supposed to be consistent in views so as to maintain regulatory certainty and on the other, it has to be quick to adapt to changes of this dynamic industry.
For purposes of conducting inquiries under the Act, CERC operates in quasi-judicial capacity with authority akin to that of a Civil Court.
Section 79 stipulates the functions required to be carried out by CERC. While S.79(1) outlines CERC’s mandatory functions, Section 79(2) outlines its advisory functions.
Mandatory Functions
- Regulate tariff of generating companies owned/controlled by Central government, and for those generating companies not controlled by Government if such company is involved in ‘composite scheme’ for generation and sale of electricity in more than one state
- Regulate inter-state transmission of electricity and determine tariff for such inter-state transmission
- Issue license to persons to function as transmission licensee and electricity trader with respect to their inter-State operations
- Increasing information availability for all parties involved
- Speedy settlement of disputes involving generating companies or transmission licensees
- Improving regional transmission system’s performance by defining the grid code in accordance with grid standards
- Defining the requirements for consistency and dependability of licensees’ services
Advisory Functions
- Formation of National Electricity Policy and Tariff Policy.
- Fostering efficiency, economy, and competition in the operations of power sector.
- Encouraging investment in electricity sector and tackling other issues brought by Central Government.
For detailed functioning of CERC, one may click here.
Furthermore, Central commission is supposed to maintain transparency while exercising authority and carrying out functions. CERC is to be guided by National Electricity Policy, National Electricity Plan, and the pricing policy while discharging its functions and duties.
Under Section 178(2), CERC has power to issue regulations on various issues, which can be found hereunder:
1. MOP Rules
3. Consolidated Regulations Incorporated
CERC is mandated to publish annual reports, most recent of which can be accessed by clicking here.
CENTRAL ADVISORY COMMITTEE (CAC)
CERC can establish a temporary ‘Central Advisory Committee’ (CAC) With respect to any major question of policy; or matters relating to quality, continuity and extent of service provided by licensees; compliance by licensees with conditions and requirements of their license; protection of consumer’s interest; or electricity supply and overall standards of performance by utilities. A CAC can consist of maximum 31 members to represent interests of commerce, industry, transport, agriculture, labour, consumers, non-governmental organisations, and academic and research bodies in electricity sector.
III. STATE ELECTRICITY REGULATORY COMMISSIONS (SERCs)
State Electricity Regulatory Commissions (SERCs) are established under Sections 82(1) of the Act. Head-office of SERCs are located at places chosen by State governments (in most cases, the capital city).
Members and Qualifications:
As per S.82 (4) & (5), a SERC can consist of maximum three members, including the Chairperson. Members of SERC are appointed by State government on recommendation of the Selection Committee.
According to S.84(1), Chairperson and members of an SERC can be persons of ability, integrity and standing and must be capable of handling problems involving power, finance, business, engineering, law, or management. Further, State governments can appoint any Judge of a High Court (after consultation with the Chief Judge) for position of Chairperson.
Functions and Objectives:
An SERCs primary goal is to ensure that all households across the State have access to electricity at subsidised rates on a 24/7 basis. SERCs are obligated to ensure transparency while exercising authority and discharging duties.
S.86 stipulates the functions required to be carried out by SERCs. While S.86(1) outlines SERC’s mandatory functions, Section 86(2) outlines their advisory functions.
Mandatory Functions:
- Determining tariff for generation, supply, transmission and wheeling of electricity wholesale, bulk or retain, within the state
- Regulating electricity purchase and procurement process of distribution licensees including the price at which electricity can be procured from generating companies, licensees or from other sources within the State
- Facilitating intra-State transmission and wheeling of electricity
- Issuing licenses to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to operations within the State
- Promoting co-generation and generation of electricity from renewable sources of energy.
- Adjudicating upon disputes between licensees and generating companies, and to refer any dispute for arbitration
- Levying fee
- Specifying the State Grid Code in accordance with Central Grid Code
- Specifying and enforcing standards with respect to quality, continuity and reliability of service by licensees
- Fixing trading margins (if necessary); discharging any other functions required under the Act
Advisory Functions:
- Promoting competition, efficiency, and economy in activities of electricity industry
- Promotion of investment in the sector.
- Reorganisation and restructuring of electricity industry within the State.
- Matters concerning generation, transmission, distribution and trading of electricity or any other matter referred to the SERC by respective State government.
Furthermore, SERCs are required to maintain transparency while exercising authority and carrying out functions. While discharging functions, SERCs are to be guided by National Electricity Policy, National Electricity Plan, and the pricing policy.
Currently, the following SERCs are established and operating in India:
1) Arunachal Pradesh Electricity Regulatory Commission (APSERC)
2) Assam Electricity Regulatory Commission (AERC)
3) Andhra Pradesh Electricity Regulatory Commission (APERC)
4) Bihar Electricity Regulatory Commission (BERC)
5) Chhattisgarh State Electricity Regulatory Commission (CSERC)
6) Delhi Electricity Regulatory Commission (DERC)
7) Gujarat Electricity Regulatory Commission (GERC)
8) Himachal Pradesh Electricity Regulatory Commission (HPERC)
9) Haryana Electricity Regulatory Commission (HERC)
10) Jharkhand State Electricity Regulatory Commission (JSERC)
11) Karnataka Electricity Regulatory Commission (KERC)
12) Kerala State Electricity Regulatory Commission (KSERC)
13) Madhya Pradesh Electricity Regulatory Commission (MPERC)
14) Maharashtra Electricity Regulatory Commission (MERC)
15) Meghalaya State Electricity Regulatory Commission (MSERC)
16) Nagaland Electricity Regulatory Commission (NERC)
17) Orissa Electricity Regulatory Commission (OERC)
18) Punjab State Electricity Regulatory Commission (PSERC)
19) Rajasthan Electricity Regulatory Commission (RERC)
20) Tamil Nadu Electricity Regulatory Commission (TNERC)
21) Tripura Electricity Regulatory Commission (TERC)
22) Uttarakhand Electricity Regulatory Commission (UERC)
23) Uttar Pradesh Electricity Regulatory Commission (UPERC)
24) West Bengal Electricity Regulatory Commission (WBERC)
DELHI
With respect to state of Delhi, SERC in operation is the Delhi Electricity Regulatory Commission (DERC). SERCs have power to issue regulations consistent with the Act. One may click here to find more about the regulations issued by DERC which are in operation in Delhi. Apart from the Act, DERC is guided by other Acts, Rules and Policies which are:
1. Delhi Electricity Reform Act, 2000
2. Delhi Electricity Regulatory Commission (Budget) Rules, 2006;
3. National Electricity Policy
Further, DERC is mandated to publish annual reports, most recent of which can be read by clicking here.
UTTAR PRADESH
With respect to state of Uttar Pradesh, SERC in operation is the Uttar Pradesh Electricity Regulatory Authority (UPERC). UPERC has issued certain regulations which are operative in the state, to be found here. Apart from the Act, UPERC is guided by other Rules and Policies which are mentioned hereunder:
3. Indian Electricity Rules, 1956;
4. National Electricity Policy (link provided above)
5. National Tariff Policy (link provided above)
7. Rural Electrification Policy
Further, UPERC is mandated to publish annual reports, most recent of which can be read by clicking here.
IV. JOINT COMMISSIONS (JERCs)
Section 83 of the Act provides for recognition and establishment of Joint Commissions. Joint Commissions are nothing but SERCs for smaller states and UTs. A Joint Commission can be established when an agreement is entered between:
a) two or more State governments
b) by Central government in respect of one or more UTs, or one or more State governments.
JERCs consist of one member from each participating State and UT and Chairperson is appointed from amongst members, by consensus. If consensus does not yield any result, then the appointment takes place via rotation.
Based on S.83(4), a JERC determines tariff for each participating State or UT in a separate and independent manner. JERCs act as quasi-judicial bodies.
A JERC is obligated to discharge functions similar to SERCs.
Currently, the following Joint Commissions are established and operating in India:
1) Joint Electricity Regulatory Commission for the States of Manipur and Mizoram
‘JERC (M&M)’ is the joint regulatory commission for Manipur and Mizoram, headquartered at Aizawl. JERC( M&M) consists of 2 members, one from each participating state. Based on powers granted under Section 181, JERC (M&M) has issued several regulations operative in both states, to be found here. Similarly, one may click here to read the recent annual reports of Manipur and Mizoram JERC.
2) Joint Electricity Regulatory Commissions for the State of Goa and Union Territories
‘JERC (Goa and UTs)’ is the joint regulatory commission for state of Goa and all Union Territories, being headquartered at Gurugram. JERC (Goa and UTS) currently has one member from legal background. Based on powers granted under Section 181, JERC (Goa and UTs) has issued several regulations operative in Goa and all UTs which can be found here. Further, one may click here to read the recent annual reports of this Joint Commission.
V. APPELLATE TRIBUNAL FOR ELECTRICITY
The Appellate Tribunal for Electricity (APTEL) is an appellate authority having jurisdiction over the entire country to hear and adjudicate appeals against orders of CERC and SERCs. Under S.121, APTEL has original jurisdiction to hear petitions, and power to order any commission to carry out its mandated duties. However, APTEL is not permitted to consider issues related to legality of regulations issued by CERC or SERCs, as such powers are vested in respective High Court of the state. Appellate Tribunal has power to enforce and execute its own order, similar to a decree of civil court.
APTEL was established in respect of observations made by J. Santosh Hegde regarding a ‘multi-disciplinary expert appellate body,’ in the case of WBERC v CESC Ltd. (2002). Any second appeal would lie before the Supreme Court.
As per S.111(2), every appeal preferred against an order of adjudication officer or the Commissions, should be filed within period of 45 days from the date when a copy of order was first received by aggrieved party. Every appeal should be dealt as expeditiously as possible, and an effort should be made to dispose the appeal within 180 of its receipt. With privatisation in electricity market and pursuant to ‘competitive bidding process’ envisaged in Section 63, there has been substantial growth in litigation involving complex and unprecedented issues. APTEL has been responsible in giving definite responses to many such issues arising out of ambiguity or un-established position of law.
Members and Qualifications:
APTEL consists of a Chairperson and three other members. Jurisdiction of APTEL is exercised by Benches composed of Chairperson with two or three members. Every bench is required to include at least one Judicial member and one technical member, combining legal and technical/financial industry’s experience in highly effective manner.
The ‘principal bench’ for APTEL is situated at New Delhi. ‘Circuit benches’ are situated at Chennai (Southern region), Mumbai (Western region) and Kolkata (Eastern region).
A person can only qualify as Chairperson if he has been a Supreme Court Judge or Chief Justice of a High Court. Section 113 stipulates the statutory requirements, whereby a person can only be selected as member if he is qualified to be a High Court Judge, has been secretary for at least one year at the Central government, or has adequate knowledge and experience in electricity generation, transmission and distribution.
Powers and functions:
After hearing the interested parties, APTEL can issue orders, directions, or instructions to CERC and SERCs to performance its statutory functions under the Act (functions are mentioned above).
APTEL is not bound by the procedure laid under CPC, instead is guided by principles of ‘natural justice.’ APTEL has same powers as is vested in a Civil court under CPC in respect of following matters:
- Summoning and enforcing attendance of any person, examining him over oath
- Requiring discovery and production of documents
- Receiving evidence on affidavits
- Requisitioning any public record/document from any office (subject to provisions of Section 123 and 124 of Indian Evidence Act, 1872)
- Issuing commissions for examination of witnesses or documents
- Reviewing its decisions
- Dismissing a representation of default, or deciding it ex parte.
- Setting aside any order of dismissal or any representation for default or any order passed by it ex parte or any other matter prescribed by Central government.
APTEL can transmit its order to a civil court having local jurisdiction, and such civil court must execute the order as if it were a decree made by that court. All proceedings before APTEL are judicial proceedings within the meaning provided under Section 193 and 228 of ‘Indian Penal Code, 1860’ (IPC).
VI. APPEAL TO SUPREME COURT
Any person aggrieved by an order/decision of APTEL can file an appeal to the Supreme Court within 60 days from date of communication of APTEL’s decision or order on any one or more of the grounds specified in Section 100 of ‘Code of Civil Procedure, 1908’ (CPC).
VII. SPECIAL COURTS
Sections 135 to 140 and 150 embody certain offences punishable under the Act, for example ‘theft of electricity and electric lines,’ ‘interference or tampering with electric meters’ etc. One can read more about offences and defences under the Act by clicking here.
State governments can establish Special Court/(s) in an area (if it thinks necessary) for providing speedy trial for offences that have been mentioned in Sections 135 to 140 and Section 150.
Members and Qualifications:
Special Court is headed by a single Judge appointed by State government after consultation with the respective High Court. A Judge at Special Court must have experience of serving as an Additional District and Sessions Judge.
Powers and Functions:
All offences punishable under the Act (Sections 135 to 140 and 150) are triable only by the Special Court within whose jurisdiction such offence has been committed.
Special courts have power to hear pleas in a summary way. In any case of conviction in a summary trial, Special courts can pass a sentence of imprisonment for up to five years.
Special Courts have power to tender pardon to persons directly or indirectly involved in an offence. This power has been granted with the objective of obtaining evidence from that person. Thereby, a pardon under Section 154(4) can only be granted if such person is willing to disclose (fully and truly) all particulars about the offence and all persons involved.
Powers of a Special Court are same to powers of a Sessions Court. The provisions of ‘Code of Criminal Procedure, 1973’ (CrPC) consistent with the Electricity Act are applicable in a Special Court, and person conducting the prosecution is called ‘Public Prosecutor.’ Special Courts have power to review its judgement.
VIII. CENTRAL TRANSMISSION UTILITY (CTU)
Central Government can notify any government company as Central Transmission Utility (CTU). A CTU discharges its functions as a ‘transmission licensee.’ CTU’s role is limited to transmission of electricity, and it cannot engage in business of generation or trading of electricity. Central Transmission Utility of India Limited (CTUIL), a wholly owned subsidiary company of Power Grid Corporation of India Limited (PGCIL), is the company operating as CTU in India.
Functions:
- Undertaking transmission of electricity through inter-state transmission system
- Discharging all functions of planning and co-ordination relating to inter-state transmission systems with different State Transmission Utilities, Central and State governments etc
- Ensuring development of efficient inter-state transmission lines for smooth flow of electricity
- Providing non-discriminatory ‘open access’ to its transmission system for use by any licensee, generating company or consumer, on payment of stipulated surcharges.
To read more about Open Access and associated surcharges, one can click here.
IX. STATE TRANSMISSION UTLITY (STUs)
State governments have power to notify a board or government Company as State Transmission Utility (STU). Such companies (notified STUs) operate in capacity of transmission licensees and cannot engage in business of trading in electricity.
In state of UP, Uttar Pradesh Power Transmission Corporation Limited (UPPTCL) is the body designed to function as State Transmission Utility. Elaborate functions of an STU are mentioned herewith:
Functions:
- Undertaking transmission of electricity through intra-state transmission system
- Discharging all functions of planning and co-ordination relating to intra-state transmission systems with CTU, State governments etc.
- Ensuring development of efficient intra-state transmission lines for smooth flow of electricity.
- Providing non-discriminatory ‘open access’ to its transmission system for use by any licensee, generating company or consumer, on payment of transmission charges and surcharges.
X. NATIONAL LOAD DESPATCH CENTRE (NLDC)
Central government has established a centre at national level known as National Load Despatch Centre (NLDC) for the purpose of optimum scheduling and despatch of electricity among Regional Load Despatch Centres (RLDCs). NLDC must work in co-ordination with RLDCs to ensure efficient transmission of electricity to all regions.
The NLDC discharges functions in accordance with directions of Central government. NLDC cannot engage in business of trading in electricity.
XI. REGIONAL LOAD DESPATCH CENTRE (RLDCs)
Central government has made region-wise demarcation of the country for facilitating transmission of electricity across all regions.
Central government, under Section 27 has established a centre for each region known as Regional Load Despatch Centre for efficient, economical, and integrated transmission and supply of electricity. An RLDC is the apex body for ensuring integrated operation of power system in the concerned region.
An RLDC’s role is limited to transmission and supply of electricity, and it must not engage in business of generating or trading in electricity.
Functions:
- Responsible for ‘optimum scheduling and dispatch’ of electricity within a region (in accordance with contracts entered with licensees or generating companies)
- Monitoring Grid Operations
- Keeping account of quantity of electricity transmitted through regional grid
- Exercising supervision and control over inter-state transmission system
Based on Central Government’s demarcations, India has been divided into 5 regions for efficient transmission and supply of electricity:
1) Northern Regional Load Despatch Centre (NRLDC)
2) Eastern Regional Load Despatch Centre (ERLDC)
3) Southern Regional Load Despatch Centre (SRLDC)
4) Western Region Load Despatch Centre (WRLDC)
5) North-Eastern Region Load Despatch Centre (NERLDC)
XII. STATE LOAD DESPATCH CENTRE (SLDCs)
State governments have established centres to be known as ‘State Load Dispatch Centre’ (SLDCs). An SLDC is the apex body designed to ensure integrated operation of power system in a state. If State government has not notified any government company as SLDC, the State Transmission Utility (STU) shall operate as the SLDC.
For e.g.- In UP, Uttar Pradesh Power Transmission Corporation Limited, which is a UP government undertaking is the authority designated to function as SLDC. As regards New Delhi, Central government has established State Load Despatch Center, Delhi as the SLDC.
Functions:
- Responsible for optimum scheduling and dispatch of electricity within a State (in accordance with contracts entered into with licensees or generating companies)
- Monitoring Grid Operations
- Keeping account of quantity of electricity transmitted through State grid
- Exercising supervision and control over intra-state transmission systems
CONCLUSION
Electricity Act, 2003 governs all aspects of electricity generation, distribution, transmission, and trading. Right from generation to of supply electricity to the destined consumer, the Act has opened gates for private investment. This is done for ‘dual’ purpose, wherein inclusion of private parties in generation, distribution, transmission, and trading is taking burden off the government to efficiently provide electricity to all corners of the country; and is also helping in employing more number of people and corporations into the electricity sector. The Act provides for regulators who are assigned with different responsibilities at different levels, which involve fixation of tariff and providing dispute resolution in a fair and timely manner, among others.
With regards to certain illicit activities like theft of electricity or interference with electric meters have been regarded as offences punishable under the Act. To this end, the Act provides for establishment of Special Courts to address grievances of those affected by commission of such illicit activities. All in all, theAct provides for regulations and statutes governing how electricity is provided in India, and it is the obligation of regulatory commissions of India to keep these laws and regulations in harmony and accord.
