THE ELECTRICITY ACT,2003

• The Electricity Act, 2003 is legislation in India that aims to transform the power sector in India.
• The act covers major issues involving generation, distribution, transmission and trading in power. While some of the sections have already been enacted and are yielding benefits, there are a few other sections that are yet to be fully enforced till date.

BACKGROUND:

• Before Electricity Act, 2003, the Indian electricity sector was guided by The Indian Electricity Act, 1910 and The Electricity (Supply) Act, 1948.
•  The generation, distribution and transmission were carried out mainly by the State Electricity Boards in various States.
•  Due to politico-economic situation, the cross-subsidies reached at an unsustainable level. For the purpose of distancing state governments form tariff determination, The Electricity Regulatory Commissions Act was enacted in 1998.
•  So as to reform electricity sector further by participation of private sector and to bring in competition, Electricity Act was enacted in 2003.

The main features of the Act are as follows:

1. Generation has been delicensed and captive generation freely permitted, i.e. any generating company may establish, operate and maintain a generating station without obtaining a licence under this Act with the only exception that it should comply with the technical standards relating to connectivity with the grid referred to in clause (b) of section 73.

Note: Hydro-projects, however, need concurrence from the Central Electricity Authority.

2. 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 licence issued, exceptions are informed by authorised commissions through notifications.

3. Central Government may, make region-wise demarcation of the country, and, from time to time, make such modifications therein as it may consider necessary for the efficient, economical and integrated transmission and supply of electricity, and in particular to facilitate voluntary inter-connections and co-ordination of facilities for the inter-State, regional and inter-regional generation and transmission of electricity.

Transmission utility at the central and state level to be a government company with responsibility of planned and coordinated development of transmission network.

4. Open access in transmission with provision for surcharge for taking care of current level of cross-subsidy, with the surcharge being gradually phased out.

5. The state governments are required to unbundle State Electricity Boards. However they may continue with them as distribution licensees and state transmission utilities.

6. Setting up State Electricity Regulatory Commission (SERC) has been made mandatory.

7. An appellate tribunal to hear appeals against the decision of (CERC's) and SERC's.

8. Metering of electricity supplied made mandatory.

9. Provisions related to thefts of electricity made more stringent.

10. Trading as a distinct activity recognised with the safeguard of Regulatory commissions being authorised to fix ceiling on trading margins.

11. For rural and remote areas, stand-alone system for generation and distribution is permitted.

12. Thrust to complete rural electrification and provide for management of rural distribution by panchayat, cooperative societies, NGOs, franchisees etc.

13. Central government to prepare National Electricity Policy and Tariff Policy.

14. Central Electricity Authority (CEA) to prepare National Electricity Plan.