| The Electricity Act, 2003 | |
|---|---|
| An Act to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalisation of electricity tariff , ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto. | |
| Citation | Act No. 36 of 2003 |
| Enacted by | Parliament of India |
| Date enacted | 26 May 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.
Contents |
Before Electricity act 2003 the electricity sector was guided by The Indian Electricity Act, 1910 The Electricity (Supply) Act, 1948. generation distribution and transmission were carried out mainly by State electricity board. Due to politico economic situation the cross subsidies reached at unsustainable level. For purpose of distancing state govt. form tariff determination The Electricity Regulatory Commissions Act, was inacted 1998. So as to reform electricity sector further by participation of private sector and to bring in competition Electricity act in enacted in 2003.
The Act delicenses power generation completely (except for hydro power projects over a certain size) As per the act, 10% of the power supplied by suppliers and distributors to the consumers has to be generated using renewable and non-conventional sources of energy so the energy is reliable.
The Act delicenses distribution in rural areas and brings in a licensing regime for distribution in urban areas.
However, as per the Act, only 16 states in India have notified what constitutes as rural areas and therefore the rural distribution is yet to be freed up in nearly one third of the country.
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 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 would however need concurrence from 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 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 government 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) 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 permitted
12. Thrust to complete rural electrification and provide for management of rural distribution by panchayat, cooporative societies, NGOs, franchises etc.
13. Central government to prepare National Electricity Policy and tariff Policy
14. Central electricity authority to prepare National electricity plan
Left parties opposed the clauses related to competition in electricity market such as unbundling of Electricity Boards and open access and also had strong objection regarding elimination of cross subsidies.UPA government, in its first tenure agreed for some of the amendments and according clause regarding cross subsidies are amended.
The act extends to whole of India except state of Jammu and Kashmir