ELECTRICITY ACT, 2003 - KEBEAkebea.in/kebea_appdata/resources_documents/Paper-III... · 2017-09-12 · •It provides a road map for overall and uniform development ... with the Grid

1

ELECTRICITY ACT, 2003

2


• What is an Act ?

• The need for the Electricity Act 2003

• Significance of Electricity Act 2003

• Purpose of Electricity Act 2003

• Various provisions under Electricity

Act 2003 in regard to:

– Generation

– Electricity Trading,

– Transmission,

– Distribution and

– Tariffs.

3


• What is an Act?

• An Act is a legislation, passed

by both houses of the

legislature.

• Central Act -it will be passed

by both the houses of the

parliament and State Act -

both houses of the State

legislature

4


• The Need for enactment ofElectricity Act 2003, was felt by theCentral Government in the backdropof the on-going Economic Reformsin the country coupled with powersector reforms in various States.

• Poor performance of SEBs whichwere formed and operating under IEAct 1910 and Electricity Supply Act1948 forced the GoI to bring out anuniform and unified law to take careof the current needs of power sectorin the areas of Generation,Transmission, Trading andDistribution of Electricity


Significance of Electricity Act ,2003,

• It is a single legislation which addresses all the key areas ofElectricity in the country.

• It provides a road map for overall and uniform developmentof electricity sector in the country

• It takes care of interests of consumers belonging to varioussectors

• It also aims to reform the sector to suit the needs of thepresent day requirement, in the light of globalization.

• Through specific provisions it aims to bring in financial andcommercial viability for power sector utilities.

5

6


Purpose of the Act,

1.To consolidate the laws relating to generation, transmission, distribution, trading and use of electricity.

2. To take measures conducive for development of

electricity sector.

3. To promote Competition in the Power sector.

4. To protect the interests of Consumers

5. To rationalize the electricity tariffs

6. To Establish Regulatory commissions and Appellate

Tribunal for Electricity.

Legislations Relating to Electricity

Year Act/Policy Main Features

1910 Indian

Electricity Act

Governed the relations between the consumer and the licensees

1948 Electricity

(Supply) Act

Governed the constitution of the Central Electricity Authority, State Electricity

Boards, Generating Companies, Consultative Councils and local Advisory

Committees.

The Act empowered the State to make rules providing for management and

accounts of the State Electricity Boards.

1956 The Indian

Electricity

Rules,

To regulate the supply, transmission, generation, and use of electricity.

1998 Electricity

Regulatory

Commission Act

For the establishment of a Central Electricity Regulatory Commission and

State Electricity Regulatory Commissions,

2003 Electricity Act

2003

To consolidate the laws relating to generation, transmission, distribution,

trading and use of electricity

2004-

05

National

Electricity

Policy

It aims at laying guidelines for accelerated development of the power sector.

2007 Electricity

Amendment Act

Specifying Anti-theft measures to reduce the T&D Losses. Putting the theft of

power in the categories of non- bailable offence, so as to curb the evil ;ab-

initio;.

Three erstwhile Acts that regulated the electricity sector:

The Indian Electricity Act, 1910The Electricity (Supply) Act, 1948The Electricity Regulatory Commissions Act, 1998

The Electricity (Supply) Act, 1948Mandated creation of SEBs. Need for the State to step in (through SEBs) to extend electrification (so far limited to cities) all across the country.

The Indian Electricity Act, 1910

Provided basic framework for electric supply industry in India

Main amendments to the existing Acts

Amendment in 1975 to enable generation in Central sector 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 statutory requirement (w.e.f 1.4.1985) Amendment in 1991 to open generation to private sector and

establishment of RLDCs Amendment in 1998 to provide for private sector participation in

transmission

GoI initiated Power Sector Reforms in 1991.

Most of the States followed the GoI measures and initiated Power Sector Reforms

Objectives of Power Sector Reforms :

Provide for the restructuring of electricity industry.Rationalization of the generation, transmission, distribution and supply of power.

Provide avenues for participation of private sector in the industry.

Provide reliable quality power in an economic and competitive manner.

Reduce burden on State Governments.Bring in regulatory framework to the Sector with an objective of transparency.

Power Sector Reforms

Support from GoI

Reforming States expect following support from GoI :

More allocation in Central Generating Stations

Reduced interest on Loans from PFC, REC and other

Government Financial Institutions

Support to State Government to fund Pension Liabilities

More budgetary support to enable Power Sector to

enlarge and improve T&D Network.

Meet the burden on account of social welfare schemes like

Bhagya jyothi, Agricultural Sector, etc., based on a national

policy.

Ensuring timely payment of power dues by CPSUs and

other Central Govt. consumers

The Electricity Regulatory Commissions Act, 1998Provision for setting up of Central / State Electricity Regulatory Commission with powers to determine tariffs. Constitution of SERC optional for States. Distancing of Govt. from tariff determination.

State Reforms

Orissa (1995)Haryana (1997)Andhra Pradesh (1998)Uttar Pradesh (1999)Karnataka (1999)Rajasthan (1999)Delhi (2000)Madhya Pradesh (2000)Gujarat (2003)

COMMON FEATURES FOR THE STATES

Independent Regulatory MechanismConstitution of SERCPowers of tariff fixation, licensing, regulation or working of licensees, performance standards etc. to SERC

Re-organization of SEBTRANSCO as successor entitySingle buyer modelSeparation of generation, transmission & distribution

Powers of State Governments to give policy directions to SERCs.

Policy directions also on subsidy

State Governments to compensate licensee affected by direction regarding

subsidy

12


An overview of Electricity Act 2003

• Enacted in 2003 and given to effect from 10th June 2003

• Consists of 18 ( XVIII) parts, 185 sections & one schedule.

13


New concepts introduced in Electricity Act 2003

1. National Electricity Policy and Tariff Policy section 3

2. Separation of Electricity Trading( Section 12 , 39 and 52)

3. Introduction of Open Access section 39(d)

4. Introduction of MYT ( Multi Year Tariffs) section 61(f)

5. Constitution of Appellate Tribunal and its functions ( sections 110 – 125)

14

SECTION WISE OVERVIEW OF THE ACT

Part I- Sections 1-2 Title, Commencement and

definitions

Part II – Sections 3-6 National Electricity Policy, tariff

Policy and NE Plan

Part III – Sections 7-11 Generation of Electricity –

including captive plants

Part IV- Sections 12-24 Licensing provisions

Part V – Sections 25-41 Transmission of electricity

Part VI – Sections 42-60 Distribution of electricity

Part VII- Sections 61-66 Tariffs

15


Part VIII- Sections 67-69 Works of licensees

Part IX – Sections 70-75 Provisions relating to Central

Electricity Authority ( CEA)

Part X– Sections 76-97

Sections 98-109

CERC and SERCs

Grants, Funds, Accounts and Reports

of Central / State Governments

Part XI- Sections 110-125 Establishment and operations of

ATE

Part XII – Sections 126-130 Investigation and Enforcement

Part XIII – Sections 131-134 Reorganization of Board

Part XIV- Sections 135-152 Offences and Penalties

16


Part XV- Sections

153-157

Special Courts

Part XVI –

Sections 158

Dispute

Resolution

Part XVII –

Sections 159-165

Other Clauses –

Protective clauses

Part XVIII-

Sections 166-185

Miscellaneous

17

PROVISIONS RELATING TO TRANSMISSION

(SYSTEM OPERATION)

• Section 26 – Provides for establishment of National Load Dispatch centre ( NLDC) to monitor and maintain grid operations at the national level.

•

• Section 27 – Provides for establishment of Regional Load Despatch Centre ( RLDC) to monitor and maintain grid operations at the regional level.

• Section 31- Provides for establishment of State Load Dispatch Centre ( SLDC) to monitor and maintain grid operations at the State level.

• NLDC and RLDC takes care of inter-State transmission while SLDC takes care of intra-State transmission

18


(SYSTEM OPERATION)

• 26 (1) : NLDC is for optimum scheduling & Dispatch

electricity among RLDCs

• 26 (2) : NLDC shall not engage in Trading of electricity

• Discussion Point : NLDC is now made Central

Agency for Registration and issuance of RECs.

19


(SYSTEM OPERATION)

• 28 (3) : Functions of RLDC -

Optimum Scheduling & despatch in

accordance with the contracts

entered into with licensees or

generating companies in the region,

monitor grid operations, keep

accounts of quantity of electricity,

responsible for real time operations

of the grid etc.

• 32 (2) : Similar provision under the

functions of SLDC.

• Case Discussion : CERC order on

the matter BESCOM v/s Generator

20


(SYSTEM OPERATION)

• 29(2) : Every licensee, generatingcompany, substation and any otherperson connected with the Grid &operation of power system shall complywith the directions issued by the RLDCunder sub section (1)

•

• 29 (3) : All Directions issued by RLDCsto any Tr Licensee or other licenseeshall be issued through SLDC andSLDC shall ensure that suchdirections are duly complied with bythe licensee or generating company

• Discussion: What is the role of SLDC?

21


(SYSTEM OPERATION)

• Section 33 (3)

• The SLDC shall comply with the

direction of the RLDC.

• 29 (6) & 33 (5) provides for

levying penalty not exceeding

Rs.15 Lakhs & Rs.5 lakhs

respectively for not complying

with the directions of RLDC &

SLDC.

22

IMPORTANT PROVISIONS RELATING TO

TRANSMISSION • Section 34 – Provides for complying with the Grid Standards

specified by CEA. ( At the State level the KERC has come outwith the Grid Code for Karnataka Transmission system) .

•

• Section 39 – Provides for formation of State TransmissionUtility ( STU) “ The State Government may notify the Boardor a Government Company as State Transmission utility ,provided that the STU shall not engage in the business oftrading of electricity”.

• Therefore the State Government barred KPTCL from tradingelectricity w.e.f 10th June 2005. A new entity called SPPCC(State Power Procurement and Coordination cell) wasestablished. This entity has now been transformed into aCompany called “ Power Company of Karnataka Limited”(PCKL).

• The PPAs have been allocated to respective ESCOMs who areempowered to trade .

.

23


TRANSMISSION

• Section 39, subsection (2)clause (d) and also section40(c) very clearly states thatthe STU shall provide “ Nondiscriminatory Open Accessto any licensee or generatingcompany on payment oftransmission charges or toany consumer as and whensuch open access is providedby the State Commission.”

• Discussion: Read with section11, leads to contentiousissues.

24


DISTRIBUTION • Section 43 – Duty to supply on request : This provision very

clearly indicates that it shall be the duty of the licensee tosupply electricity to the premises of the applicant within 30 daysfrom the date of application.

• Section 45 – Power to recover charges for supply of electricityin accordance with the methods and principles laid down by theState Commission.

• Section 50- Electricity Supply Code- This section empowers theState Commission to specify the ES Code for effectiveoperation of supply, billing , disconnection, restoration of supplyetc.,.

• Section 53 – Provisions relating to safety and electricity supply

• Section 56 – provisions relating to Disconnection of supply

25


DISTRIBUTION • Section 55 – use of meters – this

provision makes it very clear thatno licensee shall supplyelectricity except throughinstallation of a correct meter

• Section 56 – Specific provisionfor disconnection of supply indefault of payment. However thesections clearly says suchdisconnection can be made onlyafter giving a 15 days clearnotice to the consumer.Subsection (2) under this sectionalso specifies a limitation of twoyears for recovery of dues.

26


DISTRIBUTION

• Section 57 – Consumer protection - Provisions under thissection says that appropriate standards of performanceshall be determined by the Commission . Failure toadhere to the standards, the licensee becomes liable forpenalty or prosecution besides providing compensation tothe consumer.

• Section 42 (5) provides for establishment of consumergrievance redressal forum by the licensee as per theguidelines issued by the Commission.

• Section 42(6) provides for establishment of Ombudsmanfor redressal of grievances which are not addressed byconsumer grievance redressal forums under sub section(5)

27


DISTRIBUTION LICENSEE• Section 126 – Provides for assessing

unauthorized use of electricity by theassessing officer. Under theexplanation, Assessing officers aredefined as “ An Officer of StateGovernment, Board or licensee asthe case may be, designated as suchby the State Government”

• In our State, the GoK has notified thejurisdictional AEE as the AssessingOfficer under this section.

•

• Section 127 provides for constitutionof appellate authority to hear appealson the assessment by the assessingofficers

28


TARIFFS

Sections 61- 65 deals with Tariffs

• Section 61 provides for setting ofterms and conditions fordetermination of tariffs by theState Commission which shall beguided by the national tariff policyand national electricity policy.

• This section also provides fordetermining tariffs under MYTprinciples. 61 (f), tariffsprogressively reflecting the costof supply and elimination of crosssubsidy etc.

29

IMPORTANT PROVISIONS RELATING TO TARIFFS

Section 62 provides for determination tariff bythe commission in respect of

a) Supply of electricity by a Gen. Co. to aDist. Licensee

b) Transmission of electricity

c) Wheeling of electricity

d) Retail supply of electricity

Section 63. (Determination of tariff by biddingprocess):

Section 64: provides for procedure for tarifforder

Section 65: If Government wishes to exemptany class of consumer from paying tariffsin full or part as determined by thecommission, then it shall have tocompensate the difference by way ofsubsidy , that too in advance to thesupply company.

30

DEVELOPMENT OF POWER MARKET

• Section 66 :Provides for development of powermarket including trading and such development shallbe guided by National Electricity Policy(IEX and PXIL).

• Section 70: Provides for constitution of centralelectricity authority consisting of not more than 14members and eight of them shall be full timemembers.

• Section 73: Functions and duties of CEA which shallspecify technical standards for construction ofelectrical plants, connectivity to grid standards for O &M of Tr lines installation and operation of meters.

31

REGULATORY COMMISSIONS

• Section 76: Provides constitution for CERC consistingof chair persons and three members (Total fourmembers).

• Section 82: Provides constitution for statecommissions consisting of chairperson and twomembers (total three members).

• Section 108 : Directions by state government. Thestate commission shall be guided by directions bystate government in matters of policy involving publicinterest.

Regulatory Commissions

• At the Center – CERC

• Powers to regulate centrally owned generating

companies and companies having composite scheme for

generation and sale of electricity in more than one State.

• To regulate inter-State transmission/Trading.

• In the States – SERCs

• Powers to regulate intra-State generation, transmission

and distribution.

– CERC vis a vis SERCs

• No hierarchical relationship. However, SERCs are to be

guided by the principles of tariff determination specified

by CERC.

Functions of CERC

• to regulate the tariff of inter-state generatingcompanies

• to regulate the inter-State transmission of electricity

• to determine tariff for inter-State transmission ofelectricity

• to issue licenses for inter state electricity transmissionand trading.

• to adjudicate upon inter-State disputes

• to specify Grid Code

• to specify and enforce the standards with respect toquality, continuity and reliability of service

• to fix the trading margin

Functions of CERC…

• Advisory Functions:

– formulation of National electricity Policy and

tariff policy;

–promotion of competition, efficiency and

economy in the activities of the electricity

industry;

–promotion of investment in electricity industry;

–any other matter referred to the Central

Commission by the Central Government

Functions of SERCs

• determine the tariff for generation, supply, transmission andwheeling of electricity, wholesale, bulk or retail within the State

• regulate electricity purchase and procurement process ofdistribution licensees

• facilitate intra-State transmission and wheeling of electricity

• issue licenses for intra state transmission, distribution andtrading.

• promote co-generation and generation of electricity fromrenewable sources of energy

• adjudicate upon the intra-state disputes

• specify or enforce standards with respect to quality, continuityand reliability of service by licensees;

• fix the trading margin in the intra-State trading of electricity

Functions of SERCs…

• Advisory Functions:

– promotion of competition, efficiency and economy in

activities of the electricity industry;

– promotion of investment in electricity industry;

– reorganization and restructuring of electricity

industry in the State;

– matters concerning generation, transmission ,

distribution and trading of electricity or any other

matter referred to the State Commission by that

Government.

Regulatory Commission - a quasi judicial body

• Powers of Civil Court for the purposes of inquiry or proceedingsunder the Act. (Section 94)

• Powers to impose penalty for non-compliance of direction ofRegulatory Commissions.

• Powers to adjudicate

Accountability of Regulators-CERC

• Annual Report to be laid before the Parliament.

• Accounts of Regulatory Commissions to be audited by CAG.

• Appeal against the orders of Regulatory Commissions to liebefore the Appellate Tribunal.

Procedure for Regulations

PROCEDURE FOR PETITIONS

PETITIONER RESPONDANTS

ARGUMENTS

ORDERSREVIEW

PROCEEDINGS

Appeal in

Appellate

Tribunal

40

APPELLATE TRIBUNAL FOR ELECTRICITY

(ATE)

• Section 110: Provides for

establishment for ATE

consisting of four members of

each two are judicial members

and two are technical members.

• Section 131: Provides for re-

organisation of SEBs .

41

THEFT OF ELECTRICITY & PENALTY

• Section 135: Deals with theft of electricity –tapping, tampering, damaging, use fordifferent purpose.

• Section 136: Theft of electrical lines andmaterials.

• Section 141 : Extinguishing public lamps –fine up to 2000 rupees

• Section 142 : Punishment for noncompliance of directions by appropriatecommissions – fine up to Rs one lakh .

• Section 146 : Failure to order and directionsunder this act is punishable withimprisonment up to three months and fineup to one lakh or both.

42

SPECIAL COURTS

• Section 153: provides forconstitution of special courts forstate government for speedy trialsof offences under section 135 to140 and 150 (abetment).

• Section 162: Deals withappointment of CEIG

• Section 166: Constitution ofcoordination forum.

• Section 185 : Repeal and savings.

43

FEW REGULATIONS GOVERNING SYSTEM

OPERATION

• Grid Standards Regulations – Section 34

• The IEGC Regulations – 73 (d) & 79 (h)

• Grant of Connectivity and Open Access Regulations

• UI Charges Regulations

• Measures to relieve congestion in real time operation

Regulations

• Sharing of Interstate Transmission Charge and

Losses, Regulations

44

Impact of Regulatory Mechanism on

SYSTEM operation

• Grid Stability – ABT Regime

• Better Management of grid through enforcement of

Intra State ABT

• Facilitation of open access

• Move towards Independent System Operation – Ring

Fencing of SLDCs

• POSOCO is a step towards Independent System

Operation

45

THANK YOU

ELECTRICITY ACT, 2003 - KEBEAkebea.in/kebea_appdata/resources_documents/Paper-III... · 2017-09-12 · •It provides a road map for overall and uniform development ... with the Grid

Documents