Electricity Act,2003

The Govt. of India enacted the Electricity Act, 2003, which came into force with effect from 10th June 2003. The Act has repealed the earlier Central Acts namely the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948 and the Electricity Regulatory Commission Act,1998. The main objectives of the Act as envisaged in the preamble are “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, 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 there to.”

The Electricity Act, 2003 is a comprehensive law intended for growth and development of Electricity sector as a whole. This Act gives clarity to the investors, the regulators, the consumers and other stakeholders at large and connected to the Electricity Sector in particular. It also brings modern concept like power trading, open access and parallel networks. The main features of the Act are as follows:
  • Delicensing Generation except in case hydro.
  • Captive generation free from control.
  • Open Access to provide multiple choices for selection of suppliers/ consumers.
  • Transmission utilities not to engage in the business of trading of power.
  • Power trading recognized as a distinct legal and licensed activity.
  • Appellate Tribunal to replace High Courts to expedite court cases.
  • Government to distance itself from regulatory function and to formulate policies which will be the guiding principle for the regulators.
  • SEBs will be restructured into separate companies and transmission will be separated from other business.
  • Stringent provisions for penalising theft.
  • Regulatory Commissions to issue licenses.
  • Regulatory Commissions to determine tariff for sale of power to distribution licensee. While determining tariff, regulatory commissions will be guided by the National Power Policy and tariff policy issued by Central Government.
  • Set up of State Regulatory Commissions is mandatory.
  • Rationalisation of traffic to reflect cost and cross subsidies to be eliminated progressively.

From the above, it is evident that the new Electricity Act provides a comprehensive enabling framework which can be considered as a milestone in further liberalising the electricity sector in the country as it paves the way for evaluation of a genuinely competition in power sector. It is for all the stakeholder as to utilise the framework and take the electricity sector rapidly in the direction of realising the objectives stated in the Act which are in line with the National Electricity policy.