Indian Electricity ACT
(IE Act-2003)
Phase II - Module No. STC-GS-4
CAMTECH, Gwalior
BRIEF ON POWER
SECTOR
IN
INDIA
2
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
LANDMARK EVENTS OF INDIAN
POWER
1897 - SECTOR
Power generation in India with a small hydro plant in
Darjeeling, which is still operating.
1947 - Total installed capacity of only 1362 MW.
1948 - Electricity (Supply) Act leads to Establishment of CEA
(Central Electricity Authority), SEBs (State Electricity
Boards).
Priority in development through SEBs.
Development through Five Year Plans.
Emphasis on Hydel power in the first two Plans.
Uneven distribution of natural resources; inter-state
imbalances.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
1966-67 – REBs(Regional Electricity Boards) formed to take
care of interstate imbalances.
1970s - Unprecedented power crisis, Capacity:16,664 MW
in 1974.
1964 Constitution of Regional Electricity Boards.
1965-73 Interconnecting State Grids to form Regional Grid
systems.
1974 Independent Ministry for Power Sector.
1975 NTPC & NHPC in Central Sector. CEA full fledged
organization.
Phase II - Module No. STC-GS-
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1989 Formation of Power Grid Corporation of India.
1991 Generation of Electricity opened for Private Sector.
1998 Electricity Regulatory Commission Act.
2000 Accelerated Power Development Programme
(APDRP).
2003 Electricity Act 2003.
2005 National Electricity Policy.
2006 National Tariff Policy.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
EVOLUTION OF INDIAN
POWER GRID
Phenomenal Growth Since Independence.
Generation : 1349 MW in 1947 To 305554.25 MW
in
August, 2016.
Grid :
• Local Grid – At the time of Independence
• State Grids – Emerged In 1960s
• Regional Grids – In 1970s
• National Grid - April;
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II - Module No. STC-GS-
CAMTECH, Gwalior
STARTING OF UTILITY
SERVICES
1st utility service started in Nov’1897 with commissioning
of a 130 KW hydro station at Sidrapong near Darjeeling in
WB.
2300 volts single phase 83.3 cycle per second.
Cost of installation 1.2 Lakhs.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
GROWTH AFTER
INDEPENDENCE
Before we gained Independence in 1947, electricity was
predominantly a domain of the Princely States and Municipal
Committees.
In synchronism with the policy of soft socialism that we
adopted on achieving Independence, Public sector entered the
field of Electricity.
Industrial Policy Resolution of 1956 gave birth to State
Electricity Boards and Regional Electricity Boards.
Mid Seventies and early Eighties saw emergence of Public
Sector Organizations like NTPC, NHPC, PGCIL.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Growth of power Installed Capacity in first 50 years is given in
Table No. 1.
Despite having grown by more than 60 times after
independence, ours is one of the lowest per capita
consumption, as reflected in Table 2.
Although Private Sector has remained a partner right from
innovation of electricity, having attracted such household
names as Tata Electric Company, Calcutta Electric Company,
Ahmadabad Electric Company, Ambala Electric Company,
Lahore Electric Company; but the share of private sector since
Independence has grown from just about 3% to 21 % today in
Generation and 12 % in Distribution.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Growth of Installed Capacity
Year Capacity MW Annual Addition MW
1950 1700 -
1960 4600 290
1970 13,000 840
1980 28,000 1,500
1990 63,636 3564
2000 98,184 3,455
2006 1,27,056 4812
(As On 9.9.06)
Feb;2007 1,28,435 4000
Dec; 2012 207,700 -
31st August 2016 305554.25 -
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CAMTECH, Gwalior
Power Supply Chain
Power Power Power Power Revenue
Generated Supplied Metered Billed Collected
Technical Losses Commercial Losses
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Distribution
Scenario……
Rapidly Increasing Losses
Dilapidated Distribution Network – Couple of
transformers and plenty of cables bursting every day.
Harassed Consumers with poor fault management
system, wrong billing, inadequate payment channels,
Pending Complaints and no one to listen to them.
A huge work force but with no to very little skill level.
No Corporate structure.
Lack of accountability, initiative & service attitude
No administrative infrastructure and Dilapidated/ Unsanitary buildings/ Offices
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Utility’s Dilemma
Front-end Back-end
Generator
UTILITY
Tx. Utility
Govt.
Consumer Trader
Regulator SLDC
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Transmission & Distribution
Losses
INDIA TOPS THE WORLD
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
T & D LOSSES : INDIA TOPS THE
WORLD
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
INDIAN
ELECTRICITY
ACT 2003
16
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
ELECTRICITY ACT
2003
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 Electricity Trading , Transmission, Distribution and
Tariffs.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
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, will be passed by both
of houses of the State legislature.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
NEED OF ELECTRICITY ACT 2003
The need for enactment of Electricity Act 2003, was felt by the
Central Government in the backdrop of the on going Economic
Reforms in the country coupled with power sector reforms in
various States.
Poor performance of SEBs which were formed and operating
under IE Act 1910 and Electricity Supply Act 1948 forced the
Government of India to bring out an uniform and unified law
to take care of the current needs of power sector in the areas of
Generation, Transmission, Trading and Distribution of
Electricity
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
SIGNIFICANCE OF ELECTRICITY ACT 2003
It is a single legislation which addresses all the key areas of
electricity in the country.
It provides a road map for over all and uniform development
of electricity sector in the country.
It takes care of interests of consumers belonging to various
sectors.
It also aims to reform the sector to suit the needs of the
present day requirement, in the light of globalization.
Through specific provisions it aims to bring in financial and
commercial viability for power sector utilities.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
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 sector.
4. To protect the interests of Consumers.
5. To rationalize the electricity tariffs.
6. To establish regulatory commissions and Appellate
Tribunal for electricity.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
AN OVERVIEW OF
INDIAN ELECTRICITY ACT 2003
Enacted in 2003 and given to effect from 10th June
2003.
Consists of 18 (XVIII) parts, 185 Sections and one
schedule.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
NEW CONCEPT
INTRODUCED IN
ELECTRICITY ACT
1. National
2003Electricity 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)
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
ECTION WISE OVERVIEW OF THE ACT
Part I- Sections 1-2 Title, Commencement and definitions
National Electricity Policy, tariff Policy and
Part II – Sections 3-6
National Electricity Plan
Generation of Electricity – including captive
Part III – Sections 7-11
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
Phase II - Module No. STC-GS-
CAMTECH, Gwalior CONTD…
…
Part VIII- Sections 67-69 Works of licensees
Provisions relating to Central Electricity
Part IX – Sections 70-75
Authority (CEA)
CERC and SERCs
Part X– Sections 76-97
Grants, Funds, Accounts and Reports of
Sections 98-109
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
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CAMTECH, Gwalior CONTD…
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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
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
PROVISION 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 Dispatch Centre ( RLDC) to monitor and
maintain grid operations at the regional level.
Section 31- Provides for establishment of Regional
Load Dispatch Centre ( SLDC) to monitor and maintain
grid operations at the State level.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
NLDC and RLDC takes care of interstate transmission
while SLDC takes care of intrastate transmission.
26 (1) : NLDC is for optimum scheduling & Dispatch
electricity among RLDCs
26 (2) : NLDC shall not engage in Trading of
electricity.
28 (3) : Functions of RLDC - Optimum Scheduling
& dispatch 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. Phase II - Module No. STC-GS-
CAMTECH, Gwalior
29(2) : Every licensee , generating company,
generating station, substation and any other person
connected with the operation of power system shall
comply with the directions issued by the RLDC under
sub section (1)
29 (3) : All Directions issued by RLDCs to any Tr
Licensee or other licensee shall be issued through SLDC
and SLDC shall ensure that such directions are duly
complied with by the licensee or generating company.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Section 33 (3) The SLDC shall comply with the direction
of the RLDC.
29 (6) & 33 (6) provides for levying penalty not
exceeding Rs 5 lakhs for not complying with the
directions.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
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 out
with the Grid code for Karnataka Transmission system).
Section 39 – Provides for formation of State Transmission
Utility (STU)“ The State Government may notify the Board or
a Government Company as State Transmission utility, provided
that the STU shall not engage in the business of trading of
electricity”.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Therefore the State Government barred KPTCL from trading
electricity w.e.f 10th June 2005. A new entity called SPPCC
(State Power Procurement and Coordination cell) was
established. This entity has now been transformed into a
Company called “ Power Company of Karnataka Limited”
The PPAs have been allocated to respective ESCOMs who
are empowered to trade.
Section 39, subsection (2) clause (d) and also section 40(c)
very clearly states that the STU shall provide “Non
discriminatory Open Access to any licensee or generating
company on payment of transmission charges or to any
consumer as and when such open access is provided by the
State Commission.”
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
IMPORTANT PROVISIONS
RELATING TO DISTRIBUTION
Section 43 – Duty to supply on request: This
provision very clearly indicates that it shall be the duty of
the licensee to supply electricity to the premises of the
applicant within 30 days from the date of application.
Section 45 – Power to recover charges for supply of
electricity in accordance with the methods and principles
laid down by the State Commission.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Section 50 - Electricity Supply Code- This section
empowers the State Commission to specify the ES code for
effective operation of supply, billing , disconnection,
restoration of supply etc.,.
Section 53 – Provisions relating to safety and electricity
supply.
Section 56 – Provisions relating to Disconnection of supply
Section 55 – Use of meters – this provision makes it very
clear that no licensee shall supply electricity except through
installation of a correct meter.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Section 56 – Specific provision for disconnection of supply
in default of payment. However the sections clearly says
such disconnection can be made only after giving a 15 days
clear notice to the consumer. Subsection (2) under this
section also specifies a limitation of two years for recovery
of dues.
Section 57 – Consumer protection - Provisions under this
section says that appropriate standards of performance shall
be determined by the Commission. Failure to adhere to the
standards, the licensee becomes liable for penalty or
prosecution besides providing compensation to the
consumer.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Section 42 (5) provides for establishment of
consumer grievance redressal forum by the licensee as
per the guidelines issued by the Commission.
Section 42(6) provides for establishment of
Ombudsman for redressal of grievances not properly
addressed by consumer grievance redressal forums
under sub section (5)
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
IMPORTANT PROVISIONS
RELATING TO DISTRIBUTION
LICENSE
Section 126 – Provides for assessing unauthorized
use of electricity by the assessing officer. Under the
explanation, Assessing officers are defined as “An Officer
of State Government, Board or licensee as the case may be,
designated as such by the State Government”
Section 127 Provides for constitution of appellate
authority to hear appeals on the assessment by the
assessing officers.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
IMPORTANT PROVISIONS
RELATING TO TARIFFS
Sections 61- 65 deals with Tariffs
• Section 61 provides for setting of terms and conditions
for determination of tariffs by the State Commission
which shall be guided by the national tariff policy and
national electricity policy.
• This section also provides for determining tariffs under
MYT principles. 61 (f) , tariffs progressively reflecting
the cost of supply and elimination of cross subsidy etc.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Section 62: Provides for determination tariff by the
commission in respect of
a) Supply of electricity by a Generation Company to a
Distribution Licensee.
b) Transmission of electricity.
c) Wheeling of electricity.
d) Retail supply of electricity.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Section 64: provides for procedure for tariff order.
Section 65: If Government wishes to exempt any class of
consumer from paying tariffs in full or part as determined
by the commission, then it shall have to compensate the
difference by way of subsidy, that too in advance to the
supply company.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
DEVELOPMENT OF POWER
MARKET
Section 66 : Provides for development of power market
including trading and such development shall be guided by
National Electricity Policy(IEX and PXIL).
Section 70: Provides for constitution of Central Electricity
Authority (CEA) consisting of not more than 14 members
and eight of them shall be full time members.
Section 73: Functions and duties of CEA which shall
specify technical standards for construction of electrical
plants, connectivity to grid standards for Operation &
Maintenance of Transmission lines, installation and
operation of meters.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
REGULATORY
COMMISSIONS
Section 76: Provides constitution for CERC consisting
of chair persons and three members (Total four
members).
Section 82: Provides constitution for state commissions
consisting of chairperson and two members (total three
members).
Section 108 : Directions by state government. The
state commission shall be guided by directions by state
government in matters of policy involving public
interest.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
APPELLATE TRIBUNAL FOR
ELECTRICITY (ATE)
o Section 110: Provides for establishment for ATE
consisting of four members of each two are judicial
members and two are technical members.
o Section 131: Provides for reorganization of SEBs .
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
THEFT OF ELECTRICITY &
PENALTY
Section 135: Deals with theft of electricity – tapping,
tampering, damaging, use for different purpose.
Section 136: Theft of electrical lines and materials.
Section 141 : Extinguishing public lamps – fine upto
2000 rupees
Section 142 : Punishment for non compliance of
directions by appropriate commissions – fine upto one lakh .
Section 146 : Failure to order and directions under
this act is punishable with imprisonment upto three months
and fine upto one lakh or both.
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CAMTECH, Gwalior
SPECIAL
COURTS
Section 153: Provides for constitution of special
courts for state government for speedy trials of offences
under section 135 to 140 and 150 (abetment).
Section 162: Deals with appointment of CEIG
Section 166: Constitution of coordination forum.
Section 185 : Repeal and savings.
Phase II - Module No. STC-GS-
CAMTECH, Gwalior
Phase II - Module No. STC-GS-
