Indian law relating to generation, transmission, distribution, trading and use of electricity, etc.
Electricity Act, 2003
[Act 36 of 2003 as amended up to Act 7 of 2017] [26th May, 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
Be it enacted by Parliament in the Fifty-fourth Year of the Republic of India as follows:—
Statement of Objects and Reasons.—The Electricity Supply Industry in India is presently governed by three enactments namely, the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948, the Electricity Regulatory Commissions Act, 1998.
1.1. The Indian Electricity Act, 1910 created the basic framework for electric supply industry in India which was then in its infancy. The Act envisaged growth of the electricity industry through private licensees. Accordingly, it provided for licensees who could supply electricity in a specified area. It created the legal framework for laying down of wires and other works relating to the supply of electricity.
1.2. The Electricity (Supply) Act, 1948 mandated the creation of a State Electricity Board. The State Electricity Board has the responsibility of arranging the supply of electricity in the State. It was felt that electrification which was limited to cities needed to be extended rapidly and the State should step in to shoulder this responsibility through the State Electricity Boards. Accordingly the State Electricity Boards through the successive Five Year Plans undertook rapid growth expansion by utilising Plan funds.
1.3. Over a period of time, however, the performance of SEBs has deteriorated substantially on account of various factors. For instance, though power to fix tariffs vests with the State Electricity Boards, they have generally been unable to take decisions on tariffs in a professional and independent manner and tariff determination in practice has been done by the State Governments. Cross-subsidies have reached unsustainable levels. To address this issue and to provide for distancing of the Government from determination of tariffs, the Electricity Regulatory Commissions Act, was enacted in 1998. It created the Central Electricity Regulatory Commission and has an enabling provision through which the State Governments can create a State Electricity Regulatory Commission. 16 States have so far notified/created State Electricity Regulatory Commissions either under the Central Act or under their own Reform Acts.
2. Starting with Orissa, some State Governments have been undertaking reforms through their own Reform Acts. These reforms have involved unbundling of the State Electricity Boards into separate Generation, Transmission and Distribution Companies through transfer schemes for the transfer of the assets and staff into successor companies. Orissa, Haryana, Andhra Pradesh, Karnataka, Rajasthan and Uttar Pradesh have passed their Reform Acts and unbundled their State Electricity Boards into separate companies. Delhi and Madhya Pradesh have also enacted their Reforms Acts which, inter alia, envisage unbundling/corporatisation of SEBs.
3. With the policy of encouraging private sector participation in generation, transmission and distribution and the objective of distancing the regulatory responsibilities from the Government to the Regulatory Commissions, the need for harmonising and rationalising the provisions in the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998 in a new self-contained comprehensive legislation arose. Accordingly it became necessary to enact a new legislation for regulating the electricity supply industry in the country which would replace the existing laws, preserve its core features other than those relating to the mandatory existence of the State Electricity Board and the responsibilities of the State Government and the State Electricity Board with respect to regulating licensees. There is also need to provide for newer concepts like power trading and open access. There is also need to obviate the requirement of each State Government to pass its own Reforms Act. The Bill has progressive features and endeavours to strike the right balance given the current realities of the power sector in India. It gives the State enough flexibility to develop their power sector in the manner they consider appropriate. The Electricity Bill, 2001 has been finalised after extensive discussions and consultations with the States and all other stake holders and experts.
4. The main features of the Bill are as follows:—
(i) Generation is being delicensed and captive generation is being freely permitted. Hydro projects would, however, need approval of the State Government and clearance from the Central Electricity Authority which would go into the issues of dam safety and optimal utilisation of water resources.
(ii) There would be a Transmission Utility at the Central as well as State level, which would be a Government company and have the responsibility of ensuring that the transmission network is developed in a planned and coordinated manner to meet the requirements of the sector. The load despatch function could be kept with the Transmission Utility or separated. In the case of separation the load despatch function would have to remain with a State Government organisation/company.
(iii) There is provision for private transmission licensees.
(iv) There would be open access in transmission from the outset with provision for surcharge for taking care of current level of cross-subsidy with the surcharge being gradually phased out.
(v) Distribution licensees would be free to undertake generation and generating companies would be free to take up distribution licensees.
(vi) The State Electricity Regulatory Commissions may permit open access in distribution in phases with surcharge for—
(a) current level of cross-subsidy to be gradually phased out along with cross-subsidies; and
(b) obligation to supply.
(vii) For rural and remote areas stand alone systems for generation and distribution would be permitted.
(viii) For rural areas decentralised management of distribution through Panchayats, Users Associations, Cooperatives or Franchisees would be permitted.
(ix) Trading as a distinct activity is being recognised with the safeguard of the Regulatory Commissions being authorised to fix ceilings on trading margins, if necessary.
(x) Where there is direct commercial relationship between a consumer and a generating company or a trader the price of power would not be regulated and only the transmission and wheeling charges with surcharge would be regulated.
(xi) There is provision for a transfer scheme by which company/companies can be created by the State Governments from the State Electricity Boards. The State Governments have the option of continuing with the State Electricity Boards which under the new scheme of things would be a distribution licensee and the State Transmission Utility which would also be owning generation assets. The service conditions of the employees would as a result of restructuring not be inferior.
(xii) An Appellate Tribunal has been created for disposal of appeals against the decision of the CERC and State Electricity Regulatory Commissions so that there is speedy disposal of such matters. The State Electricity Regulatory Commission is a mandatory requirement.
(xiii) Provisions relating to theft of electricity have a revenue focus.
5. The Bill seeks to replace the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998.
6. The Bill seeks to achieve the above objects.
Part I
PRELIMINARY
1. Short title, extent and commencement.
1. Short title, extent and commencement.—(1) This Act may be called the Electricity Act, 2003.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) It shall come into force on such date as the Central Government may, by notification, appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
2. Definition.
2. Definition.—In this Act, unless the context otherwise requires,—
(1) “Appellate Tribunal” means the Appellate Tribunal for Electricity established under Section 110;
(2) “appointed date” means such date as the Central Government may, by notification, appoint;
(3) “area of supply” means the area within which a distribution licensee is authorised by his licence to supply electricity;
(4) “Appropriate Commission” means the Central Regulatory Commission referred to in sub-section (1) of Section 76 or the State Regulatory Commission referred to in Section 82 or the Joint Commission referred to in Section 83, as the case may be;
(5) “Appropriate Government” means,—
(a) the Central Government,—
(i) in respect of a generating company wholly or partly owned by it;
(ii) in relation to any inter-State generation, transmission, trading or supply of electricity and with respect to any mines, oil-fields, railways, national highways, airports, telegraphs, broadcasting stations and any works of defence, dockyard, nuclear power installations;
(iii) in respect of the National Load Despatch Centre and Regional Load Despatch Centre;
(iv) in relation to any works or electric installation belonging to it or under its control;
(b) in any other case, the State Government having jurisdiction under this Act;
(6) “Authority” means the Central Electricity Authority referred to in sub-section (1) of Section 70;
(7) “Board” means a State Electricity Board, constituted before the commencement of this Act, under sub-section (1) of Section 5 of the Electricity (Supply) Act, 1948 (54 of 1948);
(8) “Captive generating plant” means a power plant set up by any person to generate electricity primarily for his own use and includes a power plant set up by any cooperative society or association of persons for generating electricity primarily for use of members of such cooperative society or association;
(9) “Central Commission” means the Central Electricity Regulatory Commission referred to in sub-section (1) of Section 76;
(10) “Central Transmission Utility” means any Government company which the Central Government may notify under sub-section (1) of Section 38;
(11) “Chairperson” means the Chairperson of the Authority or Appropriate Commission or the Appellate Tribunal, as the case may be;
(12) “Cogeneration” means a process which simultaneously produces two or more forms of useful energy (including electricity);
(13) “company” means a company formed and registered under the Companies Act, 1956 and includes any body corporate under a Central, State or Provincial Act (1 of 1956);
(14) “conservation” means any reduction in consumption of electricity as a result of increase in the efficiency in supply and use of electricity;
(15) “consumer” means any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be;
(16) “dedicated transmission lines” means any electric supply-line for point to point transmission which are required for the purpose of connecting electric lines or electric plants of a captive generating plant referred to in Section 9 or generating station referred to in Section 10 to any transmission lines or sub-stations or generating stations or the load centre, as the case may be;
(17) “distribution licensee” means a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply;
(18) “distributing main” means the portion of any main with which a service line is, or is intended to be, immediately connected;
(19) “distribution system” means the system of wires and associated facilities between the delivery points on the transmission lines or the generating station connection and the point of connection to the installation of the consumers;
(20) “electric line” means any line which is used for carrying electricity for any purpose and includes—
(a) any support for any such line, that is to say, any structure, tower, pole or other thing in, on, by or from which any such line is, or may be, supported, carried or suspended; and
(b) any apparatus connected to any such line for the purpose of carrying electricity;
(21) “Electrical Inspector” means a person appointed as such by the Appropriate Government under sub-section (1) of Section 162 and also includes Chief Electrical Inspector;
(22) “electrical plant” means any plant, equipment, apparatus or appliance or any part thereof used for, or connected with, the generation, transmission, distribution or supply of electricity but does not include—
(a) an electric line; or
(b) a meter used for ascertaining the quantity of electricity supplied to any premises; or
(c) an electrical equipment, apparatus or appliance under the control of a consumer;
(23) “electricity” means electrical energy—
(a) generated, transmitted, supplied or traded for any purpose; or
(b) used for any purpose except the transmission of a message;
(24) “Electricity Supply Code” means the Electricity Supply Code specified under Section 50;
(25) “electricity system” means a system under the control of a generating company or licensee, as the case may be, having one or more—
(a) generating stations; or
(b) transmission lines; or
(c) electric lines and sub-stations,
and when used in the context of a State or the Union, the entire electricity system within the territories thereof;
(26) “electricity trader” means a person who has been granted a licence to undertake trading in electricity under Section 12;
(27) “franchisee” means a person authorised by a distribution licensee to distribute electricity on its behalf in a particular area within his area of supply;
(28) “generating company” means any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person, which owns or operates or maintains a generating station;
(29) “generate” means to produce electricity from a generating station for the purpose of giving supply to any premises or enabling a supply to be so given;
(30) “generating station” or “station” means any station for generating electricity, including any building and plant with step-up transformer, switch-gear, switch yard, cables or other appurtenant equipment, if any, used for that purpose and the site thereof; a site intended to be used for a generating station, and any building used for housing the operating staff of a generating station, and where electricity is generated by water-power, includes penstocks, head and tail works, main and regulating reservoirs, dams and other hydraulic works, but does not in any case include any sub-station;
(31) “Government company” shall have the meaning assigned to it in Section 617 of the Companies Act, 1956 (1 of 1956);
(32) “grid” means the high voltage backbone system of inter-connected transmission lines, sub-station and generating plants;
(33) “Grid Code” means the Grid Code specified by the Central Commission under clause (h) of sub-section (1) of Section 79;
(34) “Grid Standards” means the Grid Standards specified under clause (d) of Section 73 by the Authority;
(35) “high voltage line” means an electric line or cable of a nominal voltage as may be specified by the Authority from time to time;
(36) “inter-State transmission system” includes—
(i) any system for the conveyance of electricity by means of main transmission line from the territory of one State to another State;
(ii) the conveyance of electricity across the territory of an intervening State as well as conveyance within the State which is incidental to such inter-State transmission of electricity;
(iii) the transmission of electricity within the territory of a State on a system built, owned, operated, maintained or controlled by a Central Transmission Utility;
(37) “intra-State transmission system” means any system for transmission of electricity other than an inter-State transmission system;
(38) “licence” means a licence granted under Section 14;
(39) “licensee” means a person who has been granted a licence under Section 14;
(40) “line” means any wire, cable, tube, pipe, insulator, conductor or other similar thing (including its casing or coating) which is designed or adapted for use in carrying electricity and includes any line which surrounds or supports, or is surrounded or supported by or is installed in close proximity to, or is supported, carried or suspended in association with, any such line;
(41) “local authority” means any Nagar Panchayat, Municipal Council, municipal corporation, Panchayat constituted at the village, intermediate and district levels, body of port commissioners or other authority legally entitled to, or entrusted by the Union or any State Government with, the control or management of any area or local fund;
(42) “main” means any electric supply-line through which electricity is, or is intended to be, supplied;
(43) “Member” means the Member of the Appropriate Commission or Authority or Joint Commission, or the Appellate Tribunal, as the case may be, and includes the Chairperson of such Commission or Authority or Appellate Tribunal;
(44) “National Electricity Plan” means the National Electricity Plan notified under sub-section (4) of Section 3;
(45) “National Load Despatch Centre” means the Centre established under sub-section (1) of Section 26;
(46) “notification” means notification published in the Official Gazette and the expression “notify” shall be construed accordingly;
(47) “open access” means the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission;
(48) “overhead line” means an electric line which is placed above the ground and in the open air but does not include live rails of a traction system;
(49) “person” shall include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person;
(50) “power system” means all aspects of generation, transmission, distribution and supply of electricity and includes one or more of the following, namely:—
(a) generating stations;
(b) transmission or main transmission lines;
(c) sub-stations;
(d) tie-lines;
(e) load despatch activities;
(f) mains or distribution mains;
(g) electric supply-lines;
(h) overhead lines;
(i) service lines;
(j) works;
(51) “premises” includes any land, building or structure;
(52) “prescribed” means prescribed by rules made by the Appropriate Government under this Act;
(53) “public lamp” means an electric lamp used for the lighting of any street;
(54) “real time operation” means action to be taken at a given time at which information about the electricity system is made available to the concerned Load Despatch Centre;
(55) “Regional Power Committee” means a committee established by resolution by the Central Government for a specified region for facilitating the integrated operation of the power systems in that region;
(56) “Regional Load Despatch Centre” means the Centre established under sub-section (1) of Section 27;
(57) “regulations” means regulations made under this Act;
(58) “repealed laws” means the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998 repealed by Section 185 (9 of 1910, 54 of 1948, 14 of 1998);
(59) “rules” means rules made under this Act;
(60) “Schedule” means the Schedule to this Act;
(61) “service-line” means any electric supply-line through which electricity is, or is intended to be, supplied—
(a) to a single consumer either from a distributing main or immediately from the Distribution Licensee’s premises; or
(b) from a distributing main to a group of consumers on the same premises or on contiguous premises supplied from the same point of the distributing main;
(62) “specified” means specified by regulations made by the Appropriate Commission or the Authority, as the case may be, under this Act;
(63) “stand alone system” means the electricity system set-up to generate power and distribute electricity in a specified area without connection to the grid;
(64) “State Commission” means the State Electricity Regulatory Commission constituted under sub-section (1) of Section 82 and includes a Joint Commission constituted under sub-section (1) of Section 83;
(65) “State Grid Code” means the State Grid Code specified under clause (h) of sub-section (1) of Section 86;
(66) “State Load Despatch Centre” means the centre established under sub-section (1) of Section 31;
(67) “State Transmission Utility” means the Board or the Government company specified as such by the State Government under sub-section (1) of Section 39;
(68) “street” includes any way, road, lane, square, court, alley, passage or open space, whether a thoroughfare or not, over which the public have a right of way and also the roadway and footway over any public bridge or causeway;
(69) “sub-station” means a station for transforming or converting electricity for the transmission or distribution thereof and includes transformers, converters, switch-gears, capacitors, synchronous condensers, structures, cable and other appurtenant equipment and any buildings used for that purpose and the site thereof;
(70) “supply”, in relation to electricity, means the sale of electricity to a licensee or consumer;
(71) “trading” means purchase of electricity for resale thereof and the expression “trade” shall be construed accordingly;
(72) “transmission lines” means all high pressure cables and overhead lines (not being an essential part of the distribution system of a licensee) transmitting electricity from a generating station to another generating station or a sub-station, together with any step-up and step-down transformers, switch-gear and other works necessary to and used for the control of such cables or overhead lines, and such buildings or part thereof as may be required to accommodate such transformers, switch-gear and other works;
(73) “transmission licensee” means a licensee authorised to establish or operate transmission lines;
(74) “transmit” means conveyance of electricity by means of transmission lines and the expression “transmission” shall be construed accordingly;
(75) “utility” means the electric lines or electrical plant, and includes all lands, buildings, works and materials attached thereto belonging to any person acting as a generating company or licensee under the provisions of this Act;
(76) “wheeling” means the operation whereby the distribution system and associated facilities of a transmission licensee or distribution licensee, as the case may be, are used by another person for the conveyance of electricity on payment of charges to be determined under Section 62;
(77) “works” includes electric line, and any building, plant, machinery, apparatus and any other thing of whatever description required to transmit, distribute or supply electricity to the public and to carry into effect the objects of a licence or sanction granted under this Act or any other law for the time being in force.
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