A Glimpse at

Electricity Act 2003

- Anil Kumar K
AO, Regulatory Affairs , KPTCL

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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.
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Electricity Act 2003

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 of houses of the State legislature

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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 GoI 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
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Electricity Act 2003

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.
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Electricity Act 2003

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.
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Electricity Act 2003

An overview of Electricity Act 2003
Enacted in 2003 and given to effect from
10th June 2003
Consists of 18 ( XVIII) parts, 185
Sections and one schedule.

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Electricity Act 2003

New concepts introduced in Electricity Act 2003
1. National Electricity Policy and Tariff Policy
section 3

2.
3.
4.
5.

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

Introduction of Open Access section 39(d)
Introduction of MYT ( Multi Year Tariffs) section 61(f)
Constitution of Appellate Tribunal and its
functions ( sections 110 125)

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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
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Section wise overview of the Act

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

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Section wise overview of the Act

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

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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 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.
NLDC and RLDC takes care of interstate transmission
while SLDC takes care of intrastate transmission

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Provisions relating to Transmission

(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.

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Provisions relating to Transmission

(System Operation)
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

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Provisions relating to Transmission

(System Operation)
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
Discussion : What is the role of SLDC ?
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Provisions relating to Transmission

(System Operation)
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.

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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.
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 PPA s have been allocated to respective ESCOMs who
are empowered to trade .
.

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Important Provisions relating to

Transmission
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.
Discussion : Read with section 11 , leads to
contentious issues.

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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.
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
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Important Provisions relating to

Distribution
Section 55 use of meters this provision
makes it very clear that no licensee shall supply
electricity except through installation of a
correct meter
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.
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Important Provisions relating to

Distribution
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.
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)
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Important Provisions relating to

Distribution Licensee
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 licenssee as the
case may be, designated as such by the State
Government
In our State, the GoK has notified the jurisdictional AEE
as the Assessing Officer under this section.
Section 127 provides for constitution of appellate
authority to hear appeals on the assessment by the
assessing officers

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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
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Important Provisions relating to

Tariffs
Section 62 provides for determination tariff by the
commission in respect of
a) Supply of electricity by a Gen. Co. to a Dist. Licensee
b) Transmission of electricity
c) Wheeling of electricity
d) Retail supply of electricity
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.
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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 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 O & M of Tr
lines installation and operation of meters.

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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.
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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 reorganisation of
SEBs .

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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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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.
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Few Regulations Governing

System Operation
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
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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

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Karnataka Case
CERC Levied Penalty of Rs. 17 Lakhs for
violation of grid code. ( 6.5.09)
The Order was appealed before ATE in
appeal No. 94/2009
ATE Passed Order on 11.01.2010 and
quashed the CERC Order
CERC Refunded the Penalty Recovered.
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Karnataka Case
Grounds
CERC Relied upon SEM Reading instead
of SCADA
Action taken by KPTCL ( LDC) for
restoring the frequency back to 49 Hz not
recognised
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Karnataka Case
Clause 5.4.2 of IEGC
(a) As mentioned above the utilities shall
endeavor to restrict their net drawl from the
grid to within the respective drawl schedule
whenever the system frequency is below 49.5
Hz. When the frequency falls below 49 Hz
requisite load shedding (manual) shall be
carried out to curtail the over drawl.

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Delhi Case
CERC Adjudication Case 1 of 2009
Delhi SLDC V/s NRLDC
Delhi SLDC failed to comply with the
directions of NRLDC
Delhi SLDC Argues that , it is not
responsible for overdrawl. Discoms
responsible
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Delhi Case
Facts of the Case
Para 5.4.2 (b) of the Indian Electricity (the Grid
Code) provides as
Further, in case of certain contingencies and/or
threat to system security, the RLDC may direct
the State Load Dispatch Centre to decrease its
drawal by a certain quantum. Such directions
shall immediately be acted upon.

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Delhi Case
Facts of the Case

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Delhi Case
Adjudicator rejected the argument of Delhi
and held that Delhi SLDC responsible for
the lapse
Imposed fine of Rs. 50,000 per default.

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Cases
Case: SRLDC TN v/s Karnataka.
Case 2: MMD
Case 3: Short term procurement

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THANK YOU
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