Electricity Act, 2003

Electricity Act, 2003

The act covers major issues involving generation, distribution, transmission and trading in power. While some of the sections have already been enacted and are yielding benefits, there are a few other sections that are yet to be fully enforced till date.

The Act delicenses power generation completely (except for all nuclear and hydro-power projects over a certain size). As per the Act, 10 percent of the power supplied by suppliers and distributors to the consumers has to be generated using renewable and non-conventional sources of energy so that the energy is reliable.

Electricity generation has been made a non-licensed activity and the techno-economic clearance from the Central Electricity Authority (CEA) has been done away with for any power plant, except for hydro-electric power stations above a certain amount of capital investment. This has been provided in section 7 and 8 of the Electricity Act 2003. The generators can sell electricity to any licensees or where allowed by the state regulatory commissions, to consumers directly. The provision of direct sale of electricity by the generators, when and where allowed, would promote more IPP participation in the power generation, as these consumers are more creditworthy and bankable compared to many SEB’s. However the act provides for imposition of a surcharge by the regulatory body to compensate for some loss in cross-subsidy revenue to the SEB’s due to this direct sale of electricity by generators to the consumers.

The Act delicenses distribution in rural areas and brings in a licensing regime for distribution in urban areas.Recently, Electricity (Amendment) Bill, 2022 mentioned that now Electricity Private Company will also be able to distribute.

The Central Government shall, from time to time, prepare & publish the national electricity policy and tariff policy plan, in consultation with the State Governments and the Authority for development of the power system based on optimal utilisation of resources such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy

Transmit, Distribution, Under take trading in Electricity

Any person is allowed to transmit or distribute or undertake trading in electricity provided he has authorised licence issued under section-14 or is exempted under section-13.

Network Transmission of Electricity

• The Central Government may establish a centre at the national Level, tobe known as the National Load Dispatch Centre for optimum scheduling and dispatch of electricity among the Regional Load Dispatch Centres. The Central Government makes region-wise demarcation of the country, and, from time to time, makes such modifications therein as it may consider necessary for the efficient, economical and integrated transmission and supply of electricity.
•  The National Load Dispatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any Central Act, as may be notified by the Central Government· 
• The Central Government shall establish a centre for each region to be known as the Regional Load Dispatch Centre having territorial jurisdiction as determined by the Central Government for the purposes of exercising the Powers, and discharging the functions under this Part. 
• All directions issued by the Regional Load Dispatch Centres to any transmission licensee of State transmission lines or any other licensee of the State or generating company (other than those connected to inter State Transmission system) or sub-station in the State shall be issued through the State Load Dispatch Centre.