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Understanding Electricity Act 2003: Provisions and Significance

Get insights into the Electricity Act 2003, its purpose, significance, and key provisions regarding electricity trading, transmission, distribution, and tariffs in India.

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Understanding Electricity Act 2003: Provisions and Significance

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  1. A Glimpse at Electricity Act 2003 - Anil Kumar K AO, Regulatory Affairs , KPTCL anilkumar ao ra kptcl

  2. 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. anilkumar ao ra kptcl

  3. 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 anilkumar ao ra kptcl

  4. 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 anilkumar ao ra kptcl

  5. 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. anilkumar ao ra kptcl

  6. 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. anilkumar ao ra kptcl

  7. 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. anilkumar ao ra kptcl

  8. Electricity Act 2003 New concepts introduced in Electricity Act 2003 • National Electricity Policy and Tariff Policy section 3 • 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) anilkumar ao ra kptcl

  9. Section wise overview of the Act anilkumar ao ra kptcl

  10. Section wise overview of the Act anilkumar ao ra kptcl

  11. Section wise overview of the Act anilkumar ao ra kptcl

  12. 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 anilkumar ao ra kptcl

  13. 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. anilkumar ao ra kptcl

  14. 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 anilkumar ao ra kptcl

  15. 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 ? anilkumar ao ra kptcl

  16. 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. anilkumar ao ra kptcl

  17. 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 . . anilkumar ao ra kptcl

  18. 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. anilkumar ao ra kptcl

  19. 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 anilkumar ao ra kptcl

  20. 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. anilkumar ao ra kptcl

  21. 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) anilkumar ao ra kptcl

  22. 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 anilkumar ao ra kptcl

  23. 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 anilkumar ao ra kptcl

  24. Important Provisions relating to Tariffs Section 62 provides for determination tariff by the commission in respect of • Supply of electricity by a Gen. Co. to a Dist. Licensee • Transmission of electricity • Wheeling of electricity • 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. anilkumar ao ra kptcl

  25. 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. anilkumar ao ra kptcl

  26. 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. anilkumar ao ra kptcl

  27. 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 . anilkumar ao ra kptcl

  28. 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. anilkumar ao ra kptcl

  29. 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. anilkumar ao ra kptcl

  30. 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 anilkumar ao ra kptcl

  31. 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 anilkumar ao ra kptcl

  32. 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. anilkumar ao ra kptcl

  33. 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 anilkumar ao ra kptcl

  34. 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.” anilkumar ao ra kptcl

  35. 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 anilkumar ao ra kptcl

  36. 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.” anilkumar ao ra kptcl

  37. Delhi Case Facts of the Case anilkumar ao ra kptcl

  38. 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. anilkumar ao ra kptcl

  39. Cases • Case: SRLDC TN v/s Karnataka. • Case 2: MMD • Case 3: Short term procurement anilkumar ao ra kptcl

  40. THANK YOU anilkumar ao ra kptcl

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