The energy sector in India is governed by various statutes, including the Electricity Act, 2003 and the Energy Conservation Act, 2001.
In India, the first Electricity Act was enacted in 1903. Meant as a tentative measure, it was speedily replaced by the Indian Electricity Act, 1910. This 1910 Act regulated the issue of granting licenses to the licensees, the according to sanction to persons for the generation, distribution and supply of electrical energy, the powers and obligations of such persons and the takeover of their undertakings by the central government, the state government and the local authority. Later, in 1948, the Electricity (Supply) Act was enacted. It provided a basis for takeover of most undertakings by State Electricity Boards constituted under it. The Act mainly deals with constitution, powers and functions of various bodies including the Central Electricity Authority (CEA), state electricity boards, generating companies, consultative councils and local advisory committees. The National Electricity Policy and the tariff policy are prepared by the Central Government in consultation with the CEA and the state governments. These policies are meant to ensure the optimal utilization of resources such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy. The CEA is also responsible for specifying technical standards and safety requirements for construction and operation of plants and transmission lines, advising the government and commissions on technical matters and other activities. The Electricity (Supply) Act was followed by the Electricity Regulatory Commissions Act in 1998, which mandated the creation of the Central Electricity Regulatory Commission (CERC), to which was delegated the task of setting the tariff of centrally owned or controlled generation companies. The Commission aims to promote competition, efficiency and economy in bulk power markets, improve the quality of supply, promote investments and advise government on the removal of institutional barriers to bridge the demand supply gap and thus foster the interests of consumers. The Act also mandated the creation of state electricity regulatory commissions (SERC), which were also granted powers to set tariffs. The CERC is mainly a regulatory body, in contrast to CEA which is mainly an advisory body. However, both CERC and SERC have certain advisory functions to foster competition, efficiency and investment. Besides the setting up of a regulatory mechanism, the function of CERC also includes adjudication of disputes among generating companies or transmission licensees. An appeal from CERC or SERC will lie with the
Appellate Tribunal for Electricity (APTEL). APTEL has been in operation from July 21, 2005.
The Electricity Regulatory Commissions Act was followed by the Energy Conservation Act in 2001. This
Act mainly provided for the establishment of the Bureau of Energy Efficiency (BEE). BEE was constituted to reduce the ‘energy intensity’ of the Indian economy. One of the key functions of BEE is to provide policy framework and direction to national energy efficiency and conservation efforts and programs.
In 2003, the Electricity Act was enacted, which regulates generation, distribution, transmission and trading in power. It replaced the legislations that are mentioned above, such as the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948, and the Electricity Regulatory Commissions Act, 1998. CERC has been granted its quasijudicial status under section 76 of the Electricity Act. From a regulatory point of view, CERC is a key player in the Electricity sector. CERC press releases and orders are the key to understand regulations in the Indian power sector. CERC and SERC formulate terms and conditions for the determination of tariff.