VARIOUS COMMISSIONS FOR ENERGY REGULATION IN INDIA

[priyanka bhutani]

Electricity Act, 2003 deals with the provisions relating to the commissions for energy regulation in India. There is one commission at the Central level namely, Central Electricity Regulatory Commission and at the State Level also, there is the Commission which is called as State Electricity Regulatory Commission.

CERC is a statutory body constituted under the provision of the erstwhile Electricity Regulatory Commissions Act, 1998 and continued under Electricity Act, 2003 (which has since repealed inter alia the ERC Act, 1998). The main functions of the CERC are to regulate the tariff of generating companies owned or controlled by the Central Government, to regulate the tariff of generating companies other than those owned or controlled by the Central Government, if such generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one State, to regulate the inter-State transmission of energy including tariff of the transmission utilities, to grant licences for inter-State transmission and trading and to advise the Central Government in formulation of National Electricity Policy and Tariff Policy.

The concept of SERC as a statutory body responsible for determination of tariff and grant of licence at intra-State level was envisaged in the erstwhile Regulatory Commissions Act, 1998 and has been continued in the Electricity Act, 2003 (which has since repealed inter alia the ERC Act, 1998). Main responsibilities of the SERC are to determine the tariff for generation, supply, transmission and wheeling of electricity, whole sale, bulk or retail sale within the State; to issue licences for intra-State transmission, distribution and trading; to promote co-generation and generation of electricity from renewal sources of energy etc.

Section 76 deals with the constitution of the Central Commission. It provides that:

Section 76 (Constitution of Central Commission):

1. There shall be a Commission to be known as the Central Electricity Regulatory Commission to exercise the powers conferred on, and discharge the functions assigned to it under this Act.
2. The Central Electricity Regulatory Commission, established under section 3 of the Electricity Regulatory Commissions Act, 1998 and functioning as such immediately before the appointed date, shall be deemed to be the Central Commission for the purposes of this Act and the Chairperson, Members, Secretary, and other officers and employees thereof shall be deemed to have been appointed under this Act and they shall continue to hold office on the same terms and conditions on which they were appointed under the Electricity Regulatory Commissions Act, 1998:

Provided that the Chairperson and other Members of the Central Commission appointed, before the commencement of this Act, under the Electricity Regulatory Commissions Act, 1998, may, on the recommendations of the Selection Committee constituted under sub-section (1) of section 78, be allowed, to opt for the terms and conditions under this Act by the Central Government.

Provided that the Chairperson and other Members of the Central Commission appointed, before the commencement of this Act, under the Electricity Regulatory Commissions Act, 1998, may, on the recommendations of the Selection Committee constituted under sub-section (1) of section 78, be allowed, to opt for the terms and conditions under this Act by the Central Government.

3. The Central Commission shall be a body corporate by the name aforesaid, having perpetual succession and a common se al with power to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.

4. The head office of the Central Commission shall be at such place as the Central Government may, by notification, specify.

5. The Central Commission shall consist of the following Members, namely:-

(a) A Chairperson and three other Members;

(b) The Chairperson of the Authority who shall be the Member, ex-officio.

6. The Chairperson and Members of the Central Commission shall be appointed by the Central Government on the recommendation of the Selection Committee referred to in section 78.

The Commission intends 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. In pursuit of these objectives the Commission aims to –

• Improve the operations and management of the regional transmission systems through Indian Electricity Grid Code (IEGC), Availability Based Tariff (ABT), etc.
• Formulate an efficient tariff setting mechanism, which ensures speedy and time bound disposal of tariff petitions, promotes competition, economy and efficiency in the pricing of bulk power and transmission services and ensures least cost investments.
• Facilitate open access in inter-state transmission.
• Facilitate inter-state trading.
• Promote development of power market.
• Improve access to information for all stakeholders.
• Facilitate technological and institutional changes required for the development of competitive markets in bulk power and transmission services.
• Advise on the removal of barriers to entry and exit for capital and management, within the limits of environmental, safety and security concerns and the existing legislative requirements, as the first step to the creation of competitive markets.

As entrusted by the Electricity Act, 2003 the Commission has the responsibility to discharge the following functions:-

Mandatory Functions:-

• To regulate the tariff of generating companies owned or controlled by the Central Government;
• To regulate the tariff of generating companies other than those owned or controlled by the Central Government specified in clause (a), if such generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one State;
• To regulate the inter-State transmission of electricity;
• To determine tariff for inter-State transmission of electricity;
• To issue licences to persons to function as transmission licensee and electricity trader with respect to their inter-State operations;
• Improve access to information for all stakeholders;
• To adjudicate upon disputes involving generating companies or transmission licensee in regard to matters connected with clauses (a) to (d) above and to refer any dispute for arbitration;
• To levy fees for the purposes of the Act;
• To specify Grid Code having regard to Grid Standards;
• To specify and enforce the standards with respect to quality, continuity and reliability of service by licensees;
• To fix the trading margin in the inter-State trading of electricity, if considered, necessary;
• To discharge such other functions as may be assigned under the Act.

Advisory Functions:-

• Formulation of National Electricity Policy and Tariff Policy;
• Promotion of competition, efficiency and economy in the activities of the electricity industry;
• Promotion of investment in electricity industry;
• Any other matter referred to the Central Commission by the Central Government. 

Section 82 of the Electricity Act, 2003 deals with the constitution of the State Commission, it provides that:

Section 82: (Constitution of State Commission)-

(1) Every State Government shall, within six months from the appointed date, by notification, constitute for the purposes of this Act, a Commission for the State to be known as the (name of the State) Electricity Regulatory Commission:

Provided that the State Electricity Regulatory Commission, established by a State Government under section 17 of the Electricity Regulatory Commissions Act, 1998 and the enactments specified in the Schedule, and functioning as such immediately before the appointed date, shall be the State Commission for the purposes of this Act and the Chairperson, Members, Secretary, and other officers and other employees thereof shall continue to hold office, on the same terms and conditions on which they were appointed under those Acts:

Provided further that the Chairperson and other Members of the State Commission appointed, before the commencement of this Act under the Electricity Regulatory Commissions Act,

1998 or under the enactments specified in the Schedule, may on the recommendations of the Selection Committee constituted under sub-section (1) of Section 85 be allowed to opt for the terms and conditions under this Act by the concerned State Government.

(2) The State Commission shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.

(3) The head office of the State Commission shall be at such place as the State Government may, by notification, specify.

(4) The State Commission shall consist of not more than three Members, including the Chairperson.

(5) The Chairperson and Members of the State Commission shall be appointed by the State Government on the recommendation of a Selection Committee referred to in section 85.

The State Electricity Regulatory Commission has been envisaged in the Electricity Regulatory Commissions Act, 1998. As per Section 17(1) of the Act, the State Government may, if it deems fit, establish an Electricity Regulatory Commission for the State. The main functions of the SERC would be to determine the tariff for electricity, wholesale, bulk, grid or retail; to determine the tariff payable for use by the transmission facilities, to regulate power purchase and procurement process of transmission utilities and distribution utilities, to promote competition, efficiency and economy in the activities of the electricity industries, etc.

Subsequently as and when each State Government notifies, other regulatory functions could also be assigned to SERCs.

Main functions of SERCs:-

• Determine tariff for generation, supply transmission and wheeling of electricity : wholesale / bulk / rental/ within the State.
• Regulate electricity purchase and procurement process of distribution licensees including the price for distribution and supply within the State.
• Adjudicate upon disputes between licensees and generating companies for above.
• Specify and enforce standards for quality, continuity and reliability of services by licensees.