power compendium

POWERCOMPENDIUM

Ministry of PowerGovernment of India

Website : www.powermin.nic.in

A Compilation

of

Acts, Rules, Policies, Guidelines

2011

(Updated till 31st March 2011)

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lq'khydqekj f'kansSUSHILKUMAR SHINDE

MINISTER OF POWERGOVERNMENT OF INDIA

NEW DELHI-110 001

MESSAGE

(SUSHILKUMAR SHINDE)

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MINISTER OF STATE FOR POWERGOVERNMENT OF INDIA

D.O. NO. MOSP/VIP/_______/2011

MESSAGE7th July, 2011

Power Sector in India is passing through the phase of reform and restructuring.It isSeveral legislative and policy initiatives taken by the Ministry of Power inthe past ensured that these initiatives lead to creation of enabling environmentfor investments in power sector and more consumer friendly approach to meetthe growing needs of industry, commerce, agriculture and households.

The two earlier editions of the Power Compendium were not only wellreceived but also highlighted the need to have a regular updation.

I am happy to note that the revised edition of the Power Compendium2011 is being brought out, which will give an updated version of the Acts, Rules,Regulations and Policy Guidelines relating to the Power Sector. I am sure thatthe revised Compendium would serve as a reference book like the previouseditions.

(K.C. VENUGOPAL)

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Je 'kfDr Hkou] jQh ekxZ] ubZ fnYyh&110001 Qksu % 011-23723700] 23705903 QSDl % 23705902Shram Shakti Bhawan, Rafi Marg, New Delhi-110 001 Ph. : 011-23723700, 23705903 Fax : 23705902

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P. Uma ShankarSecretary

Government of India Ministry of Power

Unique Pin Code No. 110119Shram Shakti BhavanNew Delhi-110 001

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Fax : 23721487E-mail : [email protected]

New Delhi13th July, 2011

FOREWORD

Contents

S. No. Page No.

1. Electricity Act, 2003 (with both amendments incorporated) 3(Notification dated 10.6.2003 bringing into force the Electricity Act, 2003)1 (a) Electricity (Amendment) Act, 2003 114

(Notification dated 27.1.2004 bringing into force the Electricity(Amendment) Act, 2003)

1 (b) Electricity (Amendment) Act, 2007 124(Notification dated 12.6.2007 bringing into force the Electricity(Amendment) Act, 2007)

2. Rules under Electricity Act, 2003i) Electricity Rules, 2005 regarding requirements of captive generating plant, 127

compliance by transmission lines etc. (Notification dated 8.6.2005)(amendment made vide notification dated 26.10.2006 incorporated).(i) (a) Electricity (Amendment) Rules, 2006 (Notification dated 26.10.2006).

ii) (a) CERC Rules, 2004 (Salary, Allowance and other conditions of service of 132Chairperson and Members) Rules, 2004 (Notification dated 8.3.2004)

(b) Amend the CERC (Salary, Allowances and other Conditions of Service of 135Chairperson and Members) Rules, 2004 (Notificated dated 9.3.2010)

iii) Fees for Making Application for Grant of Licence Rules, 2004 137(Notification dated 23.3.2004)

iv) National Electricity Plan Notification Rules, 2004 (Notification dated 6.4.2004) 138v) Appellate Tribunal for Electricity (Salaries, Allowances and other conditions of 139

service of Chairperson and Members) Rules, 2004 (Notification dated 13.4.2004)(v) (a) Appellate Tribunal for Electricity (Salaries, Allowances and other conditions 142

of service of Chairperson and Members) (Amendment) Rules, 2008(Notification dated 29.9.2008)

vi) Appellate Tribunal for Electricity (Procedure, Form, Fee and Record of 143Proceedings) Rules, 2007 (Notification dated 22.1.2007)

vii) Appeal to the Appellate Authority Rules, 2004 (Notification dated 16.4.2004) 180 (the amendment notification dated 7.9.2006 incorporated)

viii) Procedure for conducting Inquiry against a Member of Appropriate Commission 181Rules, 2004 (Notification dated 21.6.2004)

ix) Means of Delivery of Notice, Order or Document Rules, 2004 183(Notification dated 21.6.2004)

x) Procedure for Holding Inquiry by Adjudicating Officer Rules, 2004 184(Notification dated 31.8.2004)

xi) Appellate Tribunal for Electricity Salary, Allowances and other conditions of 186service of the Officers and Employees Rules, 2004 (Notification dated 28.10.2004)(the amendment notification dated 6.5.2005 incorporated)

S. No. Page No.

(xi) (a) Appellate Tribunal for Electricity Salary, Allowances and other conditions of 192service of the Officers & Employees (Amendment) Rules, 2005 (Notificationdated 6.5.2005)

(xi) (b) Appellate Tribunal for Electricity Salary, Allowances and other conditions 193of service of the Officers & Employees (Second Amendment) Rules, 2008 (Notification dated 22.7.2008)

xii) Intimation of Accidents (Form & Time of Service of Notice) Rules, 2004 194(Notification dated 22.12.2004)

(xii) Notification on Intimation of Accidents (Form & Time of Service of Notice) 197(Amendment) Rules, 2005 (Notification dated 11.8.2005)

xiii) CERC (Preparation of Annual Report) Rules, 2004 (Notification dated 28.1.2005) 198(xiii) (a) Central Electricity Regulatory Commission (Preparation of Annual Report) 200

(Amendment) Rules, 2005. (Notification dated 11.8.2005)xiv) Forum of Regulators Rules, 2005 (Notification dated 16.2.2005) 201xv) National Load Despatch Centre Rules, 2004 (Notification dated 2.3.2005) 203xvi) Distribution of Electricity Licence (additional requirements of capital adequacy, 205

creditworthiness and Code of Conduct) Rules, 2005 (Notification dated 23.3.2005)xvii) CEA (Terms & Conditions of Chairperson & other Members) Rules, 2005 207

(Notification dated 24.11.2005)xviii) Works of Licensees Rules, 2006 (Notification dated 18.4.2006) 210xix) Qualifications, Powers and Functions of Chief Electrical Inspector and Electrical 216

Inspectors Rules, 2006 (Notification dated 17.8.2006)xx) Central Electricity Regulatory Commission Fund (Constitution and the manner 219

of application, of the Fund) and Form and Time for Preparation of BudgetRules, 2007. (Notification dated 22.10.2007)

xxi) Central Electricity Regulatory Commission (Form of Annual Statement of Accounts 228and Records) Rules, 2007. (Notification dated 22.10.2007)

xxii) Electricity (Procedure for Previous Publication) Rules, 2005 250(Notification dated 9.6.2005)

3. National Electricity Policy 2514. Tariff Policy (amendment made vide resolution dated 31.3.2008 incorporated) 271

4 (i) Amendment to Tariff Policy (31.3.2008) 293(ii) Amendment to Tariff Policy (20.1.2011) 296

5. Rural Electrification Policy 2976. Notification for removal of Difficulties issued under the Electricity Act, 2003

i) Inclusion of measures to control theft in Electricity Supply Code 311(Notification dated 8.6.2005)

ii) Exemption from payment of surcharge on direct sale or supply of electricity 313under the authorizations/Consent under the repealed laws(Notification dated 8.6.2005)

S. No. Page No.iii) Disposal of free electricity received by a State Government from hydro power 315

generating stations (Notification dated 8.6.2005)iv) Supply of electricity by the generating companies to the housing colonies of its 317

operating staff (Notification dated 8.6.2005)v) Establishment, operation or maintenance of dedicated transmission lines 318

(Notification dated 8.6.2005)vi) Levy and collection of fees and charges for using transmission system 320

(Notification dated 8.6.2005)vii) Supply of electricity to housing colony of sub-station 321

(Notification dated 8.6.2005)viii) Supply of electricity to Cooperative Group Housing Society, supply of 322

electricity by distribution licensee at single point to a person for hisemployees (Notification dated 9.6.2005)

ix) Previous publication of regulations by State Commission 324(Notification dated 9.6.2005)

7. Clarifications under the Electricity Act, 2003.

i) Clarifications on Rule 8 of Electricity Rules 2005 regarding approval by PPA 327by Appropriate Commission for Inter-State Projects (dated 28.8.2006)

ii) Clarification on setting up of generating station (dated 9.8.2007) 328iii) Clarification on Captive Power Plant (dated 6.8.2007) 329iv) Regulatory jurisdiction over the DVC under the Electricity Act, 2003 330

(dated 2.6.2005)v) Clarification regarding supply obligation in respect of DVC (dated 27.11.2007) 331vi) Applicability of provisions of section 126 and 135 of the Electricity Act, 332

2003 (dated 12.11.2007)vii) On compounding of theft offence (dated 26.10.2005). 333viii) Clarification on Tariff Policy regarding PPA before 6.1.2006 (dated 28.3.2006) 334ix) Clarification on Tariff Policy regarding PPA before 6.1.2006 (dated 15.2.2008). 336x) Clarification regarding Para 5.1 of Tariff Policy (dated 29.11.2010) 337xi) Clarification regarding Para 5.1 and 7.1 of Tariff Policy (dated 9.12.2010) 338xii) Clarification regarding Para 6.4 of Tariff Policy (dated 19.4.2011) 340xiii) Clarification regarding short-term purchase of power by a DISCOM (13.4.2011) 342xiv) Clarification regarding meter rent in power sector under Electricity Act, 2003 343

(dated 28.2.2011).xv) Clarification on capitive Power Plant (dated 7.10.2010) 344

8. Competitive Bidding Guidelines for procurement of Electricity (Contains 345amendments dated 30.3.2006, 18.8.2006, 27.9.2007, 27.3.2009 and 21.7.2010)

9. Resolution on Establishment of Regional Power Committees for the five 365regions (dated 25.5.2005) (amendments made vide resolution29.11.2005 and 9.5.2008 incorporated)9 (a) Amendments to the Resolution on Regional Power Committees 378

(dated 29.11.2005)9 (b) Amendments to the Resolution on Regional Power Committees 386

(dated 9.5.2008)10. Resolution on Constitution of Coordination Forum by the Central Government 391

(dated 19.2.2008).11. Notification on Joint Electricity Regulatory Commissions.

i) Notification on constitution of Joint Electricity Regulatory Commission for 397all Union Territories except Delhi (dated 2.5.2005).

ii) Notification for inclusion of Goa in JERC for Union Territories 398(dated 30.5.2008).

iii) Joint Electricity Regulatory Commission for Union Territories except Delhi 399(Salary, Allowances and other Conditions of Services of Chairperson and Member)Rules, 2007 (dated 19th March, 2007).

iv) Notification on constitution of Joint Electricity Regulatory Commission for 402Manipur and Mizoram (dated 18.1.2005).

v) Joint Electricity Regulatory Commission for the States of Manipur and 403Mizoram (Salaries, Allowances and other Conditions of Services of Chairpersonand Members) Rules, 2006 (dated 14.8.2006).

vi) JERC for Goa & UTs (Preparation of Annual Report) Rules, 2010 405(Notification dated 21.6.2010)

vii) JERC for Manipur & Mizoram (Preparation of Annual Report) Rules, 2010 407(Notification dated 21.6.2010)

12. Energy Conservation Act, 2001 409Energy Conservation (Amendment) Act, 2010 443

13. Rules and Regulations under Energy Conservation Act 449i) The Bureau of Energy Efficiency Appointment and Terms and 451

Conditions of Service of the Director-General Rules, 2003(Notification dated 24/9/2003)(Amendment made vide notification dt. 2/9/05 incorporated)

ii) The Bureau of Energy Efficiency Appointment and Terms and 453Conditions of Service of the Director-General (Amendment) Rules, 2005

iii) The Bureau of Energy Efficiency (Annual Report) Rules, 2005 454[Notification dated 5/9/2005](Amendment made vide notification dt. 29/11/2006 incorporated)

iv) The Bureau of Energy Efficiency (Annual Report) Amendment Rules, 2006 457(Notification dated 29/11/2006)

S. No. Page No.

v) The Bureau of Energy Efficiency (Appointment of Secretary) Rules, 2004 458[Notification dated 15/6/2004]

vi) The Bureau of Energy Efficiency [Procedures for Conduct of Business 460of the Governing Council] Regulations 2005(Notification dated 27/9/2005)

vii) The Bureau of Energy Efficiency 462(Form of Annual Statement of Accounts and Records) Rules, 2007(Notification dated 28/2/2007)

viii) The Bureau of Energy Efficiency (Appointment of Members, 497Manner of Filling Vacancies, Fees and Allowances andProcedure for Discharging their Functions) Rules2007(Notification dated 3/8/2007)

ix) The Energy Conservation 500(Minimum Qualification for Energy Managers) Rules, 2006(Notification dated 8/12/2006)

x) The Energy Conservation (The form and manner for submission 502of report on the status of energy consumption by the designated consumers) Rules, 2007 (Notification dated 2/3/2007)

xi) Altered List of Energy Intensive Industries 508and other establishments[Notification dated 12/3/2007]

xii) The Energy Conservation [Form and Manner and Time for 511Furnishing Information with Regard to Energy Consumedand Action Taken on Recommendations of AccreditedEnergy Auditor] Rules, 2008(Notification dated 26/6/2008)

xiii) The Bureau of Energy Efficiency (Advisory Committees) 521Regulation 2008 (Notification dated 25/11/2008)

xiv) Energy Conservation (Manner of holding Inquiry) Rules, 2009 527(Notification dated 25/02/2009)

xv) Bureau of Energy Efficiency (the manner and intervals of time for 528conduct of energy audit) Regulations, 2008 (Notification dated 10.6.2008);

xvi) Bureau of Energy Efficiency (Certification Procedures for Energy Managers) 544Regulations, 2009 (Notification dated 15.07.2009.

xvii) Bureau of Energy Efficiency (Qualifications for Accredited Energy Auditors 558and Maintenance of their List) Regulations, 2010(Notification dated 31.03.2010);

xviii) Bureau of Energy Efficiency (Manner and Intervals of Time for 569Conduct of Energy Audit) Regulations, 2010(Notification dated 28.04.2010)

14. Award Scheme of Energy Conservation 585

15. Scheme for Energy Efficiency Labeling 589

16. Energy Conservation Building Code (ECBC) 61717. Guidelines for Accelerated Power Development and Reforms Programme 621

(APDRP)18. Tariff based Competitive- bidding Guidelines for Transmission Service 637

19. Guidelines for Encouraging Competition in Development of Transmission System 645

20. Revised Mega Power Project Policy 65121. Concept of Ultra Mega Power Projects (UMPPs) 65522. Notification on Operationalisation of Power System Operation 661

Corporation Limited (POSOCO) (dated 27.9.2010)23. Rajiv Gandhi Grameen Vidyutikaran Yojana Scheme 665

(a) RGGVY Web Portal and Milestone Based Project Monitoring24. Decentralised Distributed Generation (DDG) Scheme Under RGGVY 67325. Rural Area Notification 701

26. A Scheme for Supply of Electricity in 5 km Area around Central Power Plants 705

27. Guidelines for taking Renovation & Modernization 711

28. Hydro Policy 721

29. Coal Allotment Procedure 739

30. Award Scheme for Generation, Transmission and Distribution 749

31. Formula for allocation of Power 753

32. Subject Index 761

1Chapter 1The Electricity Act, 2003

[Contains amendments to the Act vide Electricity (Amendment)Act, 2003 and Electricity (Amendment) Act, 2007]

3THE ELECTRICITY ACT, 2003

[No. 36 OF 2003]An Act to consolidate the laws relating to generation, transmission,distribution, trading and use of electricity and generally for takingmeasures conducive to development of electricity industry,promoting competition therein, protecting interest of consumers andsupply of electricity to all areas, rationalisation of electricity tariff,ensuring transparent policies regarding subsidies, promotion ofefficient and environmentally benign policies, constitution ofCentral Electricity Authority, Regulatory Commissions andestablishment of Appellate Tribunal and for matters connectedtherewith or incidental thereto.Be it enacted by Parliament in the Fifty- fourth Year of the Republic ofIndia as follows: -

PART I

PRELIMINARY1. (1) This Act may be called the Electricity Act, 2003.

(2) It extends to the whole of India except the State of Jammuand Kashmir.

(3) It shall come into force on such date1 as the CentralGovernment may, by notification, appoint:

Provided that different dates may be appointed for different provisionsof this Act and any reference in any such provision to thecommencement of this Act shall be construed as a reference to thecoming into force of that provision.2. In this Act, unless the context otherwise requires

(1) Appellate Tribunal means the Appellate Tribunal forElectricity established under section 110;

Short title,extent andcommencement

Definitions

EXTRAORDINARY PART II SECTION 1

No. 39 NEW DELHI. MONDAY, JUNE 2, 2003

MINISTRY OF LAW AND JUSTICE(Legislative Department)

New Delhi, the 2nd June, 2003

The following Act of Parliament received the assent of the President on the 26th May, 2003, and ishereby published for general information:-

1Sections 1 to 120 and sections 122 to 185 came into force on 10-6-2003, vide S.O. 669(E), dated 10th June 2003,published in the Gazette of India, Extra., Pt. II, Sec. 3(ii), dated 10th June, 2003.

4(2) appointed date means such date as the CentralGovernment may, by notification, appoint;

(3) area of supply means the area within which adistribution licensee is authorised by his licence to supplyelectricity;

(4) Appropriate Commission means the Central RegulatoryCommission referred to in sub-section (1) of section 76or the State Regulatory Commission referred to in section82 or the Joint Commission referred to in section 83, asthe case may be;

(5) Appropriate Government means, -(a) the Central Government, -

(i) in respect of a generating company whollyor partly owned by it;

(ii) in relation to any inter-State generation,transmission, trading or supply of electricityand with respect to any mines, oil-fields,railways, national highways, airports,telegraphs, broadcasting stations and anyworks of defence, dockyard, nuclear powerinstallations;

(iii) in respect of the National Load DespatchCentre; and Regional Load Despatch Centre;

(iv) in relation to any works or electric installationbelonging to it or under its control ;

(b) in any other case, the State Government havingjurisdiction under this Act;

(6) Authority means the Central Electricity Authorityreferred to in sub-section(1) of section 70;

(7) Board means, a State Electricity Board, constitutedbefore the commencement of this Act, under sub-section(I) of section 5 of the Electricity (Supply) Act, 1948;

(8) Captive generating plant means a power plant set upby any person to generate electricity primarily for hisown use and includes a power plant set up by any co-operative society or association of persons for generatingelectricity primarily for use of members of such co-operative society or association;

(9) Central Commission means the Central ElectricityRegulatory Commission referred to in sub-section (1) ofsection 76;

(10) Central Transmission Utility means any Governmentcompany which the Central Government may notifyunder sub-section (1) of section 38;

(11) Chairperson means the Chairperson of the Authorityor Appropriate Commission or the Appellate Tribunal asthe case may be;

54 of 1948

5(12) Cogeneration means a process which simultaneouslyproduces two or more forms of useful energy (includingelectricity);

(13) company means a company formed and registered underthe Companies Act, 1956 and includes any bodycorporate under a Central, State or Provincial Act;

(14) conservation means any reduction in consumption ofelectricity as a result of increase in the efficiency in supplyand use of electricity;

(15) consumer means any person who is supplied withelectricity for his own use by a licensee or the Governmentor by any other person engaged in the business ofsupplying electricity to the public under this Act or anyother law for the time being in force and includes anyperson whose premises are for the time being connectedfor the purpose of receiving electricity with the works ofa licensee, the Government or such other person, as thecase may be;

(16) Dedicated Transmission Lines means any electricsupply-line for point to point transmission which arerequired for the purpose of connecting electric lines orelectric plants of a captive generating plant referred to insection 9 or generating station referred to in section 10 toany transmission lines or sub-stations or generatingstations or the load centre, as the case may be;

(17) distribution licensee means a licensee authorised tooperate and maintain a distribution system for supplyingelectricity to the consumers in his area of supply;

(18) distributing main means the portion of any main withwhich a service line is, or is intended to be, immediatelyconnected;

(19) distribution system means the system of wires andassociated facilities between the delivery points on thetransmission lines or the generating station connectionand the point of connection to the installation of theconsumers;

(20) electric line means any line which is used for carryingelectricity for any purpose and includes(a) any support for any such line, that is to say, any

structure, tower, pole or other thing in, on, by orfrom which any such line is, or may be, supported,carried or suspended; and

(b) any apparatus connected to any such line for thepurpose of carrying electricity;

(21) Electrical Inspector means a person appointed as suchby the Appropriate Government under sub-section (1) ofsection 162 and also includes Chief Electrical Inspector;

(22) electrical plant means any plant, equipment, apparatus

1 of 1956

6or appliance or any part thereof used for, or connectedwith, the generation, transmission, distribution or supplyof electricity but does not include-(a) an electric line; or(b) a meter used for ascertaining the quantity of

electricity supplied to any premises; or (c) an electrical equipment, apparatus or appliance

under the control of a consumer;(23) electricity means electrical energy-

(a) generated, transmitted, supplied or traded for anypurpose; or

(b) used for any purpose except the transmission of amessage;

(24) Electricity Supply Code means the Electricity SupplyCode specified under section 50;

(25) electricity system means a system under the control ofa generating company or licensee, as the case may be,having one or more -(a) generating stations; or(b) transmission lines; or(c) electric lines and sub-stations,and when used in the context of a State or the Union, theentire electricity system within the territories thereof;

(26) electricity trader means a person who has been granteda licence to undertake trading in electricity under section12;

(27) franchisee means a person authorised by a distributionlicensee to distribute electricity on its behalf in aparticular area within his area of supply;

(28) generating company means any company or bodycorporate or association or body of individuals, whetherincorporated or not, or artificial juridical person, whichowns or operates or maintains a generating station;

(29) generate means to produce electricity from a generatingstation for the purpose of giving supply to any premisesor enabling a supply to be so given;

(30) generating station or station means any station forgenerating electricity, including any building and plantwith step-up transformer, switch yard, switch-gear, cablesor other appurtenant equipment, if any used for thatpurpose and the site thereof, a site intended to be usedfor a generating station, and any building used forhousing the operating staff of a generating station, andwhere electricity is generated by water-power, includespenstocks, head and tail works, main and regulatingreservoirs, dams and other hydraulic works, but does notin any case include any sub-station;

7(31) Government company shall have the meaning assignedto it in section 617 of the Companies Act, 1956;

(32) grid means the high voltage backbone system of inter-connected transmission lines, sub-stations andgenerating plants;

(33) Grid Code means the Grid Code specified by the CentralCommission under clause (h) of sub-station (1) ofsection 79;

(34) Grid Standards means the Grid Standards specifiedunder clause (d) of section 73 by the Authority;

(35) high voltage line means an electric line or cable of anominal voltage as may be specified by the Authorityfrom time to time;

(36) inter-State transmission system includes -(i) any system for the conveyance of electricity by

means of main transmission line from the territoryof one State to another State;

(ii) the conveyance of electricity across the territoryof an intervening State as well as conveyancewithin the State which is incidental to such inter-State transmission of electricity;

(iii) the transmission of electricity within the territoryof a State on a system built, owned, operated,maintained or controlled by a Central TransmissionUtility.

(37) intra -State transmission system means any systemfor transmission of electricity other than an inter-Statetransmission system ;

(38) licence means a licence granted under section 14;(39) licensee means a person who has been granted a

licence under section 14;

(40) line means any wire, cable, tube , pipe, insulator,conductor or other similar thing (including its casing orcoating) which is designed or adapted for use in carryingelectricity and includes any line which surrounds orsupports, or is surrounded or supported by or isinstalled in close proximity to, or is supported, carried orsuspended in association with, any such line;

(41) local authority means any Nagar Panchayat, MunicipalCouncil, municipal corporation, panchayat constitutedat the village, intermediate and district levels, body of

1 of 1956

8port commissioners or other authority legally entitled to,or entrusted by the Union or any State Government with,the control or management of any area or local fund;

(42) main means any electric supply-``` line through whichelectricity is, or is intended to be, supplied ;

(43) Member means the Member of the AppropriateCommission or Authority or Joint Commission, or theAppellate Tribunal, as the case may be, and includes theChairperson of such Commission or Authority orappellate tribunal;

(44) National Electricity Plan means the National ElectricityPlan notified under sub-section (4) of section 3;

(45) National Load Despatch Centre means the Centreestablished under sub-section (1) of section 26;

(46) notification means notification published in the OfficialGazette and the expression notify shall be construedaccordingly;

(47) open access means the non-discriminatory provisionfor the use of transmission lines or distribution system orassociated facilities with such lines or system by anylicensee or consumer or a person engaged in generationin accordance with the regulations specified by theAppropriate Commission;

(48) overhead line means an electric line which is placedabove the ground and in the open air but does not includelive rails of a traction system;

(49) person shall include any company or body corporateor association or body of individuals, whetherincorporated or not, or artificial juridical person;

(50) power system means all aspects of generation,transmission, distribution and supply of electricity andincludes one or more of the following, namely:-

(a) generating stations;(b) transmission or main transmission lines;(c) sub-stations;(d) tie-lines;(e) load despatch activities;(f) mains or distribution mains;(g) electric supply-lines;(h) overhead lines;(i) service lines;(j) works;

9(51) premises includes any land, building or structure;(52) prescribed means prescribed by rules made by the

Appropriate Government under this Act;

(53) public lamp means an electric lamp used for the lightingof any street;

(54) real time operation means action to be taken at a giventime at which information about the electricity system ismade available to the concerned Load Despatch Centre;

(55) Regional Power Committee means a committeeestablished by resolution by the Central Government fora specified region for facilitating the integrated operationof the power systems in that region;

(56) Regional Load Despatch Centre means the centreestablished under sub-section (1) of section 27;

(57) regulations means regulations made under this Act;(58) repealed laws means the Indian Electricity Act, 1910,

the Electricity (Supply) Act, 1948 and the ElectricityRegulatory Commissions Act, 1998 repealed by section185;

(59) rules means rules made under this Act;(60) schedule means the schedule to this Act;(61) service-line means any electric supply line through

which electricity is, or is intended to be,supplied -

(a) to a single consumer either from a distributing mainor immediately from the Distribution Licenseespremises; or

(b) from a distributing main to a group of consumerson the same premises or on contiguous premisessupplied from the same point of the distributingmain;

(62) specified means specified by regulations made by theAppropriate Commission or the Authority, as the casemay be, under this Act;

(63) stand alone system means the electricity system set upto generate power and distribute electricity in a specifiedarea without connection to the grid;

(64) State Commission means the State Electricity RegulatoryCommission constituted under sub-section (1) of section82 and includes a Joint Commission constituted undersub-section (1) of section 83;

(65) State Grid Code means the State Grid Code referredunder clause (h) of sub-section (1) of section 86;

9 of 191054 of 194814 of 1998

10

(66) State Load Despatch Centre means the centreestablished under sub-section (1) of section 31;

(67) State Transmission Utility means the Board or theGovernment company specified as such by the StateGovernment under sub-section (1) of section 39;

(68) street includes any way, road, lane, square, court, alley,passage or open space, whether a thoroughfare or not,over which the public have a right of way, and also theroadway and footway over any public bridge or causeway;

(69) sub-station means a station for transforming orconverting electricity for the transmission or distributionthereof and includes transformers, converters,switchgears, capacitors, synchronous condensers,structures, cable and other appurtenant equipment andany buildings used for that purpose and the site thereof;

(70) supply, in relation to electricity, means the sale ofelectricity to a licensee or consumer;

(71) trading means purchase of electricity for resale thereofand the expression trade shall be construedaccordingly;

(72) transmission lines means all high pressure cables andoverhead lines (not being an essential part of thedistribution system of a licensee) transmitting electricityfrom a generating station to another generating stationor a sub-station, together with any step-up and step-down transformers, switch-gear and other worksnecessary to and used for the control of such cables oroverhead lines, and such buildings or part thereof as maybe required to accommodate such transformers, switch-gear and other works;

(73) transmission licensee means a licensee authorised toestablish or operate transmission lines;

(74) transmit means conveyance of electricity by means oftransmission lines and the expression transmission shallbe construed accordingly;

(75) utility means the electric lines or electrical plant, andincludes all lands, buildings, works and materials attachedthereto belonging to any person acting as a generatingcompany or licensee under the provisions of this Act;

(76) wheeling means the operation whereby the distributionsystem and associated facilities of a transmission licenseeor distribution licensee, as the case may be, are used byanother person for the conveyance of electricity onpayment of charges to be determined under section 62;

11

(77) works includes electric line, and any building, plant,machinery, apparatus and any other thing of whateverdescription required to transmit, distribute or supplyelectricity to the public and to carry into effect the objectsof a licence or sanction granted under this Act or anyother law for the time being in force.

PART II

NATIONAL ELECTRICITY POLICY AND PLAN

3. (1) The Central Government shall, from time to time, preparethe National Electricity Policy and tariff policy, inconsultation with the State Governments and theAuthority for development of the power system basedon optimal utilisation of resources such as coal, naturalgas, nuclear substances or materials, hydro and renewablesources of energy.

(2) The Central Government shall publish National ElectricityPolicy and tariff policy from time to time.

(3) The Central Government may, from time to time, inconsultation with the State Governments and theAuthority, review or revise, the National Electricity Policyand tariff policy referred to in sub-section (1) .

(4) The Authority shall prepare a National Electricity Plan inaccordance with the National Electricity Policy and notifysuch plan once in five years:

Provided that the Authority while preparing the NationalElectricity Plan shall publish the draft National ElectricityPlan and invite suggestions and objections thereon fromlicensees, generating companies and the public withinsuch time as may be prescribed:

Provided further that the Authority shall -

(a) notify the plan after obtaining the approval of theCentral Government;

(b) revise the plan incorporating therein the directions,if any, given by the Central Government whilegranting approval under clause (a).

(5) The Authority may review or revise the NationalElectricity Plan in accordance with the National ElectricityPolicy.

4. The Central Government shall, after consultation with the StateGovernments, prepare and notify a national policy, permittingstand alone systems (including those based on renewable

NationalElectricityPolicy andPlan

National policyon stand alonesystems forrural areas andnon-

conventionalenergy systems

12

sources of energy and non-conventional sources of energy )for rural areas.

5. The Central Government shall also formulate a national policy,in consultation with the State Governments and the StateCommissions, for rural electrification and for bulk purchase ofpower and management of local distribution in rural areasthrough Panchayat Institutions, users associations, co-operative socities, non-Governmental organisations orfranchisees.

16. The concerned State Government and the Central Governmentshall jointly endeavour to provide access to electricity to allareas including villages and hamlets through rural electricityinfrastructure and electrification of households.

PART IIIGENERATION OF ELECTRICITY

7. Any generating company may establish, operate and maintaina generating station without obtaining a licence under this Actif it complies with the technical standards relating toconnectivity with the grid referred to in clause (b) of section73.

8. (1) Notwithstanding anything contained in section 7, anygenerating company intending to set-up a hydro-generating station shall prepare and submit to theAuthority for its concurrence, a scheme estimated toinvolve a capital expenditure exceeding such sum, asmay be fixed by the Central Government, from time totime, by notification.

(2) The Authority shall, before concurring in any schemesubmitted to it under sub-section (1) have particularregard to, whether or not in its opinion,-(a) the proposed river-works will prejudice the

prospects for the best ultimate development of theriver or its tributaries for power generation,consistent with the requirements of drinking water,irrigation, navigation, flood-control, or other publicpurposes, and for this purpose the Authority shallsatisfy itself, after consultation with the StateGovernment, the Central Government, or such otheragencies as it may deem appropriate, that anadequate study has been made of the optimumlocation of dams and other river-works;

(b) the proposed scheme meets, the norms regardingdam design and safety.

(3) Where a multi-purpose scheme for the development of

National policyon

electrificationand localdistribution inrural areas.

JointResponsibilityof StateGovernmentand CentralGovernmentin ruralelectrification

GeneratingCompany andrequirement forsetting up ofgeneratingstation

Hydro-electricgeneration

1 Subs. By Act 26 of 2007, sec. 2, for section 6 (w.e.f. 15-6-2007). Section 6, before substitution stood as under:

6. Obligations to supply electricity to rural areas.- The Appropriate Government shall endeavour to supplyelectricity to all rural areas including villages and hamlets.

13

any river in any region is in operation, the State Governmentand the generating company shall co-ordinate their activitieswith the activities of the person responsible for such scheme inso far as they are inter-related.

9. (1) Notwithstanding anything contained in this Act, a personmay construct, maintain or operate a captive generatingplant and dedicated transmission lines:

Provided that the supply of electricity from the captivegenerating plant through the grid shall be regulated inthe same manner as the generating station of agenerating company.1Provided further that no licence shall be required underthis Act for supply of electricity generated from a captivegenerating plant to any licencee in accordance with theprovisions of this Act and the rules and regulations madethereunder and to any consumer subject to the regulationsmade under sub-section (2) of section 42.

(2) Every person, who has constructed a captive generatingplant and maintains and operates such plant, shall havethe right to open access for the purposes of carryingelectricity from his captive generating plant to thedestination of his use:

Provided that such open access shall be subject toavailability of adequate transmission facility and suchavailability of transmission facility shall be determinedby the Central Transmission Utility or the StateTransmission Utility, as the case may be:

Provided further that any dispute regarding theavailability of transmission facility shall be adjudicatedupon by the Appropriate Commission.

10. (1) Subject to the provisions of this Act, the duties of agenerating company shall be to establish, operate andmaintain generating stations, tie-lines, sub-stations anddedicated transmission lines connected therewith inaccordance with the provisions of this Act or the rules orregulations made thereunder.

(2) A generating company may supply electricity to anylicensee in accordance with this Act and the rules andregulations made thereunder and may, subject to theregulations made under sub-section (2) of section 42,supply electricity to any consumer.

(3) Every generating company shall -(a) submit technical details regarding its generating

stations to the Appropriate Commission and theAuthority;

CaptiveGeneration

Duties ofGeneratingCompanies

1Ins. By Act 26 of 2007, sec. 3 (w.e.f. 15-6-2007).

14

(b) co-ordinate with the Central Transmission Utilityor the State Transmission Utility, as the case maybe, for transmission of the electricity generated byit.

11. (1) The Appropriate Government may specify that agenerating company shall, in extraordinary circumstancesoperate and maintain any generating station inaccordance with the directions of that Government.

Explanation. - For the purposes of this section, theexpression extraordinary circumstances meanscircumstances arising out of threat to security of theState, public order or a natural calamity or such othercircumstances arising in the public interest.

(2) The Appropriate Commission may offset the adversefinancial impact of the directions referred to in sub-section (1) on any generating company in such manneras it considers appropriate.

PART IV

LICENSING

12. No person shall

(a) transmit electricity; or(b) distribute electricity; or(c) undertake trading in electricity,

unless he is authorised to do so by a licence issuedunder section 14, or is exempt under section 13.

13. The Appropriate Commission may, on the recommendations, ofthe Appropriate Government, in accordance with the nationalpolicy formulated under section 5 and in public interest, direct,by notification that subject to such conditions and restrictions,if any, and for such period or periods, as may be specified inthe notification, the provisions of section 12 shall not apply toany local authority, Panchayat Institution, users association,co-operative societies, non-governmental organizations, orfranchisees:

14. The Appropriate Commission may, on an application made toit under section 15, grant any person licence to any person -

(a) to transmit electricity as a transmission licensee; or(b) to distribute electricity as a distribution licensee; or(c) to undertake trading in electricity as an electricity trader,

in any area as may be specified in the licence:Provided that any person engaged in the business of

Direction togeneratingcompanies

Authorisedpersons totransmit,supply, etc.,electricity

Power toexempt

Grant ofLicence

15

transmission or supply of electricity under the provisions ofthe repealed laws or any Act specified in the Schedule on orbefore the appointed date shall be deemed to be a licenseeunder this Act for such period as may be stipulated in thelicence, clearance or approval granted to him under the repealedlaws or such Act specified in the Schedule, and the provisionsof the repealed laws or such Act specified in the Schedule inrespect of such licence shall apply for a period of one yearfrom the date of commencement of this Act or such earlierperiod as may be specified, at the request of the licensee, bythe Appropriate Commission and thereafter the provisions ofthis Act shall apply to such business:Provided further that the Central Transmission Utility or theState Transmission Utility shall be deemed to be a transmissionlicensee under this Act:Provided also that in case an Appropriate Government transmitselectricity or distributes electricity or undertakes trading inelectricity, whether before or after the commencement of thisAct, such Government shall be deemed to be a licensee underthis Act, but shall not be required to obtain a licence under thisAct:Provided also that the Damodar Valley Corporation, establishedunder sub-section (1) of section 3 of the Damodar ValleyCorporation Act, 1948, shall be deemed to be a licensee underthis Act but shall not be required to obtain a licence under thisAct and the provisions of the Damodar Valley Corporation Act,1948, in so far as they are not inconsistent with the provisionsof this Act, shall continue to apply to that Corporation:Provided also that the Government company or the companyreferred to in sub-section (2) of section 131 of this Act and thecompany or companies created in pursuance of the Actsspecified in the Schedule, shall be deemed to be a licenseeunder this Act:Provided also that the Appropriate Commission may grant alicence to two or more persons for distribution of electricitythrough their own distribution system within the same area,subject to the conditions that the applicant for grant of licencewithin the same area shall, without prejudice to the otherconditions or requirements under this Act, comply with theadditional requirements 1relating to the capital adequacy,creditworthiness, or code of conduct as may be prescribed bythe Central Government, and no such applicant, who complieswith all the requirements for grant of licence, shall be refusedgrant of licence on the ground that there already exists a licenseein the same area for the same purpose:Provided also that in a case where a distribution licensee

14 of 1948

1Subs. By Act 57 of 2003, sec. 2, for (including the capital adequacy, creditworthiness, or code of conduct) (w.e.f.27-1-2004).

16

proposes to undertake distribution of electricity for a specifiedarea within his area of supply through another person, thatperson shall not be required to obtain any separate licencefrom the concerned State Commission and such distributionlicensee shall be responsible for distribution of electricity inhis area of supply:

Provided also that where a person intends to generate anddistribute electricity in a rural area to be notified by the StateGovernment, such person shall not require any licence forsuch generation and distribution of electricity, but he shallcomply with the measures which may be specified by theAuthority under section 53:

Provided also that a distribution licensee shall not require alicence to undertake trading in electricity.

15. (1) Every application under section 14 shall be made insuch form and in such manner as may be specified bythe Appropriate Commission and shall be accompaniedby such fee as may be prescribed.

(2) Any person who has made an application for grant oflicence shall, within seven days after making suchapplication, publish a notice of his application with suchparticulars and in such manner as may be specified anda licence shall not be granted -

(i) until the objections, if any, received by theAppropriate Commission in response topublication of the application have beenconsidered by it:

Provided that no objection shall be so consideredunless it is received before the expiration of thirtydays from the date of the publication of such noticeas aforesaid;

(ii) until, in the case of an application for a licence foran area including the whole or any part of anycantonment, aerodrome, fortress, arsenal, dockyardor camp or of any building or place in theoccupation of the Government for defencepurposes, the Appropriate Commission hasascertained that there is no objection to the grantof the licence on the part of the Central Government.

(3) A person intending to act as a transmission licenseeshall, immediately on making the application, forward acopy of such application to the Central TransmissionUtility or the State Transmission Utility, as the case maybe.

(4) The Central Transmission Utility or the State

Procedure forGrant ofLicence

17

Transmission Utility, as the case may be, shall, withinthirty days after the receipt of the copy of the applicationreferred to in sub-section (3), send its recommendations,if any, to the Appropriate Commission:

Provided that such recommendations shall not be binding onthe Commission.

(5) Before granting a licence under section 14, theAppropriate Commission shall -

(a) publish a notice in two such daily newspapers, asthat Commission may consider necessary, statingthe name and address of the person to whom itproposes to issue the licence;

(b) consider all suggestions or objections and therecommendations, if any, of the CentralTransmission Utility or State Transmission Utility,as the case may be.

(6) Where a person makes an application under sub-section(1) of section 14 to act as a licensee, the AppropriateCommission shall, as far as practicable, within ninetydays after receipt of such application, -

(a) issue a licence subject to the provisions of thisAct and the rules and regulations made thereunder;or

(b) reject the application for reasons to be recorded inwriting if such application does not conform to theprovisions of this Act or the rules and regulationsmade thereunder or the provisions of any otherlaw for the time being in force:

Provided that no application shall be rejected unless theapplicant has been given an opportunity of being heard.

(7) The Appropriate Commission shall, immediately afterissue of licence, forward a copy of the licence to theAppropriate Government , Authority, local authority,and to such other person as the Appropriate Commissionconsiders necessary.

(8) A licence shall continue to be in force for a period oftwenty- five years unless such licence is revoked.

16. The Appropriate Commission may specify any general orspecific conditions which shall apply either to a licensee orclass of licensees and such conditions shall be deemed to beconditions of such licence:

Provided that the Appropriate Commission shall, within oneyear from the appointed date, specify any general or specific

Conditions oflicence.

18

conditions of licence applicable to the licensees referred to inthe first, second, third, fourth and fifth provisos to section 14after the expiry of one year from the commencement of thisAct.

17. (1) No licensee shall, without prior approval of theAppropriate Commission, -

(a) undertake any transaction to acquire by purchaseor takeover or otherwise, the utility of any otherlicensee; or

(b) merge his utility with the utility of any other licensee:Provided that nothing contained in this sub-section shallapply if the utility of the licensee is situate in a State other thanthe State in which the utility referred to in clause (a) or clause(b) is situate.(2) Every licensee shall, before obtaining the approval

under sub-section (1), give not less than one monthsnotice to every other licensee who transmits or distributes,electricity in the area of such licensee who applies forsuch approval.

(3) No licensee shall at any time assign his licence or transferhis utility, or any part thereof, by sale, lease , exchangeor otherwise without the prior approval of the AppropriateCommission.

(4) Any agreement relating to any transaction specified insub-section (1) or sub-section (3), unless made with, theprior approval of the Appropriate Commission, shall bevoid.

18. (1) Where in its opinion the public interest so permits, theAppropriate Commission, may, on the application of thelicensee or otherwise, make such alterations andamendments in the terms and conditions of his licence asit thinks fit:

Provided that no such alterations or amendments shallbe made except with the consent of the licensee unlesssuch consent has, in the opinion of the AppropriateCommission, been unreasonably withheld.

(2) Before any alterations or amendments in the licence aremade under this section, the following provisions shallhave effect, namely: -

(a) where the licensee has made an application undersub-section (1) proposing any alteration ormodifications in his licence, the licensee shallpublish a notice of such application with suchparticulars and in such manner as may be specified;

Licensee not todo certainthings.

Amendmentof licence

19

(b) in the case of an application proposing alterationsor modifications in the area of supply comprisingthe whole or any part of any cantonment,aerodrome, fortress, arsenal, dockyard or camp orof any building or place in the occupation of theGovernment for defence purposes, the AppropriateCommission shall not make any alterations ormodifications except with the consent of the CentralGovernment;

(c) where any alterations or modifications in a licenceare proposed to be made otherwise than on theapplication of the licensee, the AppropriateCommission shall publish the proposed alterationsor modifications with such particulars and in suchmanner as may be specified;

(d) the Appropriate Commission shall not make anyalterations or modification unless all suggestionsor objections received within thirty days from thedate of the first publication of the notice have beenconsidered.

19. (1) If the Appropriate Commission, after making an enquiry,is satisfied that public interest so requires, it may revokea licence in any of the following cases, namely: -

(a) where the licensee, in the opinion of the AppropriateCommission, makes wilful and prolonged default indoing anything required of him by or under thisAct or the rules or regulations made thereunder;

(b) where the licensee breaks any of the terms orconditions of his licence the breach of which isexpressly declared by such licence to render it liableto revocation;

(c) where the licensee fails, within the period fixed inthis behalf by his licence, or any longer period whichthe Appropriate Commission may have grantedtherefor

(i) to show, to the satisfaction of the AppropriateCommission, that he is in a position fully andefficiently to discharge the duties andobligations imposed on him by his licence;or

(ii) to make the deposit or furnish the security,or pay the fees or other charges requiredby his licence;

(d) where in the opinion of the Appropriate Commissionthe financial position of the licensee is such that he

Revocation oflicence

20

is unable fully and efficiently to discharge the dutiesand obligations imposed on him by his licence.

(2) Where in its opinion the public interest so requires, theAppropriate Commission may, on application, or with theconsent of the licensee, revoke his licence as to the wholeor any part of his area of distribution or transmission ortrading upon such terms and conditions as it thinks fit.

(3) No licence shall be revoked under sub-section (1) unlessthe Appropriate Commission has given to the licenseenot less than three monthsnotice, in writing, stating thegrounds on which it is proposed to revoke the licence,and has considered any cause shown by the licenseewithin the period of that notice, against the proposedrevocation.

(4) The Appropriate Commission may, instead of revoking alicence under sub-section (1), permit it to remain in forcesubject to such further terms and conditions as it thinksfit to impose, and any further terms or conditions soimposed shall be binding upon and be observed by thelicensee and shall be of like force and effect as if theywere contained in the licence.

(5) Where the Commission revokes a licence under thissection, it shall serve a notice of revocation upon thelicensee and fix a date on which the revocation shall takeeffect.

(6) Where an Appropriate Commission has given notice forrevocation of licence under sub-section (5), withoutprejudice to any penalty which may be imposed orprosecution proceeding which may be initiated under thisAct, the licensee may, after prior approval of thatCommission, sell his utility to any person who is foundeligible by that Commission for grant of licence.

20. (1) Where the Appropriate Commission revokes undersection 19 the licence of any licensee , the followingprovisions shall apply, namely:-

(a) the Appropriate Commission shall inviteapplications for acquiring the utility of the licenseewhose licence has been revoked and determinewhich of such applications should be accepted,primarily on the basis of the highest and best priceoffered for the utility;

(b) the Appropriate Commission may, by notice inwriting, require the licensee to sell his utility andthereupon the licensee shall sell his utility tothe person (hereafter in this section referred to as

Sale of utilitiesof licensees.

21

the purchaser) whose application has beenaccepted by that Commission;

(c) all the rights, duties, obligations and liabilities ofthe licensee, on and from the date of revocation oflicence or on and from the date, if earlier, on whichthe utility of the licensee is sold to a purchaser,shall absolutely cease except for any liabilitieswhich have accrued prior to that date;

(d) the Appropriate Commission may make such interimarrangements in regard to the operation of the utilityas may be considered appropriate including theappointment of Administrators;

(e) The Administrator appointed under clause (d) shallexercise such powers and discharge such functionsas the Appropriate Commission may direct.

(2) Where a utility is sold under sub-section (1), the purchasershall pay to the licensee the purchase price of the utilityin such manner as may be agreed upon.

(3) Where the Appropriate Commission issues any noticeunder sub- section (1) requiring the licensee to sell theutility, it may, by such notice, require the licensee to deliverthe utility, and thereupon the licensee shall deliver on adate specified in the notice, the utility to the designatedpurchaser on payment of the purchase price thereof.

(4) Where the licensee has delivered the utility referred to insub- section(3) to the purchaser but its sale has not beencompleted by the date fixed in the notice issued underthat sub-section, the Appropriate Commission may, if itdeems fit, permit the intending purchaser to operate andmaintain the utility system pending the completion of thesale.

21. Where a utility is sold under section 20 or section 24, then,upon completion of the sale or on the date on which the utilityis delivered to the intending purchaser, as the case may be,whichever is earlier-

(a) the utility shall vest in the purchaser or the intendingpurchaser, as the case may be, free from any debt,mortgage or similar obligation of the licensee or attachingto the utility:

Provided that any such debt, mortgage or similar obligationshall attach to the purchase money in substitution for theutility; and

(b) the rights, powers, authorities, duties and obligations ofthe licensee under his licence shall stand transferred to

Vesting ofutility inpurchaser

22

the purchaser and such purchaser shall be deemed to bethe licensee.

22. (1) If the utility is not sold in the manner provided undersection 20 or section 24, the Appropriate Commissionmay, to protect the interest of consumers or in publicinterest, issue such directions or formulate such schemeas it may deem necessary for operation of the utility.

(2) Where no directions are issued or scheme is formulatedby the Appropriate Commission under sub-section (1),the licensee referred to in section 20 or section 24 maydispose of the utility in such manner as it may deem fit:

Provided that, if the licensee does not dispose of theutility, within a period of six months from the date ofrevocation under section 20 or section 24, the AppropriateCommission may cause the works of the licensee in, under,over, along, or across any street or public land to beremoved and every such street or public land to bereinstated, and recover the cost of such removal andreinstatement from the licensee.

23. If the Appropriate Commission is of the opinion that it isnecessary or expedient so to do for maintaining the efficientsupply, securing the equitable distribution of electricity andpromoting competition, it may, by order, provide for regulatingsupply, distribution, consumption or use thereof.

24. (1) If at any time the Appropriate Commission is of the opinionthat a distribution licensee

(a) has persistently failed to maintain uninterruptedsupply of electricity conforming to standardsregarding quality of electricity to the consumers;or

(b) is unable to discharge the functions or perform theduties imposed on it by or under the provisions ofthis Act; or

(c) has persistently defaulted in complying with anydirection given by the Appropriate Commissionunder this Act; or

(d) has broken the terms and conditions of licence,and circumstances exist which render it necessaryfor it in public interest so to do, the AppropriateCommission may, for reasons to be recorded inwriting, suspend, for a period not exceeding oneyear, the licence of the distribution licensee andappoint an Administrator to discharge the functionsof the distribution licensee in accordance with theterms and conditions of licence:

Provisionswhere nopurchase takesplace

Directions tolicensees.

Suspension ofdistributionlicence and saleof utility.

23

Provided that before suspending a licence under this section,the Appropriate Commission shall give a reasonable opportunityto the distribution licensee to make representations against theproposed suspension of license and shall consider therepresentations, if any, of the distrbution licensee.

(2) Upon suspension of license under sub-section (1) theutilities of the distribution licensee shall vest in theAdministrator for a period not exceeding one year or upto the date on which such utility is sold in accordancewith the provisions contained in section 20, whichever islater.

(3) The Appropriate Commission shall, within one year ofappointment of the Administrator under sub-section (1)either revoke the licence in accordance with the provisionscontained in section 19 or revoke suspension of thelicence and restore the utility to the distribution licenseewhose licence had been suspended, as the case maybe.

(4) In case where the Appropriate Commission revokes thelicence under sub-section (3), the utility of thedistribution licensee shall be sold within a period of oneyear from the date of revocation of the licence inaccordance with the provisions of section 20 and theprice after deducting the administrative and otherexpenses on sale of utilities be remitted to thedistribution licensee.

PART- V

TRANSMISSION OF ELECTRICITY

Inter-State transmission

25. For the purposes of this Part, the Central Government may,make region- wise demarcation of the country, and, from time totime, make such modifications therein as it may considernecessary for the efficient, economical and integratedtransmission and supply of electricity, and in particular tofacilitate voluntary inter-connections and co-ordination offacilities for the inter-State, regional and inter-regional generationand transmission of electricity.

26. (1) The Central Government may establish a centre at thenational level, to be known as the National Load DespatchCentre for optimum scheduling and despatch of electricityamong the Regional Load Despatch Centres.

(2) The constitution and functions of the National LoadDespatch Centre shall be such as may be prescribed bythe Central Government:

Inter-State,regional andinter-regionaltransmission.

National LoadDespatchCentre.

24

Provided that the National Load Despatch Centre shall notengage in the business of trading in electricity.

(3) The National Load Despatch Centre shall be operatedby a Government company or any authority orcorporation established or constituted by or under anyCentral Act, as may be notified by the CentralGovernment.

27. (1) The Central Government shall establish a centre for eachregion to be known as the Regional Load Despatch Centrehaving territorial jurisdiction as determined by the CentralGovernment in accordance with section 25 for the purposesof exercising the powers and discharging the functionsunder this Part.

(2) The Regional Load Despatch Centre shall be operatedby a Government Company or any authority orcorporation established or constituted by or under anyCentral Act, as may be notified by the CentralGovernment:

Provided that until a Government company or authority orcorporation referred to in this sub-section is notified by theCentral Government, the Central Transmission Utility shalloperate the Regional Load Despatch Centre:

Provided further that no Regional Load Despatch Centre shallengage in the business of generation of electricity or trading inelectricity.

28. (1) The Regional Load Despatch Centre shall be the apexbody to ensure integrated operation of the power systemin the concerned region.

(2) The Regional Load Despatch Centre shall comply withsuch principles, guidelines and methodologies in respectof the wheeling and optimum scheduling and despatchof electricity as the Central Commission may specify inthe Grid Code.

(3) The Regional Load Despatch Centre shall -(a) be responsible for optimum scheduling and

despatch of electricity within the region, inaccordance with the contracts entered into withthe licensees or the generating companiesoperating in the region;

(b) monitor grid operations;(c) keep accounts of the quantity of electricity

transmitted through the regional grid;

(d) exercise supervision and control over the inter-Statetransmission system; and

Constitution ofRegional LoadDespatchCentre.

Functions ofRegional LoadDespatchCentre.

25

(e) be responsible for carrying out real time operationsfor grid control and despatch of electricity withinthe region through secure and economic operationof the regional grid in accordance with the GridStandards and the Grid Code.

(4) The Regional Load Despatch Centre may levy and collectsuch fee and charges from the generating companies orlicensees engaged in inter-State transmission of electricityas may be specified by the Central Commission.

29. (1) The Regional Load Despatch Centre may give suchdirections and exercise such supervision and control asmay be required for ensuring stability of grid operationsand for achieving the maximum economy and efficiencyin the operation of the power system in the region underits control.

(2) Every licensee, generating company, generating station,sub-station and any other person connected with theoperation of the power system shall comply with thedirection issued by the Regional Load Despatch Centresunder sub-section (1).

(3) All directions issued by the Regional Load DespatchCentres to any transmission licensee of Statetransmission lines or any other licensee of the State orgenerating company (other than those connected to interState transmission system) or sub-station in the Stateshall be issued through the State Load Despatch Centreand the State Load Despatch Centres shall ensure thatsuch directions are duly complied with the licensee orgenerating company or sub-station.

(4) The Regional Power Committee in the region may, fromtime to time, agree on matters concerning the stabilityand smooth operation of the integrated grid and economyand efficiency in the operation of the power system inthat region.

(5) If any dispute arises with reference to the quality ofelectricity or safe, secure and integrated operation of theregional grid or in relation to any direction given undersub-section (1), it shall be referred to the CentralCommission for decision :

Provided that pending the decision of the Central Commission,the directions of the Regional Load Despatch Centre shall becomplied with by the State Load Despatch Centre or the licenseeor the generating company, as the case may be.

(6) If any licensee, generating company or any other personfails to comply with the directions issued under sub-

Compliance ofdirections.

26

section (2) or sub-section (3), he shall be liable to apenalty not exceeding rupees fifteen lacs.

Intra-State transmission

30. The State Commission shall facilitate and promote transmission,wheeling and inter-connection arrangements within its territorialjurisdiction for the transmission and supply of electricity byeconomical and efficient utilisation of the electricity.

31. (1) The State Government shall establish a Centre to beknown as the State Load Despatch Centre for thepurposes of exercising the powers and discharging thefunctions under this Part.

(2) The State Load Despatch Centre shall be operated by aGovernment company or any authority or corporationestablished or constituted by or under any State Act, asmay be notified by the State Government.

Provided that until a Government company or any authority orcorporation is notified by the State Government, the StateTransmission Utility shall operate the State Load DespatchCentre:

Provided further that no State Load Despatch Centre shallengage in the business of trading in electricity.

32. (1) The State Load Despatch Centre shall be the apex bodyto ensure integrated operation of the power system in aState.

(2) The State Load Despatch Centre shall -(a) be responsible for optimum scheduling and

despatch of electricity within a State, in accordancewith the contracts entered into with the licenseesor the generating companies operating in that State;

(b) monitor grid operations;(c) keep accounts of the quantity of electricity

transmitted through the State grid;

(d) exercise supervision and control over the intra-statetransmission system; and

(e) be responsible for carrying out real time operationsfor grid control and despatch of electricity withinthe State through secure and economic operationof the State grid in accordance with the GridStandards and the State Grid Code.

(3) The State Load Despatch Centre may levy and collectsuch fee and charges from the generating companies andlicensees engaged in intra-State transmission of electricityas may be specified by the State Commission.

Transmissionwithin a State

Constitution ofState LoadDespatchCentres

Functions ofState LoadDespatchCentres

27

33. (1) The State Load Despatch Centre in a State may give suchdirections and exercise such supervision and control asmay be required for ensuring the integrated gridoperations and for achieving the maximum economy andefficiency in the operation of power system in that State.

(2) Every licensee, generating company, generating station,sub-station and any other person connected with theoperation of the power system shall comply with thedirection issued by the State Load Depatch Centre undersub-section (1).

(3) The State Load Despatch Centre shall comply with thedirections of the Regional Load Despatch Centre.

(4) If any dispute arises with reference to the quality ofelectricity or safe, secure and integrated operation of theState grid or in relation to any direction given under sub-section (1) , it shall be referred to the State Commissionfor decision:

Provided that pending the decision of the StateCommission, the directions of the State Load DespatchCentre shall be complied with by the licensee or generatingcompany.

(5) If any licensee, generating company or any other personfails to comply with the directions issued under sub-section(1), he shall be liable to penalty not exceedingrupees five lacs.

Other provisions relating to transmission

34. Every transmission licensee shall comply with such technicalstandards, of operation and maintenance of transmission lines,in accordance with the Grid Standards, as may be specified bythe Authority.

35. The Appropriate Commission may, on an application by anylicensee, by order require any other licensee owning or operatingintervening transmission facilities to provide the use of suchfacilities to the extent of surplus capacity available with suchlicensee.

Provided that any dispute regarding the extent of surpluscapacity available with the licensee, shall be adjudicated uponby the Appropriate Commission.

36. (1) Every licensee shall, on an order made under section 35,provide his intervening transmission facilities at rates,charges and terms and conditions as may be mutuallyagreed upon :

Provided that the Appropriate Commission may specifyrates, charges and terms and conditions if these cannot

Compliance ofdirections

Grid Standards

Interveningtransmissionfacilities.

Charges forinterveningtransmissionfacilities.

28

be mutually agreed upon by the licensees.

(2) The rates, charges and terms and conditions referred toin sub-section (1) shall be fair and reasonable, and maybe allocated in proportion to the use of such facilities.

Explanation. - For the purposes of section 35 and 36, theexpression intervening transmission facilities means theelectric lines owned or operated by a licensee where suchelectric lines can be utilised for transmitting electricity for andon behalf of another licensee at his request and on paymentof a tariff or charge.

37. The Appropriate Government may issue directions to theRegional Load Despatch Centres or State Load DespatchCentres, as the case may be, to take such measures as may benecessary for maintaining smooth and stable transmissionand supply of electricity to any region or State.

38. (1) The Central Government may notify any Governmentcompany as the Central Transmission Utility:

Provided that the Central Transmission Utility shall not engagein the business of generation of electricity or trading inelectricity:

Provided further that, the Central Government may transfer,and vest any property, interest in property, rights and liabilitiesconnected with, and personnel involved in transmission ofelectricity of such Central Transmission Utility, to a companyor companies to be incorporated under the Companies Act,1956 to function as a transmission licensee, through a transferscheme to be effected in the manner specified under Part XIIIand such company or companies shall be deemed to betransmission licensees under this Act.

(2) The functions of the Central Transmission Utility shallbe -

(a) to undertake transmission of electricity throughinter-State transmission system;

(b) to discharge all functions of planning and co-ordination relating to inter-state transmissionsystem with -

(i) State Transmission Utilities;(ii) Central Government;(iii) State Governments;(iv) generating companies;(v) Regional Power Committees;(vi) Authority;

Directions byappropriateGovernment.

CentralTransmissionUtility andfunctions.

1 of 1956

29

(vii) licensees;(viii) any other person notified by the Central

Government in this behalf;(c) to ensure development of an efficient, co-ordinated

and economical system of inter-State transmissionlines for smooth flow of electricity from generatingstations to the load centres;

(d) to provide non-discriminatory open access to itstransmission system for use by-(i) any licensee or generating company on

payment of the transmission charges; or(ii) any consumer as and when such open access

is provided by the State Commission undersub-section (2) of section 42, on payment ofthe transmission charges and a surchargethereon, as may be specified by the CentralCommission:

Provided that such surcharge shall be utilised for the purposeof meeting the requirement of current level cross-subsidy:Provided further that such surcharge and cross subsidiesshall be progressively reduced 1in the manner as may bespecified by the Central Commission:2

Provided also that the manner of payment and utilisation ofthe surcharge shall be specified by the Central Commission:Provided also that such surcharge shall not be leviable in caseopen access is provided to a person who has established acaptive generating plant for carrying the electricity to thedestination of his own use.

39. (1) The State Government may notify the Board or aGovernment company as the State Transmission Utility:

Provided that the State Transmission Utility shall not engage inthe business of trading in electricity:Provided further that the State Government may transfer, andvest any property, interest in property, rights and liabilitiesconnected with, and personnel involved in transmission ofelectricity, of such State Transmission Utility, to a company orcompanies to be incorporated under the Companies Act, 1956to function as transmission licensee through a transfer schemeto be effected in the manner specified under Part XIII and suchcompany or companies shall be deemed to be transmissionlicensees under this Act.(2) The functions of the State Transmission Utility shall be -

StateTransmissionUtility andfunctions

1The words and eliminated omitted by Act 26 of 2007, sec. 4(i) (w.e.f. 15-6-2007).2The third proviso omitted by Act 26 of 2007, sec. 4(ii) (w.e.f. 15-6-2007). The third proviso, before omission,stood as under:Provided also that such surcharge may be levied till such time the cross subsidies are not eliminated:.

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(a) to undertake transmission of electricity throughintra-State transmission system;

(b) to discharge all functions of planning and co-ordination relating to intra-state transmissionsystem with -

(i) Central Transmission Utility;(ii) State Governments;(iii) generating companies;(iv) Regional Power Committees;(v) Authority;(vi) licensees;(vii) any other person notified by the State

Government in this behalf;(c) to ensure development of an efficient, co-ordinated

and economical system of intra-State transmissionlines for smooth flow of electricity from a generatingstation to the load centres;

(d) to provide non-discriminatory open access to itstransmission system for use by-(i) any licensee or generating company on

payment of the transmission charges ; or

(ii) any consumer as and when such open accessis provided by the State Commission undersub-section (2) of section 42, on paymentof the transmission charges and a surchargethereon, as may be specified by the StateCommission:

Provided that such surcharge shall be utilised for the purposeof meeting the requirement of current level cross-subsidy:Provided further that such surcharge and cross subsidiesshall be progressively reduced 3in the manner as may bespecified by the State Commission:1Provided also that the manner of payment and utilisation ofthe surcharge shall be specified by the State Commission:Provided also that such surcharge shall not be leviable in caseopen access is provided to a person who has established acaptive generating plant for carrying the electricity to thedestination of his own use.

40. It shall be the duty of a transmission licensee -Duties ofTransmissionlicensees


31

(a) to build, maintain and operate an efficient, co-ordinatedand economical inter-State transmission system or intra-State transmission system, as the case may be;

(b) to comply with the directions of the Regional LoadDespatch Centre and the State Load Despatch Centre asthe may be;.

(c) to provide non-discriminatory open access to itstransmission system for use by-(i) any licensee or generating company on payment

of the transmission charges; or(ii) any consumer as and when such open access is

provided by the State Commission under sub-section (2) of section 42, on payment of thetransmission charges and a surcharge thereon, asmay be specified by the State Commission:

Provided that such surcharge shall be utilised for the purposeof meeting the requirement of current level cross-subsidy:Provided further that such surcharge and cross subsidiesshall be progressively reduced2 in the manner as may bespecified by the Appropriate Commission:3

Provided also that the manner of payment and utilisation ofthe surcharge shall be specified by the AppropriateCommission:Provided also that such surcharge shall not be leviable in caseopen access is provided to a person who has established acaptive generating plant for carrying the electricity to thedestination of his own use.

41. A transmission licensee may, with prior intimation to theAppropriate Commission , engage in any business for optimumutilisation of its assets:Provided that a proportion of the revenues derived from suchbusiness shall, as may be specified by the AppropriateCommission, be utilised for reducing its charges for transmissionand wheeling:Provided further that the transmission licensee shall maintainseparate accounts for each such business undertaking toensure that transmission business neither subsidizes in anyway such business undertaking nor encumbers itstransmission assets in any way to support such business:Provided also that no transmission licensee shall enter into anycontract or otherwise engage in the business of trading inelectricity :

Other businessof transmissionlicensee


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PART VI

DISTRIBUTION OF ELECTRICITY

Provisions with respect to distribution licensees

42. (1) It shall be the duty of a distribution licensee to developand maintain an efficient, co-ordinated and economicaldistribution system in his area of supply and to supplyelectricity in accordance with the provisions containedin this Act.

(2) The State Commission shall introduce open access insuch phases and subject to such conditions, (includingthe cross subsidies, and other operational constraints)as may be specified within one year of the appointed dateby it and in specifying the extent of open access insuccessive phases and in determining the charges forwheeling, it shall have due regard to all relevant factorsincluding such cross subsidies, and other operationalconstraints:Provided that 1such open access shall be allowed onpayment of a surcharge in addition to the charges forwheeling as may be determined by the State Commission:Provided further that such surcharge shall be utilised tomeet the requirements of current level of cross subsidywithin the area of supply of the distribution licensee:Provided also that such surcharge and cross subsidiesshall be progressively reduced2 in the manner as may bespecified by the State Commission:Provided also that such surcharge shall not be leviable incase open access is provided to a person who hasestablished a captive generating plant for carrying theelectricity to the destination of his own use.3Provided also that the State Commission shall, not laterthan five years from the date of commencement of theElectricity (Amendment) Act, 2003, by regulations, providesuch open access to all consumers who require a supplyof electricity where the maximum power to be madeavailable at any time exceeds one megawatt.

(3) Where any person, whose premises are situated withinthe area of supply of a distribution licensee, (not being alocal authority engaged in the business of distribution ofelectricity before the appointed date) requires a supplyof electricity from a generating company or any licenseeother than such distribution licensee, such person may,by notice, require the distribution licensee for wheelingsuch electricity in accordance with regulations made by

Duties ofdistributionlicensee andopen access

1Subs. By Act 26 of 2007, sec. 7(i), for the words such open access may be allowed before the cross subsidies areeliminated, on payment of a surcharge (w.e.f. 15-6-2007).2The words and eliminated omitted by Act 26 of 2007, sec. 7(ii) (w.e.f. 15-6-2007).3Ins. By Act 57 of 2003, sec. 3 (w.e.f. 27-1-2004).

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the State Commission and the duties of the distributionlicensee with respect to such supply shall be of a commoncarrier providing non-discriminatory open access.

(4) Where the State Commission permits a consumer or classof consumers to receive supply of electricity from a personother than the distribution licensee of his area of supply,such consumer shall be liable to pay an additionalsurcharge on the charges of wheeling, as may be specifiedby the State Commission, to meet the fixed cost of suchdistribution licensee arising out of his obligation tosupply.

(5) Every distribution licensee shall, within six months fromthe appointed date or date of grant of licence, whicheveris earlier, establish a forum for redressal of grievances ofthe consumers in accordance with the guidelines as maybe specified by the State Commission.

(6) Any consumer, who is aggrieved by non-redressal of hisgrievances under sub-section (5), may make arepresentation for the redressal of his grievance to anauthority to be known as Ombudsman to be appointed ordesignated by the State Commission.

(7) The Ombudsman shall settle the grievance of theconsumer within such time and in such manner as may bespecified by the State Commission.

(8) The provisions of sub-sections (5),(6) and (7) shall bewithout prejudice to right which the consumer may haveapart from the rights conferred upon him by those sub-sections.

43. (1) 4Save as otherwise provided in this Act, every distributionlicensee, shall, on an application by the owner or occupierof any premises, give supply of electricity to suchpremises, within one month after receipt of the applicationrequiring such supply :Provided that where such supply requires extension ofdistribution mains, or commissioning of new sub-stations,the distribution licensee shall supply the electricity tosuch premises immediately after such extension orcommissioning or within such period as may be specifiedby the Appropriate Commission.Provided further that in case of a village or hamlet or areawherein no provision for supply of electricity exists, theAppropriate Commission may extend the said period as itmay consider necessary for electrification of such villageor hamlet or area.1Explanation.- For the purposes of this sub-section,

Duty to supplyon request

4Subs. By Act 26 of 2007, sec. 8(i), for Every distribution (w.e.f. 15-6-2007).1Ins. By Act 26 of 2007, sec. 8(ii) (w.e.f. 15-6-2007).

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application means the application complete in allrespects in the appropriate form, as required by thedistribution licensee, along with documents showingpayment of necessary charges and other compliances.

(2) It shall be the duty of every distribution licensee toprovide, if required, electric plant or electric line for givingelectric supply to the premises specified in sub-section(1) :Provided that no person shall be entitled to demand, or tocontinue to receive, from a licensee a supply of electricityfor any premises having a separate supply unless he hasagreed with the licensee to pay to him such price asdetermined by the Appropriate Commission .

(3) If a distribution licensee fails to supply the electricitywithin the period specified in sub-section (1), he shall beliable to a penalty which may extend to one thousandrupees for each day of default.

44. Nothing contained in section 43 shall be taken as requiring adistribution licensee to give supply of electricity to any premisesif he is prevented from doing so by cyclone, floods, storms orother occurrences beyond his control.

45. (1) Subject to the provisions of this section, the prices to becharged by a distribution licensee for the supply ofelectricity by him in pursuance of section 43 shall be inaccordance with such tariffs fixed from time to time andconditions of his licence.

(2) The charges for electricity supplied by a distributionlicensee shall be -

(a) fixed in accordance with the methods and theprinciples as may be specified by the concernedState Commission ;

(b) published in such manner so as to give adequatepublicity for such charges and prices.

(3) The charges for electricity supplied by a distributionlicensee may include -

(a) a fixed charge in addition to the charge for the actualelectricity supplied;

(b) a rent or other charges in respect of any electricmeter or electrical pl

power compendium

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