REGULATORY REFORMS

REGULATORY REFORMS
 Indian Electricity Act, 1910
 Covered the technical and operating standards of the Indian
Power Sector.
 Provided the authority to state governments to grant licenses
for supplying power in a specified geographical area
 This Act was amended through the Electricity Laws
(Amendment) Act, 1998 to introduce several measures
relating to transmission
 Transmission license was defined and concept of central
transmission utility (for inter-state transmission) and state
transmission utilities (for intra-state transmission) were
introduced.
REGULATORY REFORMS
 Specified the licensing role of the Central Electricity Regulatory
Commission and state electricity regulatory commissions
 The Electricity (Supply) Act, 1948
 Development of the state sector
 Financing norms for performance of the electricity industry
 Creation of state electricity boards, central generating units and
central electricity authority
 Amended in 1991 to provide for private participation
 100% foreign equity participation by foreign private investors
 Policy guidelines for private participation issued in 1995
 Mega power policy announced in 1995
REGULATORY REFORMS
 Electricity Regulatory Commission Act, 1998
 Separate regulatory bodies at central and state levels
 Creation of STUs and CTUs
 The Electricity Laws Act 1910 was amended to take
transmission as a separate activity for inviting greater public
and private participation

 The Electricity Act, 2003

 Consolidated all the previous policies, streamlining the power
sector and improving efficiency
 Low level of private participation till 2000s
 Requirement of a license for generation
REGULATORY REFORMS
Key features of Electricity Act, 2003
Generation:
 No license required for generation
 International competitive bidding to encourage competition
 Captive power generation and sales to third party encouraged
 Open access in T&D, direct access to retail consumers

Impact:
 Led to entry of more private players in this segment
 Industrial players planning captive power capacities to meet their
demands
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Transmission and Distribution:
 Open access to T&D sector, providing choice to customers
 Unbundling and Corporatisation of the T&D business by SEBs
 Higher investments to improve existing infrastructure
 Opportunities for competition in the distribution segment

Impact:
 Presence of private players in transmission through JV with Power
Grid Corporation of India Ltd (PGCIL)
 16 states have been unbundled till May 2009
 Few states have turned into profit making entities
REGULATORY REFORMS
Industry dynamics:
 Regulators to play an important role
 Focus on efficiency improvement
 Cross-subsidies to come down and be eliminated
 Power trading to be encouraged

Impact:
 T&D Losses within the system came down
 Power trading corporation was set up to meet short term
requirement of electricity
REGULATORY REFORMS
Power Consumers:
 Consumers would be allowed to source power from supplier of their
choice
 Availability based tariff (ABT) system introduced to avoid grid
failures
 Tariffs continue to be regulated

Impact:
 Industrial and bulk consumers are free to source power from supplier
of their choice
 ABT system has helped to bring in grid discipline in the system
 Power trading corporation was set up to meet short term requirement
of electricity
REGULATORY REFORMS
 The Electricity (Amendment) Act, 2007
 Central government, jointly with state governments, to endeavour to
provide access to electricity to all areas including villages
 No license required to sale from captive units
 Removal of the provision for elimination of cross-subsidies.,
reduction of cross-subsidies to continue
 Tariffs continue to be regulated
 Theft made explicitly cognisable and non-bailable.
 Amendment likely to make states more lenient in setting targets for
cross-subsidy reduction
REGULATORY REFORMS
 National Electricity Policy, 2005
 Power to all – access to electricity for all households in next 5 years
 Availability of Power – demand to be met by 2012
 Per capita availability of electricity to be increased to over 1000 units
by 2012
 Financial Turnaround and commercial viability of electricity sector
 Huge capacity additions announced to meet the ‘Power to all’ by 2012
vision