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ELECTRICITY BILL 2001 INTRODUCED IN LOK SABHA

    The Electricity Supply Industry in India is presently governed by three enactments namely, The Indian Electricity Act 1910, The Electricity (Supply) Act 1948, The Electricity Regulatory Commission Act 1998. The Indian Electricity Act 1910 created the basic framework for electric supply industry in India, which was then in its infancy. The Electricity (Supply) Act 1948 mandated the creation of a State Electricity Board. The State Electricity Board (SEB) has the responsibility of arranging the supply of electricity in the State. Over a period of time, however, the performance of SEBs has deteriorated substantially on account of factors like irrational tariff structure, inefficient operations, unexpectedly high level of T&D losses and theft, non-payment of subsidies by State Government etc. The cumulative losses of SEBs have reached the level of over Rs. 26,000 crores annually. The Electricity Regulatory Commissions Act, 1998, was enacted to provide for distancing of government from determination of tariffs.

    Starting with Orissa, a few States undertook comprehensive power sector reforms by enacting their own reform laws. It was felt necessary to bring a comprehensive legislation incorporating the progressive features and best industry practices.

    The main features of the Bill are as follows:

i) The Central Government to prepare a National Electricity Policy in consultation with State Governments.

ii) Thrust to complete the rural electrification and provide for management of rural distribution by Panchayats, Cooperative Societies, non-Government organisations, franchisees etc.

iii) Generation, being delicensed and captive generation being freely permitted. Hydro projects would, however, need approval of the state government and clearance from the Central Electricity Authority.

iv) Transmission Utility at the central as well as State level, to be a Government company – with responsibility for planned and coordinated development of transmission network. Provision for private transmission licensees.

v) Open access in transmission from the outset with provision for surcharge for taking care of current level of cross subsidy with the surcharge being gradually phased out.

vi) Distribution licensees would be free to undertake generation and generating companies would be free to take up distribution licensees

vii) The State Electricity Regulatory Commission is a mandatory requirement..

viii) Provision for licence free generation and distribution in the rural areas.

ix) The SERCs may permit open access in distribution in phases with surcharge for current level of cross subsidy to be gradually phased out along with cross subsidies and obligation to supply.

x) Provision for payment of subsidy through budget.

xi) For rural and remote areas stand alone systems for generation and distribution would be permitted.

xii) Trading, a distinct activity is being recognised with the safeguard of the Regulatory Commissions being authorised to fix ceilings on trading margins, if necessary.

xiii) The State Governments have flexibility to unbundle the SEBs or continue with them as distribution licensees and State Transmission Utility.

xiv) The Bill does not prescribe any model of reform, instead provides flexibility to the State Government to choose the model suiting to their conditions.

xv) Metering of all electricity supplied made mandatory.

xvi) An Appellate Tribunal to hear appeals against the decision of the CERC and SERCs.

xvii) Provisions relating to theft of electricity have a revenue focus.