An outline of the Electrical energy Act, 2003 • The Authorized Lock


The Electrical energy Act, 2003 is a Parliament of India Act designed to enhance India’s electrical energy sector. The laws addresses important issues of energy era, distribution, transmission, and commerce. Although particular provisions have already been legislated and supply benefits, just a few others have but to be carried out totally.

This text examines the Electrical energy Act of 2003 to see how the traits differ from the earlier authorized necessities and if these insurance policies have an financial justification. With impact from 2 June 2003, India established laws, particularly, the Electrical energy Act 2003, to switch elements of the nation’s age-old electrical laws. The laws tried to resolve essential difficulties that had hindered change within the nation, leading to renewed optimism for the ability enterprise.

Moreover, the era of energy from numerous sources corresponding to pure gasoline, hydro, nuclear, wind, diesel, imported coal, and many others., expanded considerably, and the nation achieved decentralization and diversification when it comes to energy era and consumption.

electrical energy act, 2003

The Act was to unify the legal guidelines about electrical energy era, transmission, distribution, and utilization with a purpose to take steps to advertise the expansion of the electrical energy sector, promote competitors, safeguard shoppers’ pursuits, and make sure the provide of power to all areas, rationalize electrical energy tariffs, guarantee clear subsidies packages, promote environment friendly and environmentally pleasant insurance policies, and set up the Central Electrical energy Authority.

The Act totally delicenses electrical energy producing (apart from all nuclear and hydro-power tasks over a selected dimension). In accordance with the Act, 10% of the electrical energy delivered to prospects by suppliers and distributors should be generated utilizing renewable and non-conventional power sources to ensure that the power to be reliable.

Electrical energy era is said a non-licensed enterprise and the Central Electrical energy Authority (CEA) now not required techno-economic permission for any energy plant, besides hydroelectric energy vegetation with an merchandise of specified capital expenditure.


The next are a number of the essential options of the Act:

  • Era is being delicensed, and captive era is freely permitted, which meant that any producing firm would possibly set up, function, and keep a producing station with out acquiring a license below this Act, with the one exception that it should meet the technical requirements regarding grid connectivity referred to in clause (b) of part 73.
  • Hydro-projects, alternatively, require approval from the Central Electrical energy Authority.
  • Nobody shall
  • (a) transmit electrical energy,
  • (b)distribute electrical energy, or
  • (c)have interaction in electrical energy commerce.

Except a license authorizes him, exceptions are communicated to approved commissions by way of notices.

  • The Central Authorities demarcated the nation by area. It made modifications because it was vital for the environment friendly, economical, and built-in transmission and provide of electrical energy, significantly to facilitate voluntary interconnections and coordination of services for inter-State, regional, and inter-regional era and transmission of electrical energy.
  • Open entry in transmission with a premium to cowl the present degree of cross-subsidy, with the associated fee, steadily phased off.
  • State governments are obligated to unbundle State Electrical energy Boards. They might, nonetheless, stay with them as distribution licensees and state transmission utilities.
  • The institution of a State Electrical energy Regulatory Fee (SERC) was now required.
  • An appellate physique to listen to appeals in opposition to (CERC’s) and SERC’s choices.
  • Metering of energy delivered had been made obligatory.
  • Electrical energy theft provisions had been made extra rigorous.
  • Buying and selling was acknowledged as a definite exercise, with regulatory authorities approved to set buying and selling margin ceilings.
  • Stand-alone producing and distribution methods have been permitted in rural and remoted locations.
  • The central authorities draft a nationwide electrical energy coverage in addition to a tariff coverage.
  • The Central Electrical energy Authority (CEA) created the Nationwide Electrical energy Plan.

provisions of electrical energy act

Part 25 of the Electrical energy Act of 2003 empowered the Central Authorities to divide the nation into areas required for the environment friendly, economical, and built-in transmission and provide of electrical energy, and specifically to facilitate voluntary interconnections and coordination of services for inter-State, regional , and interregional era and transmission of electrical energy.

Part 25 of the Electrical energy Act 2003 and the proposed Electrical energy Act 2014 (provision to kind areas) and different related elements claimed it was illegal within the lack of ratification by every state.

manufacturing of Electrical energy

Electrical energy, additionally transmitted in a circuitous path (for instance, the north-eastern area exports energy to the japanese area, the japanese area exports energy to the northern and western areas, the western area exports energy to the northern area, and the northern area exports energy again to the north-eastern area).

Equally, the japanese space exports electrical energy to the western area, and the western area exports to the southern area, relatively than the japanese area straight exporting all the internet energy required by the southern, northern, and north-eastern areas.) Because of this, the regional notion of electrical energy era and transmission grew to become counterproductive.

Division of Nation for Electrical energy.

The standard and unscientific division of the nation into 5 areas (north, south, east, west, and northeast areas) with out offering any legitimate justification and making use of one algorithm for intra area and a distinct algorithm for inter-region in sharing electrical energy transmission system and transmission losses, amongst different issues, is taken into account discriminating one state from one other.

With out the general public curiosity, the Structure didn’t acknowledge a definite set of legal guidelines making use of to a gaggle of states except confirmed by every of the affected states following Article 252 of the Structure. Within the Seventies, the thought of ​​splitting the nation into areas by combining just a few states arose to ascertain pit head tremendous thermal energy stations close to coal mines and supplying the generated energy to distant areas by excessive voltage transmission strains. Beforehand, India’s power trade had a number of instances, and present energy consumption in lots of massive states has surpassed regional degree energy consumption on the time.

By treating states inside a area equally and people exterior the world in another way, the thought of ​​areas is rendered out of date. Resulting from regional bias/differentiation, a number of states that compose a area’s boundaries can’t draw/export cheaper energy from neighboring areas/states. Moreover, the ability grid become a single nationwide grid and establishing a single grid operation additional rendered regional grids ineffective. Nevertheless, it expanded considerably and helped the nation obtain decentralization and diversification in energy era and consumption. Every state ought to have been considered a single administrative entity/area/space for electrical energy transmission, loss accounting, and business settlement as a part of the nationwide grid.


The Act was amended a number of instances after 2003. The revisions recommended in 2015 caused important modifications. The important thing provision was the introduction of electrical energy provide companies that might now not personal energy strains. In accordance with the federal government, it could enhance competitors and, consequently, decrease costs. Those that oppose these revisions argue that within the Indian context, competitors may by no means scale back value. Some power finance specialists imagine it could undermine the general public sector and hurt its energy sector enterprise.


The Electrical energy act was to consolidate the legal guidelines concerning the era, transmission, distribution, buying and selling, and use of electrical energy. typically to take measures favorable to the expansion of the electrical energy sector, fostering competitors, safeguarding shoppers’ pursuits, assuring the availability of power to all areas, rationalization of electrical energy tariffs, guaranteeing clear insurance policies concerning subsidies, selling environment friendly and ecologically pleasant insurance policies, and the formation of the Central Electrical energy Authority.

the above weblog had been edited by Vidhya sri theresa.Okay


1. The Electrical Invoice, 2003, 73(b), The Gazette of India, pt. II sec. 1, (June 2, 2003)

2. The Electrical Invoice, 2003, 25, The Gazette of India, pt. II sec. 1, (June 2, 2003)

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