The Electricity Act 2003 governs the activity related to the generation, transmission, distribution, trade, and use of electricity in India. It also provides an elaborate framework of bodies to administer the activities under the Electricity Act.

The main objectives of the Electricity Act are:

  • Promoting competition.
  • Protecting the interest of consumers.
  • Ensuring electricity supply to all areas along with a rationalization of tariffs.
  • Ensuring transparent policies and promotion of efficiency.

Central Electricity Regulatory Commission and the State Electricity Regulatory Commissions:

The Electricity Act sets the framework for setting up electricity regulatory commissions at the central and state levels, i.e. the Central Electricity Regulatory Commission and the State Electricity Regulatory Commissions to regulate and oversee the generation, distribution, and transmission of electricity. They are independent bodies with functions as specified under the Electricity Act.

The CERC has the power to adjudicate upon disputes involving generating companies (either owned or controlled by the GOI or that have entered into a composite scheme for the generation and sale of electricity in more than one state) or transmission and trading licensees with respect to the determination of tariff and regulation of inter-state transmission and trading of electricity. SERCs have the power to adjudicate on disputes between licensees and generating companies within their respective jurisdiction.

Electricity Contract Enforcement Authority (ECEA):

The purpose of Setting up the Electricity Contract Enforcement Authority (ECEA) under the Electricity Amendment Bill was to provide for stricter contract enforcement in the Electricity sector, ECEA would be the sole authority to adjudicate on contractual enforcement matters relating to the sale and purchase or transmission of electricity. make the establishment of payment security mechanism under power purchase contracts mandatory, levy of penalty on distribution licensees for not adhering to renewable purchase obligations, etc.

ECEA orders would be enforceable as civil court decrees. Appeals against ECEA orders of the ECEA would be heard by the Appellate Tribunal for Electricity (APTEL).

Appellate Tribunal for Electricity (APTEL).APTEL is the appellate body and possesses suo moto jurisdiction to examine the validity of any order made by the EECA, CERC or SERC.

Electricity distribution License:

Electricity Distribution is a licensed activity and the license is issued by the respective SERC(State Electricity Regulatory Commission). Section 15 of the Electricity Act sets out the framework and procedure for obtaining the license. The SERCs grant the distribution license for 25 years from the date of issue (subject to compliance with the terms and conditions of the license).

The Ministry of Power administers the implementation of the Electricity Act and plays a supervisory role in overseeing the development of the electricity sector in the country. However, the development and growth of renewable energy in India are administered by the Ministry of New and Renewable Energy

Foreign direct investment:

Foreign direct investment up to 100% is permitted in the electricity sector (except atomic energy) subject to the provisions of The Electricity Act, 2003 under the automatic route (that is, no approval from the Government of India is required .