The Electricity Act, 2003

Background:

The Electricity Act, 2003 was enacted to consolidate the laws relating to generation, transmission, distribution, trading, and use of electricity in India. It replaced multiple earlier laws to create a unified legal framework for the power sector. The Act aims to promote competition, improve efficiency, ensure rational tariff structures, and provide access to electricity for all consumers while safeguarding the interests of licensees and consumers

Applicability:

The Act applies to:

  • All entities involved in the generation, transmission, distribution, and trading of electricity in India, including public, private, and cooperative organizations.

Compliance requirement under the Act

  • Registration of Electricity generating units (Electricity Act, 2003, Section 74; Regulation 4 & 5 of CEA (Furnishing of statistics, returns and information) Regulations, 2007)

All electricity generating units of the country of capacity 0.5 MW and above have to get registered with CEA and get a unique registration number from CEA.

  • License for transmission of electricity (Electricity Act, 2003, Section 12(a))

No person shall transmit electricity unless he is authorised to do so by a licence issued under section 14, or is exempt under section 13.

  • License for distribution of electricity (Electricity Act, 2003, Section 12(b))
    No person shall distribute electricity unless he is authorised to do so by a licence issued under section 14, or is exempt under section 13.
  • License for trading of electricity (Electricity Act, 2003, Section 12(c))
    No person shall undertake trading in electricity unless he is authorised to do so by a licence issued under section 14, or is exempt under section 13.
  • Obligations of Licensee for transmission/distribution/trading of electricity (Electricity Act, 2003, Section 17)

A licensee shall not, without prior approval of the Appropriate Commission, acquire or merge with another licensee’s utility, unless the utility is in a different State.
i) Every licensee shall, before obtaining the approval give not less than one month’s notice to every other licensee who transmits or distributes electricity in the area of such licensee who applies for such approval.

  1. ii) No licensee shall at any time assign his licence or transfer his utility, or any part thereof, by sale, lease, exchange or otherwise without the prior approval of the Appropriate Commission.
    iii) Any agreement, relating to any transaction specified in Section 17(1) to (3) unless made with the prior approval of the Appropriate Commission, shall be void.
  • Compliance of Directions issued by Regional Load Despatch Centres (Electricity Act, 2003, Section 29(2),(3))

Every licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system shall comply with the directions issued by the Regional Load Despatch Centres under Section 29(1).

All directions issued by the Regional Load Despatch Centres to any transmission licensee of State transmission lines or any other licensee of the State or generating company (other than those connected to inter State transmission system) or sub-station in the State shall be issued through the State Load Despatch Centre and the State Load Despatch Centres shall ensure that such directions are duly complied with by the licensee or generating company or sub-station.

  • Compliance of Directions issued by State Load Despatch Centre (Electricity Act, 2003, Section 33(2))

Every licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system shall comply with the directions issued by the State Load Despatch Centre under Section 33(1).

The State Load Despatch Centre shall comply with the directions of the Regional Load Despatch Centre.

  • Compliance of Grid Standards (Electricity Act, 2003, Section 34)
    Every transmission licensee shall comply with such technical standards of operation and maintenance of transmission lines, in accordance with the Grid Standards, as may be specified by the Authority.

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

Penalties & Punishments

  • Sec 146 – Non-compliance of orders or directions or contravention or attempts or abetting the contravention of any of the provisions of this Act or any rules or regulations made thereunder shall be punishable with imprisonment for a term which may extend to three months or with fine, which may extend to one lakh rupees, or with both in respect of each offence and in the case of a continuing failure, with an additional fine which may extend to five thousand rupees for every day during which the failure continues after conviction of the first such offence:
  • If any licensee, generating company or any other person fails to comply with the directions issued under sub-section (2) or sub-section (3) of Section 29, he shall be liable to a penalty not exceeding rupees fifteen lacs.
  • Non-compliance of any conditions subject to which License has been granted may lead to cancellation of License

Conclusion

The Electricity Act, 2003 provides a comprehensive legal and regulatory framework for India’s power sector. It ensures systematic governance of electricity generation, transmission, distribution, and trading while promoting efficiency, reliability, and competition. Compliance with the Act is essential for legal operation, consumer protection, and smooth functioning of the electricity supply system across the country.

Disclaimer: The information contained in this Article is intended solely for personal non-commercial use of the user who accepts full responsibility of its use. The information in the article is general in nature and should not be considered to be legal, tax, accounting, consulting or any other professional advice. We make no representation or warranty of any kind, express or implied regarding the accuracy, adequacy, reliability or completeness of any information on our page/article. 

To stay updated Subscribe to our newsletter today

Explore other Legal updates on the 1-Comply and follow us on LinkedIn to stay updated 

Post Views: 36

Schedule A Demo