Legal Information / Articles


Electricity Act 2003 is said to be the culmination of the power reforms that started in early 1990s. 

The main features of the Electricity Act are:

  • Generation delicensed: Thermal generation does not need clearance from CEA. Only large or inter-state Hydel projects need this. 
  • Setting up Captive generation does not need permission. Captive generation can be set up by a group or society to meet their needs. The captive plants can be located off-site (far from the consumption point)
  • Transmission utility at the central level will continue to hold responsibility of coordinating planning of the transmission network. These utilities or the State governments would look after load dispatch (scheduling of plants, maintenance etc). 
  • Private companies can build Transmission lines for captive use or for common use.

  • Open Access: Any generating station will get access to the transmission system at a fee, subject to capacity availability. They will have to pay a fee to the transmission utility (called wheeling charge) and charges for load dispatch centre. Bulk consumers including DISCOMS can take advantage of Open access by purchasing the wheeled power. Large consumers will have to pay a surcharge to cover cross subsidy, except in case of the captive generating stations. The State Regulatory Commission may permit Open access in distribution in phases and can levy a surcharge on users buying power through open access. This will be utilised to cover cross subsidy in that area. 
  • Distribution licensees are free to undertake generation and generation companies are free to undertake distribution license. The commission can allow multiple licenses in the area of a distribution licensee. 
  • For rural and remote areas, standalone systems for generation and distribution are allowed. Distribution managed through Panchayats, User associations, Co-operatives or Franchises would also be permitted without needing license (in state government notified areas). 
  • Power Trading is being recognised as an activity that can be taken up after authorisation of RCs. The RCs would issue licence and fix ceilings on trading margins. Distribution licensees and state governments do not require license to carry out trading. 
  • After Open access is allowed, consumer can enter into direct commercial relationship with a generating company or Trader. In such a case, the price of power will not be regulated, but the transmission charges (called wheeling charges) and surcharge would be. 
  • State governments can un-bundle SEBs and create companies. At the minimum, the transmission activity needs to be separated from SEB. All states should have Regulatory Commissions. 
  • An Appellate tribunal will be created at the Centre for disposal of appeals against decisions of CERC and SERCs. 
  • Strict provisions to deal with power theft. 
  • Tariff: Tariff would be along commercial principles to encourage competition and efficiency. Multiyear tariff formulation is suggested with gradual elimination of subsidises. Metering to be 100% in a few years’ time. Time of the Day tariff to be introduced in a phased manner. 
  • Central government would bring out National Electricity Policy, Tariff Policy, National policy on standalone systems for rural areas and a National policy on electrification & local distribution in rural areas. CEA shall prepare National Electricity Plan.
Regulation under the Act. 
  • Electricity Regulatory Commission (ERC) was first set up in Orissa in 1996.
  • Subsequently 27 more states have set up SERCs (2005). 
  • CERC handles issues of central utilities and those having inter-state nature. 
  • Procedure for selection of members, conduct of business rules and monitoring practices are laid down in the E Act, which are largely similar to the ERC Act 1998. 
  • E-Act formulates a new body, called the Appellate tribunal to deal with appeals against the decisions of the RCs.
Consumer Protection under the Act. 
  • It stipulates that the Consumer must be given connection within one month of applying or else distribution licensee shall be liable to pay a fine of Rs. 1000/day of default.
  • The consumer is entitled to refund of his security on request and interest on the same is payable. 
  • The State Commission is required to specify an “electricity supply code” to provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity for non-payment, restoration of supply of electricity, measures for preventing tampering, distress or damage to electrical plant or electrical line or meter, entry of distribution licensee or any person acting on his behalf for disconnecting supply and removing the meter, entry for replacing, altering or maintaining electric lines or electrical plants or meter and similar matters. 
  • No sum due from a consumer is recoverable after a lapse of two years.
  • Every distribution licensee is required to appoint a redressal forum for redressal of consumer’s grievances. 
  • Each licensee is required to meet standards of performance specified by the Regulatory Commission and a failure to meet these standards makes them liable to pay compensation within 90 days. 
  • Each licensee is required to furnish periodical information on the standards of performance to the Commission. 
  • A district level committee has been set up to coordinate and review extension of electrification in each district and to review quality of power supply and consumer satisfaction etc.

Grievance Redressal.
  • Discoms are mandated to establish Consumer Service Centres for consumers to receive information and lodging of complaint. 
  • Consumer Service Centres may also provide additional services including payment of bills. 
  • As per S. 42 (5),(6) and (7) of the Electricity Act, 2003 consumers have the right to redressal of their grievances. Such rights include:
  •  To receive a copy of rules and procedures for redressal of grievances from offices of electricity distribution companies and cash collection centres. 
  • To know the contact details of Internal Grievance Redressal (IGR) and Electricity Obudsman. 
  • To know the modes of filing a grievance, procedures, and circulars issued in the subject. If the conflict cannot be redressed by the IGR Cell, the consumer can raise complaints to Electricity Obudsman.
  • IGR, Forum and Obudsman are required to give their decision within 2 months, 
  • The Consumer can also lodge their complaints in the “Consumer Forum” under the Consumer Protection Act. 

Provision for redressal under the Consumer Protection Act, 1986.
A consumer under the Electricity Act, 2003 are covered under the definition of “consumer” under the Consumer Protection Act, 1986. 
If a consumer is not satisfied by the redressal provided by the Electricity Ombudsman, they can approach a consumer redressal forum set up under the Act. 
Although a consumer of electricity is advised to follow the internal redressal system as laid down by the Act, however, the consumer is free to approach the Consumer forum without exhaustion of remedy under the Act itself. 

Pecuniary jurisdiction of consumer forums as per the Consumer Protection Act, 1986 is:
  • District Consumer Dispute Redressal Forum (DCDRF) undertakes disputes about Rs. 20 Lakhs.
  • State Consumer Dispute Redressal Commission (SCDRC) undertakes disputes from Rs. 20 Lakhs-1 Crore.
  • National Consumer Dispute Redressal Commission (NCDRC) undertakes disputes valued at more than Rs. 1 Crore.
Further, a decision by the DCDRF may be appealed in the SCDRC and a decision by the SCDRC may be appealed in the NCDRC.

The provisions enumerated above are the few rules laid down in the Electricity Act, 2003 with the welfare of the consumer in mind. 

Shagun Suryam 
Aura & Co.