VOL. 4 NO.2
SALIENT FEATURES & CONSEQUENCES OF ELECTRICITY ACT 2003
For a developing country like India, the process of adding generation capacity has to be planned and controlled as per national priorities. The first priority obviously is to harvest the hydro energy potential of 1,50,000 MW out of which only 23,500 MW (16%) has been tapped – whereas in developed country like Norway 58% of hydro potential has been tapped. The organisation to ensure a control on fuel energy balance was CEA, which has been sidelined in the Act.
Under Section 7 any Genrating company can set up a power station without obtaining cleareance from CEA. Only Hydro Stns. are required to obtain TEC from CEA.
The Act, Section 9 allows the setting up of Captive Generating Plants &dedicated transmission lines.
It further gives the generator the right to "open access" to the destination of his use.
Under this section there is every possibility of large & other industrial consumers switching over to captive generators located anywhere in the country – which will lead the SEBs (Distribution Utilities)into accelerated bankruptcy.
In case an industrial consumer opts to purchase power from any generator through "Open Access" he would be required to pay a "subsidy surcharge". However in case of captive generators there is no provision to pay subsidy surcharge. In other words the captive generators will be given liberty to use the SEB/State Utility transmission system to deprive the SEB/State utility of its high revenue consumers.
Under Section 14 the Damodar Valley Corporation has been exempted, but no such exemption has been given to Bhakra Beas Management Board.
The role, functioning and authority of Regional Electricity Boards have been diluted to that of a "Regional Power Committee(definition 55) & Section 29(4). Under existing system the RLDCs are to work on the policy and directions of REBs.
Under Act 2003 RegionalPOwer Committees will have no authority to decide policy matters of RLDC.
Under Section 32 contract PPAs etc. have been protected & the state utility would be forced to buy costlier power. Section 32-2(a) is obviously to accomodate the future and present ENRONS.
Section 38, 2(d) makes it obligatory to provide "non discriminatory open access". The implication is that the creamy (high revenue)consumers can choose the generator of their choice, which may be located anywhere in the Country.
There is a similar obligation on the State Transmission Utility, Section 39-2(d) to provide non-discriminatory open access.
Section 42 provides the legal framework of privatisation of distribution.
Section 44 has been added clearly on the experience of Orissa Cyclone and relieves the distribution licence from restoring power supply.Under this section 44 once power supply is disrupted due to cyclone, flood storm etc., the Licensee Company is given the freedom NOT TO RESTORE SUPPLY. This section is drafted to protect the licensee Company while totally ignoring on the power consumers whose power supply is disrupted.
In section 61 the CERC/SERC is to determine the tariffs & a period of 1 year is allowed for retaining Section 43A of E.S. Act, ERC Act 1998- BUT THE CRUCIAL SECTION 59 SPECIFYING 3% SURPLUS IS MISSING . Thus private licensee have no limit on profits they can make while State Owned distribution Companies are now under no legal obligation to achieve the bare minimum of 3% surplus.
EA in Part IX, clauses 70-75 the CEA has been retained but with much reduced powers & scope of functioning. In particular, CEA has been sidelined in the field of giving technological clearance to Thermal Station.
ABOLITION OF SEBs
Section 3 of ES Act 1948 contains provision for the CEA defining its constitution, members, powers and responsibilities. The section 3 of ES Act 1948 has been replaced by Part IX (Clause 70-75) of Electricity Act 2003, thereby ensuring that however the CEA is retained under Ectectricity Act 2003( although in a diluted form). However the Act 2003 does not contain any such similar provision for retaining the SEBs in their present form. Section 5 of ES Act provides for the setting up SEBs, the members, duties & responsibilities.
The ELECTRICITY ACT 2003 COMPLETELY ELIMINATES SECTION 5 OF ES ACT 1948 THEREBY ABOLISHING THE EXISTENCE OF SEBs. AS STATUTORY AUTONOMOUS BODIES. In other words the Electricity Act 2003 by totally eliminating the Section of ES Act 1948, clearly converts the SEBs into Companies under the Company Act 1956.
RETAINING CERS/SERC – SECTION X Provisions of ERC Act 1998 have been retained in Part 10 (Section 76 –109)Section 82 allows the existing SERCs to continue functioning as envisaged under the ERC Act 1998.
APPELATE TRIBUTIONAL (XI) Under Section 110-125 the electricity Act 2003 provides for the formation of an appellate Tribunal Comprising the Chairman & 3 members. The Chair Person would be a serving or retired Supreme Court Judge or Retd.C.J. of High High Court.
The two members can be either a High Court Judge or a Secretary of GoI or a Technocrat.
The orders of Appellate Tribunal can be appealed only in Supreme Court.
Section XII Investigation & Enforcement Clauses 126-130 deals with assessment in theft cases.
Section XIII REORGANISATION OF BOARD
131: State Govt. to notify the date from which the "transfer scheme" is to be effected by which SEB property is vested with State Govt. U/S 131 (7) "The Board shall cease to be charged with and shall not perform the functions and duties with regard to the transfers made on or after the effective date."
Section 132 specifies that if assets of Board are sold the priority on the Sale Proceeds would be to meet employees dues (including retirement benefits)
Section 133 provides for transfer of officers & employees to the transferee
Section 134 debars the employee to the protection or provisions contained in Industrial Disputes Act.
Part XIV – OFFENSES AND PENALTIES
Section 135 deals with theft of energy, with provision of imprisonment upto 3 years, fine or both.
For "Lifeline" consumers’ upto 10 KW the penalty shall be 3 times for first offence & 6 times for subsequent offence (but no imprisonment).
For consumer above 10KW for first offence, the penalty shall be three times, but for second offence and the punishment is imprisonment for 6 months to 5 years.
There are provisions of search and seizure as well as to enter, break open & search.
Section 136 deals with theft of electric lines and materials.
Section 150 deals with connivance in theft.
Section 152 deals with Compounding of offences.
Provides for setting up of Special Courts to try theft of energy cases.
Part XV deals with Arbitration.
MISc: u/s 165 any penalty can be recovered as if it were
an arrear of land revenue.
This draconian provision of British colonial lines is obviously to give powers to the private distribution cost to use the Govt. law & order machinery to recover dues.
Section 167: SEB TO BE CONVERTED TO STATE
Under Section 167 the SEB constituted under ES Act 1948 will be deemed as a STATE TRANSMISSION UTILITY AND A LICENSEE.
The state govenrment may authorise the SEB to continue to function as STU or Licensee for a period beyond 1 year "AS MAY BE MUTUALLY DECIDED BY CENTRAL & STATE GOVT."
The implication is clear that the continuance of SEB as STU beyond 1 year depends upon the consent or sweet will of the Central Govt.
U/S 167(d) gives State Govt. the power to stay the implementation of electricity Act 2003 FOR MAXIMUM 6 MONTHS.
Section 169 provides for over-riding effect over every other Act except Railways, Atomic Energy & Consumer Protection Act.
U/S 180 the electricity Act 1910, E(S) Act 1948 & ERC Act 1998 are REPEALED.
Under the Schedule the State Enactments are saved, viz Orissa, Haryana, Andhra, U.P, Karnataka, Rajasthan, Delhi & M.P.