Section 11 of the Electricity Act

  • May 7, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Section 11 of the Electricity Act

Subject: Economy

Section: Infrastructure

Context:

With the coal and power supply situation in the country becoming a cause of concern, the Power Ministry has read the riot act to the imported coal based (ICB) power plants directing them to start operations.

Concept:

Section 11 of the Electricity Act, allows the government to order a Genco, in extraordinary circumstances, to operate and maintain any generating station in accordance with the government’s directions.

India is the third-largest producer and second-largest consumer of electricity worldwide, with an installed power capacity of 395.07 GW, as of January 2022.

India’s power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste.

India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020. India is the only country among the G20 nations that is on track to achieve the targets under the Paris Agreement.

Electricity regulation:

The Electricity Act 2003 governs the activities relating to generation, transmission, distribution, trading and use of electricity in India. The generation of electricity (except hydro) is an activity that does not require a licence. Distribution, transmission and trading of electricity are licensed 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 rationalisation of tariffs.
  • Ensuring transparent policies and promotion of efficiency.

The Central Electricity Authority is the statutory body under the Electricity Act that advises the Government of India on establishing policies, safety requirements and technical standards.

The Government of India (in consultation with the states and the CEA) sets policies (such as the NTP and National Electricity Policy) as a guideline for the Central Electricity Regulatory Commission (CERC) and the State Electricity Regulatory Commissions (SERCs) when they make their regulations.

The regulatory commissions are set up at the central and state level to regulate and oversee generation, distribution and transmission of electricity. They are independent bodies with functions as specified under the Electricity Act.

At the central level, CERC is responsible for the following:

  • Regulating the tariffs of the generating companies that are owned or controlled by the Government of India.
  • Regulating tariffs of generating companies (other than those owned or controlled by the Government of India), if these generating companies enter into or otherwise have a composite scheme for generation and sale of electricity in more than one state.
  • Regulate inter-state transmission of electricity.
  • Determine tariffs for inter-state transmission of electricity.
  • Adjudicating disputes involving generating companies or transmission licensees in relation to any of the previous matters.
  • Issuing licences to transmission licensees and electricity traders.

At the state level, the SERCs perform similar functions to those of CERC. The functions of SERCs include the following:

  • Regulating the purchase and procurement of electricity by distribution licensees.
  • Facilitating intra-state transmission of electricity and issuing licences to applicants for transmission licensees, distribution licensees and electricity traders within the state.
  • Determining the tariffs for the generation, supply, transmission and wheeling of electricity (wholesale, bulk or retail) within the state.
  • Adjudicate disputes between the licensees and/or the generating companies.
  • Specify state grid codes consistent with the grid code specified by CERC.

There are four types of activities covered by the Electricity Act, that is:

  • Three licensed activities:
    • transmission of electricity;
    • trading of electricity (purchase of electricity for resale); and
    • distribution of electricity.
  • De-licensed activity-Generation activity except hydropower

No licence is required under the Electricity Act for operating a generation plant (except hydro). However, a number of approvals, consents and permits must be obtained and maintained during the operation of the plant from various central and state bodies.

economy Section 11 of the Electricity Act