Power Distribution:
- The Energy Conservation Act, 2001, gives the legal framework, institutional arrangement and a regulatory mechanism at the Central and State level to embark upon the energy efficiency drive in the country. The main features of this Act involves setting up of the Bureau of Energy Efficiency, evolving minimum energy consumption and performance standards and labeling criteria for notified equipment and appliances; identifying designated consumers for compliance along with its provisions, creating a cadre of professionally qualified energy managers and auditors, specifying Energy Conservation Building Codes, setting up a Central Energy Conservation Fund and promoting Energy Service Companies (ESCOs). The Act spells out the penalty for failure to comply along with its provisions.
- The Electricity Act, 2003 has declared Electricity as an Industry and all streams of the Electricity sector as individual profit centers. It gives freedom to generate, freedom to sell and freedom to procure electricity. Under this Act, power sourcing is no more a single buyer model. The Act stipulates a greater role for the private sector. There can be multiple licensees in distribution and also a parallel network by various distribution licensees servicing the similar area. Trading is allowed as a distinct activity. Tariff has to be rationalized and cross subsidies have to be eliminated over a period of time. A multi-year tariff framework has been introduced. SERC has been made mandatory and it has the power for granting licenses as well as for tariff fixation.
- The National Electricity Policy is a major policy instrument having the force of law under the Electricity Act 2003. The Central as well as State Electricity Regulatory Commissions is needed to follow the policy to discharge their functions. Same, the Central Electricity Authority (CEA) is needed to prepare a National Electricity Plan in accordance along with the National Electricity Policy. The Policy aims at accelerated development of the power sector, providing supply of electricity to all fields and protecting interests of consumers and other stake-holders. It emphasizes phasing out of the existing cross subsidies, facilitating non-discriminatory open access, augmenting transmission capacity, restructuring of distribution utilities for achieving efficiency gains within distribution and time bound reduction in transmission and distribution losses. It envisages a greater role of the private sector in funding the sector and envisages encouraging competition in various segments, procurement of power by competitive bidding, special mechanisms for encouraging private sector investments in transmission.
- The National Tariff Policy sets broad guidelines for the Regulators for fixing tariffs for Generation, Transmission and Distribution. Its aim are to ensure availability of electricity to consumers at reasonable and competitive rates, ensure financial viability of the sector and attract investment, promote transparency, predictability and consistency in regulatory approaches across jurisdictions and minimize perceptions of regulatory risks and promote competition, efficiency within operations and improvement in the quality of supply.