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Laws And Regulations Of The Indian Power Sector

India with a population of more than 1.3 billion people is the third-largest consumer of
power in the world. A capacity of 383.37 GW was installed by the National Electric Grid of
India. Lately, there has been an increase in electricity cuts and power fluctuations across
India. This situation has been influenced by a variety of things like stress on assets, shortage
of coal, and lack of iniquity by promoters to name a few. The constitution of India helps the
power sector to continue to be one of the most growing sectors in the world because of its
efficient and effective laws for the power sector.
The Seventh Schedule of the Indian constitution talks about various subjects on which
either the Parliament or the State governments can frame legislatures. The schedule has

divided subjects into three lists-
The union list comes under the ambit of the central government or the Parliament

The state list which comes under the ambit of state governments or state legislature, and
The concurrent list wherein both legislatures are allowed to make decisions
The power sector of India is included under the Concurrent list, thus is in the ambit of both
the state and central government. But in the situation of a conflict, the decision of the
Parliament is considered final.


There have been several laws over the years that have governed the Indian Power sector.

Some of the past and present laws that talk about the power sector in India are-
The Indian Electricity Act, 1910

The first law to have ever been implemented for the regulation of the distribution and
supply of electricity in India was the Indian Electricity Act, 1910. The Indian Electricity Act,
1910 provided a license to any person for the supply of energy in a particular area.
Electricity (Supply) Act, 1948-
This act was implemented so as to rationalise the supply and production of electricity across
India. One of the most important things implemented by this act was the setting of an
authority known as the Central Electricity Authority (CEA). The CEA would act as an apex
authority that would look after the planning and development of electricity.
The Act also established State Electricity Boards (SEBs) that would supply the electricity in their

The Electricity Regulatory Commission Act, 1998

The main purpose of The Electricity Regulatory Commission Act, of 1998 was to set up the
Central Electricity Regulatory Commission (SERC) that would reduce the tariff on electricity
and make policies regarding subsidies.

The Electricity Act, 2003

With effect from 2 June, 2003 India has adopted new legislation called the Electricity Act
2003, to replace some age-old existing legislation operating in the country. The new act
consolidates the position of existing laws and aims to provide for measures conducive to
the development of the electricity industry in the country. The act has attempted to address
certain issues that have slowed reform in the country and consequently has generated new
hopes for the electricity industry. This paper reviews the Electricity Act 2003, to highlight
how the new features are different from the existing legal provisions and whether these
measures have an economic rationale.
On 2nd June 2003, the Electricity Act 2003 was adopted by the Indian parliament. It was
implemented so to replace the primitive legislation that was prevalent at that time in India.
The Electricity Act 2003 aims to include the existing laws in such a way so as to provide
measures for the development of the electricity industry in India. Some of the features of

the electricity Act, 2003 are as follows-

  1. No person shall do any of the following unless the appropriate government notifies

authorises any person by way of notification-
Distribute electricity

Transmit electricity
Trade electricity

  1. The central government may from time to time demarcate the country on the basis of
    different regions. Such modifications may be made that are considered to be vital for the
    supply of electricity in an efficient and less costly manner. Such modifications can also be
    made by the central government to smoothen the coordination and interconnection of
    facilities between different states or different regions.
  2. The Electricity Act, of 2003 made laws stricter in cases of theft of electricity.
  3. The act also mandated the establishment of the State Electricity Regulatory Commission
    (SERC) across the country.
  4. The act also introduced furnishing non-discriminatory open access. Open access in this act
    means availability to different players in the power sector of the distribution system or
    transmission lines.
  5. The act also made it mandatory to meter the electricity that is supplied.
  6. The act paved the way for a Central Electricity Authority (CEA) to make a Central
    Electricity Authority (CEA) to be implemented across the country.
    The Electricity (Amendment) Bill, 2014

The Electricity (Amendment) Bill, 2014 seeks to make certain changes to the Electricity Act,

  1. This bill was introduced by the ministry of power in the Lok Sabha on 19th December
  2. Some of the features of this bill are as follows-
  3. The Electricity (Amendment) Bill, 2014 issued one license for the distribution and

maintenance of electricity supply and the network of distribution.

  1. The bill provided an increment in the speed of renewable energy. The bill seeks to
    promote the production of renewable energy in the country and increase the energy
    generation capacity of thermal power stations for 10% or above.
  2. The bill also made an increase the penalties in cases of non-compliance with the
    directions of CERC or SERC. The penalties for companies in cases of non-compliance for
    every contravention can reach an amount of 1 lakh and up to rupees 6000 for each day such
    contravention continues. The bill has increased these amounts to rupees 1 crore and 1
    lakh respectively.
  3. The term of office of the Regulatory commission’s chairperson and other members were
    reduced to a term of 3 years and eligible for re-appointment.
    A National Renewable Energy Policy will be prepared by the central government, in
    consultation with state governments. The Policy will provide for the development of the
    power system based on optimal utilisation of hydro and renewable sources of energy.
  4. The bill introduced the implementation of the National Renewable Energy policy by the
    Parliament. The policy would be implemented by the central government after thorough
    consultation with the state governments. This was done so as to pave the way for
    development of the power system and optimise the use of renewable and hydro sources.

The Electricity sector has been included in the Concurrent List of the Indian constitution for a reason by our lawmakers. It was done so because the Power and Electricity sector is a very
a crucial subject that needs the authorisation of both the centre and the state.
Electricity can transform the lives of various people in a country, not just economically but
socially also. To make sure such a transformation is possible, the government of India has
implemented the Electricity Act, of 2003 and has also implemented various other commissions
that act as a safeguard to the electricity sector and regulate the act. Various amendments
have been made to the act with the intention of facilitating and advancing the provision of
the act.
Thus, we can conclude that the electricity sector of India has been implemented within the
the ambit of laws and regulations of the Electricity Act, 2003 and has established various
the commission that ensures synchronization of the laws with regulations.

By Yashita Kapoor