Energy | VOL. 9, ISSUE 57, November-December 2009

Electricity Regulation in India

Electricity comes under concurrent list of the Indian Constitution, with reforms and regulation falling under state territory. However, uneven distribution of electricity sources across states induced interstate trading of electricity. This required establishment of electricity grids at regional and national level for transmission of electricity between states or regions. Electricity reforms have their roots in the Electricity (Supply) Act 1948. At the beginning of the reform period and during the much of India’s history the sector was a government monopoly. So, all the three segments of the sector namely generation, transmission and distribution were under government control. Also state collection of tariffs was significantly low as non-payment of tariffs and theft was rampant. The sector has always been politically sensitive and much of the inefficiencies were driven by flawed government interventions. Tariffs were decided by the government, which in most cases did not cover the costs of the utilities. Due to cross-subsidisation some consumer sections like industries were forced to pay high tariffs and at times these tariffs were simply unviable. Reforms introduced under the Electricity Act 2003 Electricity Rules, June 2005 (amended in October 2005) Tariff Policy, January 2006 National Electricity Plan, August 2007 Tariff based procurement of power notified 2005 (amended in September 2007) Tariff based competitive bidding for transmission services Ultra mega power projects It is only after 1991 economic reforms that...

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