The Electricity Act 2003 (except Section .121) have come into force with effect from 10th of June 2003 vide Notification No.SO.669(E) dated 10th June 2003 issued by Ministry of Power, Govt. of India. The Act aims to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas, rationalisation of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies, constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto.

The Act 2003 has repealed the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948 and the Electricity Regulatory Commission Act 1998, but has saved certain provisions of the Indian Electricity Act and Electricity Supply Act as contained in Section 185 of the Electricity Act, 2003. The Electricity Act, 2003 provides that the provisions of the enactment specified in the Schedule (which include the OER Act, 1995) which are not inconsistent with the provisions of the Electricity Act, 2003 shall apply to the States in which the enactments are applicable.

Key Features of the Electricity Act. 2003

1. Central Government shall prepare National Electricity Policy and Tariff Policy in consultation with the State Govts. and Central Electricity Authority (CEA). CEA shall prepare National Electricity Plan in accordance with the National Electricity Policy.

2. Generation of electricity has been permitted without obtaining a license provided it complies with the technical standards for connectivity to GRID. Hydro generation shall need the approval of the State Govt. and clearance of CEA.

3. Captive generation freely permitted and the scope widened. A Captive shall have the right to open access for carrying electricity from captive generating plant to the destination for its use subject to availability of transmission facility. Captive Power Plant has been removed from the ambit of license and other permissions.

4. Establishment of a National Load Despatch Centre (NLDC) at the National level for optimum scheduling of despatch of electricity among Regional Load Despatch Centres. NLDC shall not engage in the business of trading in electricity and shall be operated by a Govt. Company or any authority/corporation established under any Central Act.

5. Regional Load Despatch Centre (RLDC) shall be operated by a Govt. Company or any authority/corporation established under Central Act. The Central transmission utility (CTU) shall operate the RLDC till such time it is operated by a Govt. Company etc.

6. The State Load Despatch Centre (SLDC) shall ensure integrated operation in the power sector in the State and shall be responsible for optimum scheduling of despatch of electricity within the State. The SLDC shall be operated by a Govt. company or any authority/corporation established under any State Act. Till such time it is operated by a Govt. Company etc. the State Transmission Utility (STU) will operate the SLDC.

7. Transmission and Distribution of electricity and Trading in electricity shall require license from the appropriate Commission.

8. Central Transmission Utility and State Transmission Utility at their respective levels shall be responsible for planned and coordinated development of transmission network.

9. The Central Transmission Utility shall not engage in generation of electricity or trading in electricity. The State Transmission Utility shall not engage in the business of trading in electricity.

10. Distribution licensee shall be free to undertake generation and generating company would be free to take up distribution license.

11. For Rural areas, stand-alone systems for generation and distribution of electricity shall be permitted without any license.

12. Appropriate Commission may grant license to two or more persons for distribution of electricity within the same area.

13. Trading of power is recognised as a distinctive activity with Regulatory Commissions being authorised to fix ceilings and trading margins, if necessary.

14. Central Transmission Utility and State Transmission Utility shall provide non-discriminatory open access to its Transmission system on payment of transmission charges and a surcharge as may be specified by the Commission. The surcharge shall be utilised to meet the current level of cross subsidy and shall be progressively reduced and eliminated.

15. The State Commission shall introduce open access in phases and subject to such conditions within one year. Such open access will be available on payment of transmission charges and a surcharge and the surcharge will be utilised to meet the current level of cross subsidy.

16. Transmission Licensee and distribution Licensees have been permitted to engage in any business for optimum utilisation of its assets.

17. Tariff determination principles under the repealed laws/enactments shall continue to apply for a period of one year or till the regulations are framed under the Electricity Act, 2003, whichever is earlier.

18. Generation tariff shall be subject to determination by the appropriate
Commission.

19. Setting up State Electricity Regulatory Commission is a mandatory requirement.

20. Where State Government requires grant of any subsidy to any consumer or class of consumers,the amount to be compensated to the person affected by the grant of subsidy. The subsidised tariff shall be applicable on payment of the subsidy by the State Government.

21. Metering of all electricity supply have been made mandatory within two years or within such extended period as may be allowed by the Commission to complete metering.

22. An Appellate Tribunal will be constituted to hear appeals against the decision of the SERC and CERC.

23. Provisions relating to theft of electricity have been made more stringent. States will be required to set up Special Courts to deal with theft of electricity and line materials for speedy trial of offences.

24. Distribution Licensee permitted to undertake distribution of electricity in a specified area though franchisee where the franchise is not required to have a License. The distribution license shall be responsible for distribution of electricity in the said area of supply.

25. Distribution Licensees shall establish a forum for redressal of grievances of the consumers. Any consumer aggrieved by non-addressal of grievances may represent to an authority known as Ombudsman to be appointed by the State Commission.

26. The Act provides for re-organisation of State Electricity Board with an objective of corporatising the generation, transmission, distribution and trading functions.