Arpita Mukherjee Ramneet Goswami January 2009 - icrier

1985. India is in the process of developing technology to use thorium as a nuclear fuel. An
Advanced Heavy Water Reactor (AHWR) is being developed at the Bhabha Atomic Research
Centre (BARC) to expedite transition to thorium-based systems. 110
3.1.5 Electricity
As per the Constitution of India, electricity is covered under the concurrent list and is
administered by both the central and state governments. The Constitution has, however, given
supremacy to central legislation. At the Centre, the apex body is the Ministry of Power
(MoP). In most states there are State Electricity Boards (SEBs) (see Appendix D).
After Independence, most of the electricity sector was nationalized. The Electricity
(Supply) Act, 1948 was enacted to provide the framework for governance of the electricity
sector and it led to the establishment of SEBs as monolithic state-owned entities responsible
for generation, transmission and distribution of electricity. In 1975, the National Thermal
Power Corporation (NTPC) and National Hydroelectric Power Corporation (NHPC) were
created to boost electricity generation. In 1989, the Power Grid Corporation of India Limited
was established to manage the transmission system.
In 1991, the central government opened electricity generation to foreign/private
investment and encouraged the establishment of Independent Power Producers (IPP) projects.
Enron in Maharashtra, AES in Orissa, GVK and Spectrum in Andhra Pradesh, and Essar in
Gujarat are examples of such projects. The government also offered concessions such as 100
per cent ownership, long-term purchase agreement and assured profits (as high as 32 per cent
post-tax return on equity every year in the currency of investment). After 1995, competitive
bidding was allowed for acquiring new capacity (that is, IPPs).
As most SEBs were making huge financial losses, the setting up of an independent,
autonomous and accountable regulatory structure at the centre and state levels became
essential. In 1998, the government passed the Electricity Regulatory Commission Act to
establish independent regulatory bodies or commissions at the central and state levels. The
Central Electricity Regulatory Commission (CERC) was established in August 1998. At
present, around 23 111 states have constituted the State Electricity Regulatory Commission
(SERC).
On June 10, 2003 the government introduced the Electricity Act, 2003 repealing earlier
legislations – the Indian Electricity Act 1910, the Electricity (Supply) Act 1948, and the
Electricity Regulatory Commissions Act 1998. This comprehensive Act, which became
effective in June 2005, aimed to promote competition, rationalize tariffs, and provide a
transparent regulatory environment. It provided various measures such as de-licensing of
generation, freedom of captive generation, unbundling of SEBs to promote competition and
non-discriminatory open-access was introduced in the transmission system. The Act also
made it mandatory to set up an Electricity Regulatory Commission (ERC) in states.
In consonance with the provisions of this Act, the government notified the National
Electricity Policy (NEP) in February 2005 to accelerate development of the electricity sector
by providing supply of electricity to all areas and protecting the interests of consumers and
110 DAE (2008)
111 Andhra Pradesh, Assam, Bihar, Chattisgarh, Delhi, Gujarat, Haryana, Himachal Pradesh, Jammu and
Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa, Punjab,
Rajasthan, Tamil Nadu, Tripura, Uttrakhand, Uttar Pradesh and West Bengal.
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