Opportunities and threats that emanate from the Electricity Act, 2003 that has been recently promulgated
Ravinder Vashist
Second Year
IIM Lucknow
Table of Contents
1. ... Electricity Act, 2003 4
3. Identifying the stake holders
Industrial Users and Bulk consumers 5
Domestic and Agricultural users 6
State Electricity Boards 7
Power Trading 8
Power Generation 8
Power Distribution 9
4. ... Bibliography 11
Executive Summary
The recently passed Electricity Act, 2003 is a bold piece of legislature which promises to usher in an era of reforms in the electricity sector.
The act proposes to introduce competition at all the stages of power sector from generation to distribution. However the introduction of competition in retail electricity distribution forms the crux of this experiment
The act comes as a boon for the manufacturing sector which is riddled with inefficiencies owing to the high cost of electricity and the erratic power supply. Now the generation of power has been delicensed and the industrial units can establish captive power plants to satisfy their requirements. This would also liberate them from the hold of State Electricity Boards.
Domestic consumers also stand to benefit from the act though in the initial run they will have to bear the brunt of higher costs. The act proposes elimination of cross subsidies being doled out to domestic and rural customers, thus electricity would be available at the cost of supply. ...
The act also opens a gamut of opportunities for private participation in areas like Power Trading and Transmission thus creating new business opportunities and ensuring uninterrupted power supply to the customers.
State Electricity Boards (SEBs) also need to spruce up their act since lest they should fade into irrelevance. ...
Though the act proposes an array of measures to improve the electricity scenario in the country implementation of these reforms is a big question mark. ...
Opportunities and threats that emanate from the Electricity Act, 2003 that has been recently promulgated
Electricity is one of the most vital infrastructure inputs for economic development of a country. A consistent and reliable supply of electricity is extremely essential to give a fillip to the process of development. One of the reasons why Indian Elephant has trailed the Chinese dragon on the development path is the erratic and expensive electricity supply in India. While at the same time provision of regular and cheaper electricity has enabled China to attain a position of leadership in the international market.
The lack of electricity is one of the chronic maladies which have affected Indian agriculture and manufacturing sector.
Sprucing up the power infrastructure has been accorded top priority in the tenth plan with a whopping budget allocation of Rs 1, 43,399 crore to the power ministry. The ministry has set up an ambitious target of generating an additional 41,000 MW of power in the tenth plan.
Electricity Act 2003
To overcome the massive odds and to accomplish the Herculean task of reforming the power sector, Government of India introduced the Electricity Bill 2001 which promises to unleash reforms at an unprecedented magnitude. It promised to address the "Power Woes" of end users emanating from problems like inadequate power generation capacity, lack of grid discipline and poor distribution systems, low pace of rural electrification, large scale theft and skewed tariff structure The bill was passed by both houses of the parliament in May 2003 and has become an act since.
Some of the salient features of the act are:
6.The Central Government to prepare a National Electricity Policy in consultation with State Governments. ... Open access in transmission from the outset. ... Metering of all electricity supplied made mandatory. ... Provisions relating to theft of electricity made more stringent. (Clause 135-150)
Identifying the Stakeholders and the repercussions of the Act on them
The new legislation can usher in paradigm shifts in the power sector. ...
This act will have widespread ramifications on all the stakeholders and has the capacity to change the face of Indian power scene.
Industrial units and bulk consumers
Industrial and bulk consumers stand to gain maximum from this act. ... The act allows the industrial sector to break free from the hegemony of the dilapidated SEBs and to set up an independent captive power plant (CPP) to fulfill its own needs.
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