Abstract
India’s tryst with electricity started in the 1870s with the experiment of electric bulbs by British officers in Calcutta. Now India is the world’s third-largest producer of electricity in the world, this shows India’s remarkable journey and evolution of its power sector. Since then India has come a long way and has substantially increased its potential and reach. India has seen many crucial points in its journey such as the Electricity Act of 1910, the Electricity (Supply) Act of 1948, the Central Electricity Regulatory Commission Act of 1998 and the latest Electricity Act of 2003. This article tries to shed some light on the evolution of India’s electricity sector and the basic essential features of India’s electricity law and highlights India’s judicial decision which led to the recognition of a right to access to electricity as a fundamental right under Article 21 of the Constitution of India.
Keywords
Power sector, Right to Electricity, seventh schedule, captive generation, Electricity Act of 1910, Electricity Act of 2003
Introduction
Electricity is not something which the world has seen from its inception. Electricity as we use nowadays is a result of decades of research and studies and with the development of electrical science and electrical engineering in the 19th century, electricity became an essential tool of modern life from being just a scientific curiosity. With the invention of light bulbs use of electricity extended to a larger public and led to the use of electrical equipment in day-to-day life.
In India, it also started with the experiment of electric light bulbs which later on led to a series of legislations, rules and regulations regulating the electricity sector of India. The first legislation in India was introduced in 1887 as the Electricity Act of 1887 since then India has come a long way.
In the latest legislation of 2003, the electricity under section 2(23) is defined as, Electrical energy generated, transmitted, supplied or traded for any purpose or used for any purpose except the transmission of messages.
Research Methodology
This article is descriptive focuses on secondary sources and draws inferences from sources such as already published scholarly research, website articles, journals and the previous and current enacted legislations of the electricity sector.
Constitutional Provisions
In India, the constitution being the supreme law of the land provides for the rights, duties and obligations of individuals, governing machinery and governments. It also provides and specifies the powers and functions between the Union and States under the seventh schedule. Article 246 of the Constitution divides the powers and functions into three lists: Centre, State, and Concurrent list. The central list is primarily under the control of the central government and the Central government can make legislations on the subject matters of the list, the second list is the state list where the state government is authorized to legislate on the matters covered under the second list and the third list is a concurrent list in which centre and state legislate together on common matters.
The electricity is put under a concurrent list means both the Centre and the state can legislate on the matters and during times of conflict the Centre’s view will prevail. As taxes on the consumption and sale of electricity are under the state list it provides that under Articles 287 and 288 states are exempted from taxing electricity on consumption and sale to/by Centre.
In India, the Ministry of Power is responsible for the development of electrical energy in the country and is responsible for overall growth, policy formation formulation and implementation of policies and legislations regarding the energy sector including the electricity sector.
Due to the active judiciary, the right to access to electricity has become a fundamental right under Article 21, in many judgments it has been pronounced in favour of the right to electricity as a fundamental right because in modern times it has become inevitable to use electrical devices.
In Madan Lal V/s State of Himachal Pradesh, the court held electricity is one of the basic amenities and it is an integral part of the right to life. The occupier has a right to get electricity from the licensee even if there is a dispute until the dispute is adjudicated and is not in favour of the occupant till then he has a right to access to electricity.
In one of the latest judgments of the Punjab High Court in 2022 in Om Prakash V/s Balkar Singh and others, it was held that electricity is a basic necessity and falls under the ambit of the right to life under Article 21 of the constitution.
History
The history of the power sector in India is over a century old and one of the earliest in the world in terms of power generation. India started its journey in electricity in the late 1870s later on hydroelectric power plant was established in Darjeeling in the 1890s for commercial generation of electricity meanwhile India implemented its first legislation as Electricity Act of 1887 to protect individuals and properties from the risk of electricity and for other purposes as well. The act of 1887 and 1903 were the earliest legislations in the world dealing with supply and generation and use of electricity but due to many practical difficulties in 1903 related to licensing system, governance of the sector legislation, demand and supply, commercial difficulties or electro technical issues, it was also realized between the period 1903-1909 that there were issues related to dual control. To address the challenges, a committee was formed to look into the matters, The committee’s efforts led to the draft of the Electricity Act, in 1910 which paved the way for reforms and growth of India’s power sector.
Electricity Act, 1910
It was formulated with a wider approach to engage public as well as private operators in the sector for commercial utilization of electricity and to have control over licensing and approval systems. The granting of a license is left in the hands of the local government.
Public Interest has been the primary concentration of the act as an authority can revoke a license if it is in Public Interest, apart from other factors such as failure to comply with conditions, and failure to execute duties mentioned by the act but if it is in the interest of the public the authorities can allow the operators to continue in after even after revocation.
The act puts an obligation licensee and gives a subtle right to the residents as licensees are obliged to supply electricity to all living in the area without any discrimination. Provisions are also mentioned for bulk supply where large amounts of electricity can be supplied to distributing licensees with regulating fair practices.
Electricity (Supply) Act, 1948
We gained independence in 1947 and our leaders wanted to expand the reach of electricity to semi Urban and rural areas and every part of the country in an economically effective manner as a part of electrification as it was necessary for the overall development of India because electricity is crucial for any country to develop and progress and absence of coordinated system and single authority controlling the generation and bulk supply hinders the healthy growth of electrical development. The concept of grid system was introduced in the act more vividly for interconnections of operations of different regions and the grid system was based on the United Kingdom’s Electricity (Supply) Act of 1926.
The Preamble of India’s Electricity (Supply) Act of 1948 provides for rationalization of the production and supply of electricity and measures for electrical development or any related issues.
The Act provides for the Central Electricity Authority by the Central Government to be constituted for policy making for natural power resources or to collect data on generation distribution and utilization and to conduct studies and research for the same. And to specify grid standards, lay down conditions for the installation of meters and advise State Governments, Boards, and generating companies involved in the electricity sector at the same time it provides for State Electricity Boards at the state level for each state and joint board if the Centre thinks so.
State Electricity Boards got powers for directions to keep stations in a good and effective manner. They can issue appropriate directions for quantity issues, for extensions of stations, and for notice to close down the station. State Electricity Boards are also empowered to regulate the supply of electricity, transmission and distribution as well. They got a special leverage to engage in the manufacture, purchase, sale or hire of electric machinery and equipment with discretion to maintain shops and showrooms for the sale.
Despite the enactment of new legislation, the sector’s performance provided for the desired outcome and as a result, some regulatory changes were brought in 1991 which enhanced the private participation and health of the power sector. In the mid-1990s ‘unbundling’ was done to give more focused attention to particular aspects of electricity (generation, transmission and distribution). This unbundling paved the way for regulatory commissions, and the government distanced itself from tariff regulations due to the need.
Electricity Act, 2003
As India faced issues despite previous reforms, the 2003 act was enacted to transform the electricity sector by welcoming private players and giving them more liberty and leverage to bring desired outcomes more competition and speedy reforms for the sector’s development. This act is a consolidation of all previous acts and legislations, it also extends the provisions of previous legislations more effectively as per the needs of modern times and encourages more effective competition in generation, transmission, and distribution fields with some reforms in the licensing system.
For continuous up-gradation, progress and optimal utilization of resources of the sector, the Act puts obligation under section 3 to formulate National Electricity Policy and tariff policy once every five years upon the Centre Government and the Centre is obligated to review all the policies and to permit stand-alone systems (electricity system set up to generate power and distribute electricity without grid connection) for rural areas.
The Act under section 14 mentions more liberal licensing rules with the prime aim of rural electrification, the Act exempts the need for a license to any person or a company generating and distributing electricity in rural areas. It also liberalizes the energy sector by making captive generation free from regulatory controls and unnecessary licenses. Other conditions were put in the act such as publication of the application or publication of notice granting the license before actually issuing of the license.
Captive generation is when a person may establish, maintain, and operate a generating plant for its use and he can have the right to open access for carrying electricity from his plant to the destination of his use. The Act provides for open access to captive generating plants. Open access means non-discriminatory provisions for the use of transmission lines by the licensee or consumer or any person engaged in generation.
The National Load Despatch Center under the Central Government and State Load Despatch Center under the State Government provide as well for Regional Load Despatch Center for a particular region under Sections 26, 31 and 27 respectively, for optimum scheduling and despatch of electricity, for day-to-day operations on grid stability and to levy and collect fee from licensees and generating companies. The other functions bestowed upon them are to monitor grid operations and to exercise control over inter-state/intra-state transmission systems.
Under Sections 38 and 39, the Central Government may provide for government companies which will be known as Central Transmission Utilities to ensure an efficient coordinating system of inter-state transmission lines for the smooth flow of electricity at the Centre level and at the State level for intra-state transmission lines under the control of State Transmission Utility.
The provisions under the Central Regulatory Commission Act of 1998, have also been extended under this Act which provides for the Central Electricity Regulatory Commission to regulate the tariffs and interest rates of generating companies, and transmission of electricity and for advising the Central Government concerning national electricity policies and activities of electricity industry.
The liberal approach can be seen in the wheeling concept where any person who wants to take supply from any licensee other than the distribution licensee of the area can receive it subject to charges known as wheeling charges.
Tariffs being the contentious topic of the electricity sector are dealt with under section 61 of the act and the central commission (at the Centre and state level) will determine the tariff of generating companies.
Keeping consumer protection and safety as one of the topmost priorities, the appellate tribunal is introduced where every aggrieved person by order of the adjudicating officer or by appropriate authority can appeal to the appellant tribunal established under section 110 of the act. Apart from this public safety and protection have always been a priority since the first legislation in 1887.
Establishment of Funds such as Central Regulatory Commission Fund at the Central Level and State Regulatory Commission Fund at the State Level, which will control and look after all the grants, loans, and debts and regulate expenses, salaries, and allowances of the industry.
Suggestion
For continuous evolution, one should look at all shortcomings and, inevitably, progress always follows self-introspection. There are many challenges in today’s electricity sector which need reforms and solutions. With the advancement of Technology and increasing population, India must focus on the distribution sector as there are still places where connections have been there or systems have been laid down but the supply of electricity is not distributed. Second, there is a need to reform the criteria of electrification of villages. As of now, villages are considered electrified if 10% of houses in the village have electricity connections. Third, the government must work on the theft of electricity, by punishing defaulters and by overcoming other challenges which put a load on the transmission lines and hinder one’s right to access to electricity.
Conclusion
India has seen crucial periods in its journey of progress in the electricity sector. Electricity apart from being an integral part of life as upheld by the Judiciary has been an important wheel of countries’ socio-economic development with the Central idea of electrification, equitable access to electricity, and effective regulatory bodies. We must also realize that there is a need to work on our shortcomings and must keep pace with technological advancement, and industrial development because India has the potential to achieve more in the sector.
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SHOAIB AHMED
FACULTY OF LAW, UNIVERSITY OF DELHI