CERC Asks Power Ministry to Stay Out of its Regulatory Jurisdiction for Electricity Act

CERC feels that the subjects covered under the draft rules are the substantive functions of the Central Commission

October 16, 2020


The Central Electricity Regulatory Commission (CERC) has issued an advisory for the recent draft rules proposed by the Ministry of Power (MoP), asking it to work in harmony by honoring the respective jurisdiction carved out in the Electricity Act 2003.

The CERC has asked the MoP to consult with state governments before framing rules. The Ministry has recently proposed new rules on various provisions like change in law, must-run-status, transmission system planning, recovery of inter-state transmission charges, and late payment surcharge.

The central regulator noted that the draft rules for Electricity Rules 2020 that cover clauses like change in law, and late payment surcharge rules, are available on the Ministry website; but those on transmission system planning are not available. It requested greater transparency and probity from the Ministry on such matters.

“The draft rules may not only be put on the website for wide publicity and soliciting responses of wider stakeholders, but the responses received may also be disclosed on the website for stakeholders at large to appreciate the impact of such rules,” noted CERC.

The Commission further added that the objective of the Electricity Act 2003 was to distance the regulatory responsibilities of the government and pass it on to the regulatory commissions. The Electricity Act 2003 demarcates the central government’s powers, state governments, central electricity authority, and the appellate tribunal of electricity (APTEL).

The CERC further noted that the central government could make the national electricity policy and the tariff policy in consultation with the state governments and the Central Electricity Authority (CEA). The central and state Commissions are to be guided by such a policy.

In light of the facts mentioned above, the Commission has advised the Ministry not to proceed with the framing of rules on these subjects. The Electricity Act 2003 envisages coordination between the central government and the Commission through various provisions.

Aditya K Singh, Associate Partner at HSA Advocates commented, “This letter has been issued by CERC suggesting the government to restrain from framing the proposed rules. CERC feels that the subjects covered under the draft rules are the substantive functions of the Central Commission. CERC further says the objective of the Electricity Act was distancing the regulatory responsibilities from the government and vesting it in the Regulatory Commission.”

Earlier, the MoP had issued a draft proposal for the amendment of the Electricity Act 2003 to address contract enforcement, among other vital issues. The Ministry had invited for comments, suggestions, and objections from stakeholders. Many states have raised objections to the proposed amendments.