The MoP, vide its letter dated 17.04.2020, has issued proposed amendments in the existing Electricity Act, 2003 (hereinafter “the Bill”), asking the interested stakeholders to provide their comments, if any, on the same to the Ministry, within 21 days of the letter. Such proposed amendments have been discussed in detail below:

Amendment at a glance:

  • The Bill is being made applicable to the whole India, including Jammu and Kashmir;
  • The Central Government is vested with wide powers for implementing various provisions of the Bill, through the tariff policy, leaving out much of the discretion which vested earlier with Commissions and State Governments. This appears to be a side-door to amend/ introduce any requirement under the Bill without seeking parliamentary approval, which may lead to a challenge before Constitutional Courts (High Courts and Supreme Court);
  • Creation of a new statutory body, known as the Electricity Contract Enforcement Authority (ECEA) for adjudication of disputes pertaining to non-performance of contract. However, there exists an ambiguity as to what matters are contractual and what are tariff related, for eg. Change in law, or a dispute over payment of monthly dues by Discoms, or short-supply of power, etc. Such disputes can be termed as both contractual and tariff related, as any payment to be made to the Discom will be factored in the ARR. So, this provision will certainly lead to multiplicity of proceedings, with cases filed over jurisdiction of Regulatory Commissions or ECEA over a dispute.
  • There has been a curtailment in the regulation making powers of the Central and State Commissions, which may prove detrimental to the implementation of the Bill;
  • Statutory recognition of Cross Border Trading under the Bill;
  • Introduction of the following concepts in order to give them a legal status/ certainty: i. Distribution Sub-licensee; ii. Franchisee.
  • Provision of issuance of National Renewable Energy Policy by the Central Government, and determination of Renewable Purchase Obligation by it, in order to bring in uniformity of RPO for all the states;
  • Imposition of additional obligations on National Load Dispatch Centre;
  • Scheduling and dispatch of electricity is subject to adequate security of payment as per the contract;
  • All contracts entered between generating companies and licensees, to be placed before ECEA within 30 days of execution;
  • Expansion of the scope of agreements, under Section 49, with respect to supply or purchase or transmission of electricity to include not only open access agreements but also agreements executed between generators and licensees and also giving recognition to the payment security mechanisms for such agreements.
  • The determination of surcharge under section 42(2) for providing non-discriminatory open access to the transmission system, has now been shifted from central commission to the concerned state commission;
  • Progressive reduction in surcharge and cross subsidies has been taken out of the discretion of the State Commissions, and made subject to the provisions of the Tariff Policy;
  • Fixation of timelines for the SERCs to adopt the tariff being determined through competitive bidding process;
  • Proposed amendments have been sought with respect to mandatory inclusion of a legal member in the regulatory bodies and the procedure of their appointment;
  • The Central Government has been empowered for the appointment of members of the proposed Electricity Contract Enforcement Authority (ECEA), rather than the states. However, to avoid the infringement of powers of the state, the Chief Secretaries of two state governments have been considered.

Detailed Analysis of the proposed amendments:

The aforesaid proposed amendments have been discussed in detail herein below:

S. No. Existing Provision Proposed Amended Provision   Analysis/Comments Challenges
1.   Section 1 (2): It extends to the whole of India except the State of Jammu and Kashmir.   Omission of words “except the State of Jammu and Kashmir as follows:   Section 1 (2): It extends to the whole of India.   The provisions of the Bill will now be applicable to the whole India, including Jammu and Kashmir. This is pursuant to the abrogation of Article 370 of the Constitution of India.
2.   Section 1 (11) ” Chairperson” means the Chairperson of the Authority or Appropriate Commission or the Appellate Tribunal as the case may be; Addition of words in section 1(11) as follows:   “Chairperson” means the Chairperson of the Authority or Appropriate Commission or Electricity Contract Enforcement Authority or the Appellate Tribunal as the case may be;   Creation of a new establishment/ regulatory body known as Electricity Contract Enforcement Authority (ECEA) and hence, the definition of the term chairperson will also include the chairperson of such body.  
3.   Addition of Section 1(15a) as follows:   “(15a) “Cross border trade of electricity” means transactions involving import or export of electricity between India and any other country and includes transactions related to passage of electricity through our country in transit between two other countries;”; While cross border trading did take place by virtue of the CERC Cross Border Trading Regulations, there was no such provision under the Act. The proposed amendment seeks to provide a statutory recognition and hence, legal certainty to such trading activities before any dispute could have arisen with respect to enactment/ sanctity of CERC Regulations to that effect, without any such statutory provision under the Act for the same;   The Central Government has been delegated with the powers to prescribe rules and guidelines for allowing and facilitating such activities.   Though the proposed amendment has brought in statutory and legal certainty for cross border trading of electricity, however, the proposed amendment has not cleared air on issues clouding such as trading activities like participation of private entities/ projects for such export/ import of electricity, which is still a pending issue.
4.   Addition of clause 17a as follows:   “Section 1 (17a) “Distribution sub-licensee” means a person recognized as such and authorized by the distribution licensee to distribute electricity on its behalf in a particular area within its area of supply, with the permission of the appropriate State Commission. Any reference to a distribution licensee under the Act shall include a reference to a sub-distribution licensee;”   This incorporation of the term distribution sub licensee comes in order to give legal sanctity to the agencies/ entities, which the distribution licensee might appoint on its behalf, in a particular area of its supply;   It is also an effort of the legislature to indirectly privatize Discoms by way of such model, wherein the Utility will have the power to appoint a private company for distribution of electricity in a particular area, so that the losses of both electricity and finances can be brought down;   It is also an effort to ease the burden of the distribution licensees by way of shifting the burden on such appointed agencies.   Lack of specific regulations with respect to the Distribution Licensees and Franchisees has led to a conundrum, for the reason that both the entities have been entrusted with the same responsibility under the Bill, and hence, there lies no such reason for inclusion of two different terminologies/ entities with different nomenclature for performing the same functions.   Else, the Bill should envisage that there has to be a mutual exclusivity between the Discom and the Franchisee, so that there is no overlap of functions when servicing the end-consumer. This will make the provisions related to Franchisees more effective.   Though such entities appointed by the distribution licensee have been given a legal status, if they are appointed by the distribution licensee for a particular area, however, the responsibility to distribute electricity in such area continues to be vested with the concerned Discom. Therefore, such a provision, though eases the burden of the Discom for distribution of power, yet increases its accountability by way of inclusion of such appointed agency.  
5.   Addition of clause (24a) as follows:   “Section 1 (24a): “Electricity Contract Enforcement Authority” means an Electricity Contract Enforcement Authority referred to in sub-section (1) of section 109A;”; Introduction of a new regulatory authority which will be the sole authority and having original jurisdiction for dealing with the issues of non-performance of contracts related to sale and purchase of electricity or transmission of electricity between a generating company and a licensee or between two licensees, etc.   It is being considered as a mechanism to lessen the burden of the state regulatory commissions which already are adjudicating disputes pertaining to tariff fixation, grant of licenses and other regulatory functions.   Such body seems to be centrally driven, for the reason that the members of such body will be appointed by the Central Government.   While creation of a separate forum altogether for adjudication of disputes pertaining to non-performance of contract, seems as a beneficial approach towards promotion of investment in the power market, ease of doing business, etc., however, there exists an ambiguity as to what matters are contractual and what are tariff related, for eg. Change in law, or a dispute over payment of monthly dues by Discoms, or short-supply of power, etc. Such disputes can be termed as both contractual and tariff related, as any payment to be made to the Discom will be factored in the ARR. So, this provision will certainly lead to multiplicity of proceedings, with cases filed over jurisdiction of Regulatory Commissions or ECEA over a dispute.   As such, if this Bill goes through and becomes an Act, then it will need to be seen whether such newly constituted authority will be contributing towards effective adjudication of disputes in a time bound manner, or it only will be yet another platform for post-retirement jobs for retiring judicial members.  
6.   (27) “franchisee means a persons authorised by a distribution licensee to distribute electricity on its behalf in a particular area within his area of supply; “(27) “franchisee means a person recognized as such and authorized by a distribution licensee to distribute electricity on its behalf in a particular area within his area of supply, under information to the appropriate State Commission. Subject to the provisions of the agreement entered into between the distribution licensee and the franchisee, any reference to a distribution licensee in the Act shall include a franchisee;”   This is yet another addition in the Act, wherein the distribution licensee has been empowered to lessen its burden by authorizing certain entities (Franchisees) to distribute electricity in a particular area within his area of supply to such entities. Because of lack of any specific provisions with respect to such distribution licensee and franchisee, it seems that the responsibilities/ functions/ powers of such entities are co-extensive and hence, raises doubt for incorporating two different entities for performing similar functions.   As such, mutual exclusivity ought to be inserted in the Bill, so as to make this more effective.  
7.   (43) “Member” means the Member of the Appropriate Commission or Authority or Joint Commission, or the Appellate Tribunal, as the case may be, and includes the Chairperson of such Commission or Authority or appellate tribunal; “(43) “Member” means the Member of the Appropriate Commission or Authority or Joint Commission, or Electricity Contract Enforcement Authority or the Appellate Tribunal, as the case may be, and includes the Chairperson of such Commission or Electricity Contract Enforcement Authority or Authority or Appellate Tribunal;”.   This addition has been made for inclusion of members of the proposed newly constituted ECEA. The effectiveness of such an authority (ECEA) remains to be seen in the wake of the proposed amendments.
8.   Addition of a new section 3A:   3A. National Renewable Energy Policy – The Central Government may, from time to time, after such consultation with the State Governments, as may be considered necessary, prepare and notify a National Renewable Energy Policy for the promotion of generation of electricity from renewable sources of energy and prescribe a minimum percentage of purchase of electricity from renewable and hydro sources of energy.     This comes amidst efforts being made by the Central Government towards promotion of renewable sources of energy in the power sector.   The Bill attempts to address the issues pertaining to divergent RPOs provided by the State Commissions, by way of stating that such minimum purchase commitments/ RPOs will be determined by the Central Government for all the states.     We have seen how unreasonable level of RPOs is rendering industrial activity as financially unviable, especially in energy intensive industries, such as Steel, Aluminum, cement, etc. This prompted the Central Government to issue notifications dated 01.02.2019 and 01.10.2019 for streamlining the requirement of RPO norms across various states.   The proposed amendment also seeks to give importance to hydro power by way of possible introduction of HPOs for the states under the policy.   It remains to be seen if the Central Government would bring in uniformity in the RPOs for all the states by prescribing for a uniform trajectory for all the states, or it would provide for divergent RPOs in consultation with the states, keeping in mind renewable potential in such States.   But this will also be a challenge, if the Central Government decides to prescribe RPOs for States based on renewable potential, as then a higher RPO for a State may be detrimental to industrial activity.   However, it also needs to be considered if RPO can be pegged at lower levels on account of the fact that in the present scenario, REC based renewable projects or merchant sale projects are hard to come across, as now the maximum or all of renewable energy is being supplied to Discoms through tenders. It has to be further seen, as to what is the efficacy of RPOs in this changed scenario, and whether to phase it out.  
9.    Section 14: ……..   Provided also that in a case where a distribution licensee proposes to undertake distribution of electricity for a specified area within his area of supply through another person, that person shall not be required to obtain any separate licence from the concerned State Commission and such distribution licensee shall be responsible for distribution of electricity in his area of supply: (i) Substitution of such seventh proviso with the following:    “Provided also that a franchisee shall not be required to obtain any separate license from the appropriate State Commission and such distribution licensee shall continue to remain responsible for distribution of electricity in its area of supply:”;   (ii) Insertion of a new proviso after the seventh proviso, as follows:   “Provided also that a distribution sub-licensee shall not be required to obtain any separate license from the appropriate State Commission:”   This substitution and addition of the proviso under the Section 14 is only with respect to introduction of the two new entities i.e. franchisee and distribution sub-licensee, which have been given a legal status under the Act, in order to provide legal certainty to the functions entrusted to them by the distribution licensee. However, such an addition and substitution only adds up to the ambiguity arising due to lack of understanding of the intention of the Bill behind introducing two different terminologies/ connotations for an entity performing same functions under the Act.   Mutual exclusivity of functions of a Distribution Licensee and a Franchisee, should be made part of the Bill.    
10.   Section 26:   (National Load Despatch Centre):    — (1) The Central Government may establish a centre at the national level, to be known as the National Load Despatch Centre for optimum scheduling and despatch of electricity among the Regional Load Despatch Centres. (2) The constitution and functions of the National Load Despatch Centre shall be such as may be prescribed by the Central Government: Provided that the National Load Despatch Centre shall not engage in the business of trading in electricity. (3) The National Load Despatch Centre shall be operated by a Government company or any authority or corporation established or constituted by or under any Central Act, as may be notified by the Central Government.   (i) Insertion of new clauses (4), (5) and (6) in section 26, as follows:   “(4) the National Load Despatch Centre shall:   (a) be responsible for optimum scheduling and despatch of electricity in the country across different regions in accordance with the contracts entered into with the licensees or the generating companies;   (b) monitor grid operations;   (c) exercise supervision and control over the inter-regional and interstate transmission network; and   (d) have overall authority for carrying out real time operations of the national grid.   (5) The National Load Despatch Centre may give such directions and exercise such supervision and control as may be required for the safety and security of the national grid and for ensuring the stability of grid operation throughout the country.   (6) Every Regional Load Despatch Centre, State Load Despatch Centre, licensee, generating company, generating station, sub-station and any other person connected with the operation of the power system shall comply with the directions issued by the National Load Despatch Centre.”   It is a welcome provision for detailing the role of National Load Dispatch Centre has been promulgated by way of the proposed amendments, which include carrying out real time operations and monitoring of the national grid, optimum scheduling and dispatch of electricity, and supervision and control of the inter- regional and inter-state transmission of network and grid security.
11.   Section 28 (3):   The Regional Load Despatch Centre shall –   (a) be responsible for optimum scheduling and despatch of electricity within the region, in accordance with the contracts entered into with the licensees or the generating companies operating in the region; Insertion of a proviso in Section 28(3)(a), as follows:   “Provided that no electricity shall be scheduled or despatched under such contract unless adequate security of payment, as agreed upon by the parties to the contract, has been provided.”   Introduction of adequate payment security mechanisms for the purpose of hindering defaults in payments under the contracts, and resultantly to avoid disputes and stagnancy of such contracts.   This will also reduce working capital requirements, for the payment security given in advance, will not require the “receiving” entities to resort to loans while the “paying” entities provide for such contractual payments.   While this seems to be a welcome move in order to avoid piling up of unrealized revenues in the future, yet it remains to be seen as to what such security mechanisms will be introduced by the Central Government, which can effectively ensure payments under such contracts, since the already existing mechanisms of LCs have failed to resonate in such a manner.   This will also bind Traders into providing compulsory PSM to the generators, or the sources of power.   However, one lacuna is that the contracts should also include consumer contracts under Section 49 of the Bill. Leaving out consumers from the purview of the said provision will not effectively solve the problems of non-payment.  
12.   Section 32(2)(a):   (2) The State Load Despatch Centre shall –   (a) be responsible for optimum scheduling and despatch of electricity within a State, in accordance with the contracts entered into with the licensees or the generating companies operating in that State;” Insertion of a proviso in Section 32(2)(a), as follows:   “Provided that no electricity shall be scheduled or despatched under such contract unless adequate security of payment, as agreed upon by the parties to the contract, has been provided.”   Same as above. Same as above.
13.   Section 38 (2) (d):   to provide non-discriminatory open access to its transmission system for use by- ..   (ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the Central Commission:   Changes in the provision as follows:   “38 (2) (d) ……   (ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges, as may be specified by the Central Commission and a surcharge, as may be specified by the State Commission under sub-section (2) of section 42, if required by the Appropriate Commission to be collected by it.”.   The amendment has divided transmission charges and surcharge between the Central Commission and the State Commission. Whereas, before the proposed amendment, both the charges were mandated to be determined by the Central Commission, the State Commission will now specify the surcharge applicable. The same has been done to ease out the challenges faced out by Discoms. The surcharge specified by the State Commission would be recoverable by CTU, but no methodology has been specified for the same.   Further, what is the need for a surcharge (and/ or CSS) to be charged by CTU, is nowhere defined in the Act.   It would have been better if the requirement of Surcharge to be charged by CTU had been deleted in the Bill, as it is only a Distribution licensee which has to safeguard its interests on account of high value consumers moving away under open access.   When charges of CTU are loaded on to the Distribution Licensees, then there is no point in providing Surcharge facility for the CTU. It does not make any sense. The interests of CTU are protected through payment of transmission charges and relinquishment compensation.  
14.   Section 39(2)(d):   to provide non-discriminatory open access to its transmission system for use by-   (ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the State Commission Substitution in Section 39(2)(d)(ii), as follows:    “(ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges, as may be specified by the State Commission and a surcharge, as may be specified by the State Commission under sub-section (2) of section 42, if required by the State Commission to be collected by it.”.   Same as above. Same as above.
15.   Section 40(2)(d) …….   (ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges and a surcharge thereon, as may be specified by the State Commission:   Substitution as follows:    “(ii) any consumer as and when such open access is provided by the State Commission under sub-section (2) of section 42, on payment of the transmission charges and a surcharge, as may be specified by the Appropriate Commission.”. Same as above. Same as above.   However, if the surcharge is to be determined by the State Commission, then there lies no reason for such an amendment.
16.   First Proviso to Section 42(2):   Provided that 1[such open access shall be allowed on payment of a surcharge] in addition to the charges for wheeling as may be determined by the State Commission:     Substitution of the First proviso:   “Provided that such open access shall be allowed on payment of a surcharge, and charges for wheeling, as may be determined by the State Commission in addition to the charges for intra-state transmission, as determined under section 39, if applicable, and charges for inter-state transmission, as determined by the Central Commission under section 38, if applicable: “     The Bill seeks to provide details as to what all charges have to be paid by a consumer availing open access. If transmission charges (STU or CTU) have to be factored by a beneficiary availing open access, then where is the need for providing surcharge (and/ or CSS) for a transmission licensee as per Sections 38 to 40.
17.   Third Proviso to Section 42(2):   Provided also that such surcharge and cross subsidies shall be progressively reduced 2[***] in the manner as may be specified by the State Commission:   Substitution of the Third proviso:   “Provided also that such surcharge and cross subsidies shall be progressively reduced by the State Commission in the manner as may be provided in the Tariff Policy:”;   The Bill seeks to take away the power of progressive reduction of cross subsidy by the State Commission, and seeks to give a statutory status to the Tariff Policy by stating it to be the module for the Commission to follow for such reduction. While the move is welcome as it has been seen that most State Commissions have determined arbitrarily high CSS and also cross subsidies in tariffs, which kills open access, however, the Central Government should make sure, through the tariff policy, that States where CSS and cross subsidies are already less, should not be increased in future under any circumstances.   Another challenge could be the legal sanctity of the tariff policy, as the Bill seeks to give over-arching powers to the Central Government through executive policies. This is a side-door to amend/ introduce any requirement under the Bill without seeking parliamentary approval.  
18.     Addition of a Fifth proviso to Section 42(2):   “Provided also that the manner of payment and utilization of the surcharge shall also be specified by the State Commission:”.   This is a welcome provision as putting the mode of payments and procedure for such payment of surcharge under regulatory scanner of the State Commissions approval will avoid any arm twisting by the Distribution Licensees.
19.   Section 49:   Where the Appropriate Commission has allowed open access to certain consumers under section 42, such consumers, notwithstanding the provisions contained in clause (d) of sub-section (1) of section 62, may enter into an agreement with any person for supply or purchase of electricity on such terms and conditions (including tariff) as may be agreed upon by them.   Substitution of section 49 as follows:   “49. Agreement with respect to supply or purchase or transmission of electricity). –   (1) A generating company or a licensee may enter into an agreement with a licensee for supply, purchase or transmission of electricity on such terms and conditions, as may be agreed upon by them, including tariff and adequate security of payment consistent with the provisions of this Act.   (2) Where the Appropriate Commission has allowed open access to certain consumers under section 42, such consumers, notwithstanding the provisions contained in clause (d) of sub-section (1) of section 62, may enter into an agreement with any person for supply or purchase of electricity on such terms and conditions (including tariff) as may be agreed upon by them.”.   Expansion of the scope of agreements to include not only the open access agreements but also other agreements pertaining to sale, purchase and/ or transmission of electricity, and also provide payment security mechanism for such agreements.   However, the tariff mentioned under Clause (1), includes the tariff determined as per Sections 61, 62, 63 and 64 of the Bill.   There is no non-obstante clause in Clause (1), as compared to Clause (2). This means that tariff in the open access arrangements between a consumer and the source of power are not required to be approved by Commissions.
20.   Addition of a new Section 49A:   “49A: Cross Border Trade of Electricity – (1) The Central Government may prescribe rules and issue guidelines for allowing and facilitating cross border trade of electricity in accordance with the provisions of this Act.   (2) The Central Government may require the Central Commission to make regulations for cross border trade of electricity.”.   Incorporation of cross border trading under the Act, gives legal sanctity to such trading activities. This will cover import or export of electricity from India and any other country. The transaction related to passage of electricity through India would be treated as transit between two other countries.  While this is a welcome step to provide in the Parent legislation itself the concept of cross border trade, however since the provisions proposed to be incorporated seem to have prospective application, this may raise doubt with respect to existing cross border trading activities going on, as to whether they are permitted bv the existing Act or not.
21.   Section 61:   (g) that the tariff progressively reflects the cost of supply of electricity and also, reduces cross-subsidies in the manner specified by the Appropriate Commission; (h) the promotion of co-generation and generation of electricity from renewable sources of energy; (i) the National Electricity Policy and tariff policy: Omission and substitution in section 61(g), (h) and (i) as follows:   g) that the tariff progressively reflects the cost of supply of electricity and also, reduces cross-subsidies in the manner as provided in the Tariff Policy;    (h) the promotion of co-generation and generation of electricity from renewable and hydro sources of energy;    (i) the National Electricity Policy and tariff policy and National Renewable Energy Policy:   The provision mentions the progressive reduction of cross subsidies as provided under the Tariff Policy and takes away the discretion from the State Commissions.   It also provides for promotion of hydro sources of energy, apart from the already existing renewable sources of energy   The Bill seeks to also include Large Hydro power plants within the ambit of promotional measures, since the existing provision only considered hydro plants which met the criteria of renewable energy (i.e. small hydro upto 25 MW capacity).   The Bill also seeks that Commissions should consider the provisions of the National Renewable Energy Policy, apart from the Electricity and Tariff Policies, while framing tariff regulations and/ or determining tariff.   The statutory force given to the Tariff Policy appears to be a side-door to amend/ introduce any requirement under the Bill without seeking parliamentary approval, which may lead to a challenge before Constitutional Courts (High Courts and Supreme Court).
22.   Section 62 Insertion of provision after Section 62 (1)(d):    “Provided that the Appropriate Commission shall fix tariff for retail sale of electricity without accounting for subsidy, which, if any, under section 65 of the Act, shall be provided by the government directly to the consumer;”   (i) in sub-section (1), after the word “Provided” in the existing proviso, the word “further” shall be inserted;   (ii) in sub-section (3), after the words “but may”, the words “subject to provisions of the Tariff Policy,” shall be inserted.   This is a welcome step as the proviso seeks to improve the revenue collection of Distribution Licensees, so that they will not be dependent upon the whims and fancies of the Governments in releasing subsidy funds.   However, this does not mean that there would not be any inbuilt cross subsidies in retail tariff of the Distribution Licensees. This provision will only apply where any State Government (and/ or Central) has provided subsidy under Section 65, which is to be paid to the licensee. Only in such cases, the Distribution Licensee is proposed to be allowed to charge full retail tariff from the consumer, with the onus of providing subsidies under Section 65 left to the Government(s) to be effected directly to such consumers.   Under Section 62(3), the Bill mandates that retail supply tariffs will be fixed as per the provisions of the Tariff Policy. This is a welcome provision as it would lead to some methodology to be adopted by the State Commissions while determining retail tariffs and unnecessary loading of cross subsidies will be avoided.   Presently, none of the State Commissions have any regulation or guideline, as to what should be the cross-subsidy component in a retail tariff. This is often mis-used by the State Commissions by providing arbitrary and high levels of cross subsidies in retail tariffs of consumers. The proposed amendment seeks to remove this excessive/ unbridled exercise of power by the State Commissions.   The Electricity Act, 2003 was enacted with the sole purpose of distancing government intervention in matters related to tariff. However, the existing Section 62(3) was negating the aforesaid intent, as there was no fixed roadmap/ guideline/ regulation as to how to determine retail supply tariffs. This ambiguity is sought to be addressed by the Bill.   The amendment sought in Section 62(3), giving Tariff Policy primacy, appears to be a side-door to amend/ introduce any requirement under the Bill without seeking parliamentary approval, which may lead to a challenge before Constitutional Courts (High Courts and Supreme Court).
23.   Section 63:   Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.   Insertion of a sub-section (2) in Section 63, after Section 63 is re-numbered as 63(1):   (1) Notwithstanding ………   “(2) The Appropriate Commission shall, after receipt of application complete in all respects, adopt the tariff so determined under sub-section (1), in a timely manner but not later than sixty days from the date of application:   Provided that on expiry of sixty days from the date of application, if it is not decided by the Appropriate Commission, the tariff shall be deemed to have been adopted by the Appropriate Commission.”   This is a welcome provision, which would provide sanctity of the bidding processes, whereby the distribution licensees or generators/ traders cannot seek to wriggle out of the process when bidding is concluded.   Timelines have been fixed for adoption of tariff by the SERCs so as to avoid tariff becoming irrelevant and/ or disputes arising out of the same.  
24.   Section 65:   If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the State Commission under section 62, the State Government shall, notwithstanding any direction which may be given under section 108, pay, in advance and in such manner as may be specified, the amount to compensate the person affected by the grant of subsidy in the manner the State Commission may direct, as a condition for the licence or any other person concerned to implement the subsidy provided for by the State Government:   Provided that no such direction of the State Government shall be operative if the payment is not made in accordance with the provisions contained in this section and the tariff fixed by State Commission shall be applicable from the date of issue of orders by the Commission in this regard.   Substitution of Section 65 as follows:   If the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the State Commission under section 62, the State Government shall, notwithstanding any direction which may be given under section 108, pay, in advance the amount of subsidy directly to the consumer and the licensee shall charge the consumers as per the tariff determined by the Commission: This is a welcome step as the proviso seeks to improve the revenue collection of Distribution Licensees, so that they will not be dependent upon the whims and fancies of the Governments in releasing subsidy funds.   However, this does not mean that there would not be any inbuilt cross subsidies in retail tariff of the Distribution Licensees. This provision will only apply where any State Government (and/ or Central) has provided subsidy under Section 65, which is to be paid to the licensee. Only in such cases, the Distribution Licensee is proposed to be allowed to charge full retail tariff from the consumer, with the onus of providing subsidies under Section 65 left to the Government(s) to be effected directly to such consumers.  
25.   Section 77:   (Qualifications for appointment of Members of Central Commission): — (1) The Chairperson and the Members of the Central Commission shall be persons having adequate knowledge of, or experience in, or shown capacity in, dealing with, problems relating to engineering, law, economics, commerce, finance or, management and shall be appointed in the following manner, namely:-   (a) one person having qualifications and experience in the field of engineering with specialisation in generation, transmission or distribution of electricity;   (b) one person having qualifications and experience in the field of finance;   (c) two persons having qualifications and experience in the field of economics, commerce, law or management: Provided that not more than one Member shall be appointed under the same category under clause (c).   (2) Notwithstanding anything contained in sub-section (1), the Central Government may appoint any person as the Chairperson from amongst persons who is, or has been, a Judge of the Supreme Court or the Chief Justice of a High Court:   Provided that no appointment under this sub-section shall be made except after consultation with the Chief Justice of India.   Section 77 to be amended as follows:   (Qualifications for appointment of Members of Central Commission): — (1) The Chairperson and the Members of the Central Commission shall be persons having adequate knowledge of, or experience in, or shown capacity in, dealing with, problems relating to engineering, law, economics, commerce, finance or, management and shall be appointed in the following manner, namely: –   (a) one person having qualifications and experience in the field of engineering with specialisation in generation, transmission or distribution of electricity;   (b) one person having qualifications and experience in the field of finance law;   (c) two persons having qualifications and experience in the field of finance, economics, commerce, public policy, or management:   Provided that not more than one Member shall be appointed under the same category under clause (c).   The proposed amendment is a welcome step as it seeks to make inclusion of judicial member in regulatory bodies, mandatory. This will bring some much-needed legal sanctity to the proceedings before the Commission.   There have been judicial pronouncements by the Hon’ble Supreme Court mandating appointment of judicial members in State Commissions. However, even after the said judicial orders, no judicial member was appointed to a Central Commission. The proposed amendment seeks to plug the said gap.   It also expands the scope of members of the commission by including those with the credentials of public policy to be eligible for the same.     The proposed amendment also allows appointment of members from diverse backgrounds, so as to give a broader perspective to the regulatory body, as presently the same appears to be tilted in favour of central government entities, such as PGCIL, NTPC, etc.   The Bill also removes the requirement of consultation of chief justice for appointment of judicial member or chairman.
26.   Section 78:   (Constitution of Selection Committee to recommend Members): — (1) The Central Government shall, for the purposes of selecting the Members of the Appellate Tribunal and the Chairperson and Members of the Central Commission, constitute a Selection Committee consisting of – (a) Member of the Planning Commission in-charge of the energy sector ……… Chairperson; (b) Secretary-in-charge of the Ministry of the Central Government dealing with the Department of the Legal Affairs ……. Member; (c) Chairperson of the Public Enterprises Selection Board ….Member; (d) a person to be nominated by the Central Government in accordance with sub-section (2)……… Member; Section 78 to be substituted as follows:   (Constitution of Selection Committee to recommend Members): —   (1) The Central Government shall, for the purposes of selecting the Members of the Appellate Tribunal and the Chairperson and Members of the Central Commission, Electricity Contract Enforcement Authority, State Commissions, and Joint Commissions, constitute a Selection Committee consisting of –   (a) A person who is, or has been, a Judge of the Supreme Court to be nominated by the Chief Justice of India ……….Chairperson;   (b) Secretary-in-charge of the Ministry of the Central Government to be nominated by the Central Government ………Member;   (c) Chief Secretaries of two State Governments in accordance with sub-section (2)……… Member;   (d) Secretary-in-charge of the Ministry of the Central Government dealing with power……….Member.   (2) For the purposes of clause (c) of sub-section (1), the Chief Secretary of the State Governments in alphabetical order of the states starting with Andhra Pradesh, Arunachal Pradesh shall be the members of the Selection Committee for a period of one year.   (3) Secretary-in-charge of the Ministry of the Central Government dealing with Power shall be the Convener of the Selection Committee.   (4) The Central Government shall, within one month from the date of occurrence of any vacancy by reason of death, resignation or removal of a Member of the Appellate Tribunal or the Chairperson or a Member of the Central Commission and six months before the superannuation or end of tenure of the Member of the Appellate Tribunal or Member of the Central Commission or the Electricity Contract Enforcement Authority and within a period of twelve months before the superannuation or end of tenure of the Member of the Appellate Tribunal or Chairperson or Member of the Central Commission or Electricity Contract Enforcement Authority, make a reference to the Selection Committee for filling up of the vacancy.   (5) The State Government shall, within a period of one month from the date of occurrence of any vacancy by reason of death, resignation or removal of the Chairperson or a Member and within a period of twelve months before the superannuation or end of tenure of the Chairperson or Member, make a reference to the Selection Committee for filling up of the vacancy.   (6) The proceedings of the Selection Committee shall be held in Delhi or such other places as the Central Government may notify.   (7) The Selection Committee shall finalise the selection of the Chairperson and Members referred to in sub-section (4) and (5) and make a recommendation for every vacancy referred to it within three months of the receipt of the reference.   (8) Before recommending any person for appointment as Member of the Appellate Tribunal, or the Chairperson or other Member of the Appropriate Commission or Electricity Contract Enforcement Authority, the Selection Committee shall satisfy itself that such person does not have any financial or other interest which is likely to affect prejudicially his functions as the Chairperson or Member.   (9) No appointment of the Chairperson or other Member shall be invalid merely by reason of any vacancy other than that of the Chairperson in the Selection Committee.”   This is a welcome change as strict timelines have been provided for reference to the Constitution Committee for appointment of members in adjudicatory/ regulatory forums.   The recommendation of the Committee has to be made within 3 months of the receipt of the reference. This will ensure that tribunals are not left non-functional on account of retirement/ removal/ incapacitation/ death of any member.   The appointment for the ECEA will be Centrally driven, and to avoid it being an infringement of state powers, the chief secretaries of two states will be considered.
27.   Section 79:   (Functions of Central Commission): — (1) The Central Commission shall discharge the following functions, namely:- ……..   (f) to adjudicate upon disputes involving generating companies or transmission licensee in regard to matters connected with clauses (a) to (d) above and to refer any dispute for arbitration; …..   (4) In discharge of its functions, the Central Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3. Section 79 to be amended as follows:   Section 79. (Functions of Central Commission): — (1) The Central Commission shall discharge the following functions, namely:- ……..   (f) to adjudicate upon disputes, except matters referred to in section 109A, involving generating companies or transmission licensee in regard to matters connected with clauses (a) to (d) above and to refer any dispute for arbitration;   After clause (j) in sub-Section (1), the following clause is to be inserted: –   (ja) To regulate cross border trade of electricity in accordance with the provisions of this Act and rules made there under;   Sub-section (4) to be amended as follows:   (4) In discharge of its functions, the Central Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3 and National Renewable Energy Policy under section 3A.   The Bill seeks to carve out matters relating to contractual disputes from the ambit of the Central Commission;   Only tariff/ regulatory matters shall be adjudicated by the Central Commission;   The difficulty will arise in construing what matters are tariff related, and what are purely contractual, as there is often a thin/ non-existent line between the two. While creation of a separate forum altogether for adjudication of disputes pertaining to non-performance of contract, seems as a beneficial approach towards promotion of investment in the power market, ease of doing business, etc., however, there exists an ambiguity as to what matters are contractual and what are tariff related, for eg. Change in law, or a dispute over payment of monthly dues by Discoms, or short-supply of power, etc. Such disputes can be termed as both contractual and tariff related, as any payment to be made to the Discom will be factored in the ARR. So, this provision will certainly lead to multiplicity of proceedings, with cases filed over jurisdiction of Regulatory Commissions or ECEA over a dispute.   As such, if this Bill goes through and becomes an Act, then it will need to be seen whether such newly constituted authority will be contributing towards effective adjudication of disputes in a time bound manner, or it only will be yet another platform for post-retirement jobs for retiring judicial members.
28.   Section 82:   Second proviso to sub-section (1) of Section 82:   …..   Provided further that the Chairperson and other Members of the State Commission appointed, before the commencement of this Act under the Electricity Regulatory Commissions Act, 1998 or under the enactments specified in the Schedule, may on the recommendations of the Selection Committee constituted under sub-section (1) of Section 85 be allowed to opt for the terms and conditions under this Act by the concerned State Government.   Amendment of second proviso to sub-section (1) of Section 82:   Provided further that the Chairperson and other Members of the State Commission appointed, before the commencement of this Act under the Electricity Regulatory Commissions Act, 1998 or under the enactments specified in the Schedule, may on the recommendations of the Selection Committee constituted under sub-section (1) of Section 78 be allowed to opt for the terms and conditions under this Act by the concerned State Government.   Amendment of sub-section (4) of Section 82:   (4) The State Commission shall consist of not more than four Members, including the Chairperson.   Amendment of sub-section (5) of Section 82:   (5) The Chairperson and Members of the State Commission shall be appointed by the State Government on the recommendation of a Selection Committee referred to in Section 78.   Insertion of sub-section (7) after (6) under Section 82:   “(7)  If there is no chairperson and member in a State Commission to perform its functions, the Central Government may, in consultation with the state government concerned, entrust its functions to any other State Commission or Joint Commission, as it deems proper.”   This is a welcome provision, as sub-section 7 will ensure that in the event a State Commission is not functioning, then the Central Government shall have the power to entrust the functioning of the said State Commission with any other State/ Joint Commission.   The aforesaid will provide a forum to the aggrieved persons, when a State Commission is not functioning. We have seen this recently in the case of TNERC, when it was not functioning then a lot of entities were rendered remediless, and then the only option is to file writ petitions in High Courts. 
29.   Section 84:   (Qualifications for appointment of Chairperson and Members of State Commission): —   (1) The Chairperson and the Members of the State Commission shall be persons of ability, integrity and standing who have adequate knowledge of, and have shown capacity in, dealing with problems relating to engineering, finance, commerce, economics, law or management.   (2) Notwithstanding anything contained in sub-section (1), the State Government may appoint any person as the Chairperson from amongst persons who is, or has been, a Judge of a High Court:   Provided that no appointment under this sub-section shall be made except after consultation with the Chief Justice of that High Court. Sub-section (1) of Section 84 to be substituted as follows:   “(1) The Chairperson and the Members of the State Commission shall be persons having adequate knowledge of, or experience in, or shown capacity in, dealing with, problems relating to engineering, law, economics, commerce, finance, public policy or management and shall be appointed in the following manner, namely:-   (a) one person having qualifications and experience in the field of engineering with specialization in generation, transmission or distribution of electricity;   (b) one person having qualifications and experience in the field of law;   (c) two persons having qualifications and experience in the field of finance, economics, commerce, public policy or management.”;   Sub-section (2) of Section 84 shall be omitted. This is a welcome provision as SERCs will now be required to mandatorily have four members, including one from legal fraternity.   The proposed amendment also allows appointment of members from diverse backgrounds, so as to give a broader perspective to the regulatory body, as presently the same appears to be tilted in favour of government entities.  
30.     Section 85 to be omitted   No comments, as the omission was required to make the Bill in line with the other provisions relating to the selection committee.    
31.   Section 86:   (Functions of State Commission): — (1) The State Commission shall discharge the following functions, namely: – …….   (e) promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;   (f) to adjudicate upon the disputes between the licensees, and generating companies and to refer any dispute for arbitration; …….   (4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3.   Section 86 to be amended as follows:   (Functions of State Commission): — (1) The State Commission shall discharge the following functions, namely: – …….   (e) promote co-generation and generation of electricity from renewable and hydro sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee as may be prescribed by the Central Government from time to time;   (f) to adjudicate upon the disputes, except matters referred to in section 109A, between the licensees, and generating companies and to refer any dispute for arbitration; ……   (4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3 and National Renewable Energy Policy. The Bill seeks to carve out matters relating to contractual disputes from the ambit of the State Commissions;   Only tariff/ regulatory matters shall be adjudicated by the State Commissions;   The difficulty will arise in construing what matters are tariff related, and what are purely contractual, as there is often a thin/ non-existent line between the two.   The Bill seeks to provide for promotion of hydro sources of energy, apart from the already existing renewable sources of energy.   The Bill seeks to also include Large Hydro power plants within the ambit of promotional measures, since the existing provision only considered hydro plants which met the criteria of renewable energy (i.e. small hydro upto 25 MW capacity).   The proposed amendments may also permit imposition of Hydro Energy Purchase Obligations, by the State Commissions.   The Bill also seeks that Commissions should consider the provisions of the National Renewable Energy Policy, apart from the Electricity and Tariff Policies, while discharging its functions.   While creation of a separate forum altogether for adjudication of disputes pertaining to non-performance of contract, seems as a beneficial approach towards promotion of investment in the power market, ease of doing business, etc., however, there exists an ambiguity as to what matters are contractual and what are tariff related, for eg. Change in law, or a dispute over payment of monthly dues by Discoms, or short-supply of power, etc. Such disputes can be termed as both contractual and tariff related, as any payment to be made to the Discom will be factored in the ARR. So, this provision will certainly lead to multiplicity of proceedings, with cases filed over jurisdiction of Regulatory Commissions or ECEA over a dispute.   As such, if this Bill goes through and becomes an Act, then it will need to be seen whether such newly constituted authority will be contributing towards effective adjudication of disputes in a time bound manner, or it only will be yet another platform for post-retirement jobs for retiring judicial members.   For imposition of any Hydro Energy Purchase Obligations, the entire protocol, as is there for RPO, will require to be specified through Regulations by the State Commissions, as well as Central Commission by referring to Section 66.
32.   Section 90:   Proviso to sub section (3):   Provided that nothing contained in this section shall apply to the Chairperson of the Appropriate Commission who, at the time of his appointment as such is a sitting Judge of the Supreme Court or the chief Justice of a High Court or a Judge of a High Court.   Omitted    
33.   Section 92:   Insertion of a new sub-section (6) in Section 92:   “(6) Where before or during the course of a proceeding, the Appropriate Commission comes to a conclusion that the Electricity Contract Enforcement Authority has the sole authority and jurisdiction to adjudicate a matter, it shall refer the same to the Electricity Contract Enforcement Authority for its orders”.   Since a new body is being constituted by the states as ECEA for disputes pertaining to non-performance under the contracts, hence, it requires all the SERCs to refer such disputes to ECEA. The challenge would be that the process of adjudication before State Commissions, or Central Commission, will become lengthy as decisions on jurisdiction of the concerned Commission or the ECEA shall have to be given in most of the proceedings.
34.     PART XA ELECTRICITY CONTRACT ENFORCEMENT AUTHORITY   109A. Establishment of Electricity Contract Enforcement Authority. –   (1) The Central Government shall, by notification, establish an Electricity Contract Enforcement Authority to exercise the powers conferred on, and discharge the functions assigned to, it under the Act.   (2) Notwithstanding anything contained in this Act or any other law in force, the Electricity Contract Enforcement Authority shall have the sole authority and jurisdiction to adjudicate upon matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity, provided that it shall not have any jurisdiction over any matter related to regulation or determination of tariff or any dispute involving tariff.   (3) Every contract between a generation company and a licensee shall be filed with the Appropriate Commission within 30 days of the said contract having been concluded.   109B. Application to Electricity Contract Enforcement Authority and order thereon –   (1) Any person aggrieved in any matter referred to in section 109A may prefer an application to the Electricity Contract Enforcement Authority.   (2) Every application under sub-section (1) shall be filed within a period of six months from the non-performance of the obligation under the contract:   Provided that the Electricity Contract Enforcement Authority may entertain an application after the expiry of the said period of six months if it is satisfied that there is sufficient cause for not filing it within that period.   (3) Every application received under sub section (1) shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed.   (4) On receipt of an application or matter under sub-section (6) of section 92, the Electricity Contract Enforcement Authority may, after giving the parties to the application an opportunity of being heard, determine whether a valid contract subsists between the parties and whether any party is in violation of any of its obligations under the contract.   (5) Upon a finding that there has a violation/ breach of obligation under a contract by a party or parties, the Electricity Contract Enforcement Authority shall direct that the said parties immediately perform their obligation under the contract and may direct the payment of costs on account of the breach of contract or non-fulfilment of obligations of the contract and any further amount it may deem fit as compensation.   (6) The Electricity Contract Enforcement Authority shall send a copy of every order made by it to the parties to the application as the case may be.   (7) The Electricity Contract Enforcement Authority shall deal with the application filed before it under sub-section (1) and any matter referred to it under sub-section (6) of section 92 as expeditiously as possible and endeavor to dispose it finally within one hundred and twenty days from the date of its receipt:   Provided that where any application could not be disposed off within the said period of one hundred and twenty days, the Electricity Contract Enforcement Authority shall record its reasons in writing for not disposing of the matter within the said period.   109C. Composition of Electricity Contract Enforcement Authority- (1) The Electricity Contract Enforcement Authority shall consist of the following –   a) a Chairperson;   b) two or more Judicial Members as may be prescribed by the Central Government from time to time; and   c) three or more Technical Members, as may be prescribed by the Central Government from time to time.   (2)  Subject to the provisions of this Act, a) the jurisdiction of the Electricity Contract Enforcement Authority may be exercised by Benches thereof;   b)  a Bench may be constituted by the Chairperson of the Electricity Contract Enforcement Authority with two or more Members of the Electricity Contract Enforcement Authority as the Chairperson of the Electricity Contract Enforcement Authority may deem fit:   Provided that every Bench shall include at least one Judicial Member and one Technical Member;   c) the Benches of the Electricity Contract Enforcement Authority shall ordinarily sit in Delhi and such other places as the Central Government may, in consultation with the Chairperson of the Electricity Contract Enforcement Authority, notify;   (d) the Central Government shall, in consultation with the Chairperson of the Electricity Contract Enforcement Authority, notify the areas in relation to which each Bench of the Electricity Contract Enforcement Authority may have exercise jurisdiction.   (3) Notwithstanding anything contained in sub-section (2), the Chairperson of the Electricity Contract Enforcement Authority may transfer a Member of the Electricity Contract Enforcement Authority from one Bench to another Bench.   Explanation. – For the purposes of this section, a Judicial Member shall include the Chairperson of the Electricity Contract Enforcement Authority.   109D. Qualification for appointment of Chairperson and Members of Electricity Contract Enforcement Authority. –   (1) A person shall not be qualified for appointment as the Chairperson of the Electricity Contract Enforcement Authority or a Member of the Electricity Contract Enforcement Authority unless he-   (a) in the case of the Chairperson of the Electricity Contract Enforcement Authority, is, or has been a Judge of a High Court; and   (b) in the case of a Judicial Member of the Electricity Contract Enforcement Authority, is, or has been a District Judge or Additional District Judge for a minimum period of seven years; and   (c) in the case of a Technical Member of the Electricity Contract Enforcement Authority,-   i. is, or has been, an officer of the rank of Additional Secretary or above for at least one year in the Ministry or Department of the Central Government dealing with power or any other sector of infrastructure; or   ii. is, or has been, a person of ability and standing, having adequate knowledge or experience in dealing with the matters relating to electricity generation, transmission, distribution and regulation, or economics, finance, public policy, commerce, or management with experience in infrastructure related matters.   (2) The Chairperson and Members of the Electricity Contract Enforcement Authority shall be appointed by the Central Government on the recommendation of the Selection Committee referred to in section 78.   (3) Before appointing any person for appointment as Chairperson or other Member of the Electricity Contract Enforcement Authority, the Central Government shall satisfy itself that such person does not have any financial or other interest which is likely to affect prejudicially his functions as such Chairperson or Member.   109E. Term of Office and Terms and Conditions of service.- The Chairperson of the Electricity Contract Enforcement Authority or a Member of the Electricity Contract Enforcement Authority shall hold office as such for a term of five years from the date on which he enters upon his office: Provided that such Chairperson or other Member shall not be eligible for reappointment in the same capacity as the Chairperson or a Member in the Electricity Contract Enforcement Authority;   Provided further that no Chairperson of the Electricity Contract Enforcement Authority or Member of the Electricity Contract Enforcement Authority shall hold office after attaining the age of sixty-seven years.   109F. Vacancies.- If, for reason other than temporary absence, any vacancy occurs in the office of the Chairperson of the Electricity Contract Enforcement Authority or a Member of the Electricity Contract Enforcement Authority, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Electricity Contract Enforcement Authority from the stage at which the vacancy is filled.   109G. Resignation and Removal.- (1) The Chairperson of the Electricity Contract Enforcement Authority or a Member of the Electricity Contract Enforcement Authority may, by notice in writing under his hand addressed to the Central Government, resign his office:   Provided that the Chairperson of the Electricity Contract Enforcement Authority or a Member of the Electricity Contract Enforcement Authority shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of term of office, whichever is the earliest.   (2) The Chairperson of the Electricity Contract Enforcement Authority or a Member of the Electricity Contract Enforcement Authority shall not be removed from his office except by an order of the Central Government on the ground of proved misbehavior or incapacity after an inquiry made by Chairperson of the Appellate Tribunal in which the Chairperson or a Member of the Electricity Contract Enforcement Authority concerned has been informed of the charges against him and given a reasonable opportunity of being heard in respect of such charges.   109 H. Member to act as Chairperson in certain circumstances.- (1) In the event of the occurrence of any vacancy in the office of the Chairperson of the Electricity Contract Enforcement Authority by reason of his death, resignation or otherwise, the senior-most Member of the Electricity Contract Enforcement Authority shall act as the Chairperson of the Electricity Contract Enforcement Authority until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.   (2) When the Chairperson of the Electricity Contract Enforcement Authority is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member of the Electricity Contract Enforcement Authority shall discharge the functions of the Chairperson of the Electricity Contract Enforcement Authority until the date on which the Chairperson of the Electricity Contract Enforcement Authority resumes his duties.   109 I. Officers and other employees of Electricity Contract Enforcement Authority. – (1) The Central Government shall provide the Electricity Contract Enforcement Authority with such officers and other employees as it may deem fit.   (2) The officers and other employees of the Electricity Contract Enforcement Authority shall discharge their functions under the general superintendence of the Chairperson of the Electricity Contract Enforcement Authority.   (3) The salaries and allowances and other terms and conditions of service of the officers and other employees of the Electricity Contract Enforcement Authority shall be such as may be prescribed by the Central Government.   (4) The Chairperson of Electricity Contract Enforcement Authority shall exercise such financial and administrative powers as may be prescribed by the Central Government.   109 J. Procedure and powers of Electricity Contract Enforcement Authority.- (1) The Electricity Contract Enforcement Authority shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Electricity Contract Enforcement Authority shall have powers to regulate its own procedure.   (2) The Electricity Contract Enforcement Authority shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:-   a) summoning and enforcing the attendance of any person and examining him on oath;   b) requiring the discovery and production of documents;   c) receiving evidence on affidavits;   d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872, requisitioning any public record or document or copy of such record or document from any office;   e) issuing commissions for the examination of witnesses or documents;   f) reviewing its decisions;   g) dismissing an application on default or deciding it ex parte;   h) setting aside any order of dismissal of an application on default or any order passed by it ex parte;   i) pass an interim order (including granting an injunction or stay) after providing the parties concerned an opportunity to be heard; and   j) any other matter which may be prescribed by the Central Government.   (3) An order made by the Electricity Contract Enforcement Authority under this Act shall be executable by it as a decree of civil court and, for this purpose, the Electricity Contract Enforcement Authority shall have all the powers of a civil court including but limited to powers of attachment and sale of property, arrest and detention in prison and appointment of a receiver.   (4) Notwithstanding anything contained in sub-section (3), the Electricity Contract Enforcement Authority may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court.   (5)  All proceedings before the Electricity Contract Enforcement Authority shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code and the Electricity Contract Enforcement   109 K. Distribution of business amongst Benches and transfer of cases from one Bench to another Bench.- (1) Where Benches are constituted, the Chairperson of the Electricity Contract Enforcement Authority may, from time to time, by notification, make provisions as to the distribution of the business of the Electricity Contract Enforcement Authority amongst the Benches and also provide for the matters which may be dealt with by each Bench.   (2)  On the application of any of the parties and after notice to the parties, and after hearing such of them as he may desire to be heard, or on his own motion without such notice, the Chairperson of the Electricity Contract Enforcement Authority may transfer any case pending before one Bench, for disposal, to any other Bench.   109 L. Decision to be by majority.- If the Members of the Electricity Contract Enforcement Authority of a Bench consisting of two Members differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson of the Electricity Contract Enforcement Authority who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members of the Electricity Contract Enforcement Authority and such point or points shall be decided according to the opinion of the majority of the Members of the Electricity Contract Enforcement Authority who have heard the case, including those who first heard it.   109 M. Right of parties to take assistance of legal practitioner.- A person preferring an application to the Electricity Contract Enforcement Authority under this Act and any other party to the case may either appear in person or take the assistance of a legal practitioner of his choice to present his case before the Electricity Contract Enforcement Authority, as the case may be.   109 N. Appeal to Appellate Tribunal. – Any person aggrieved by any decision or order of the Electricity Contract Enforcement Authority, may, file an appeal to the Appellate Tribunal within sixty days from the date of communication of the decision or order of the Electricity Contract Enforcement Authority to him:   Provided that the Appellate Tribunal may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.     Under Section 109A, an Electricity Contracts Enforcement Authority has been proposed, which will have sole jurisdiction to adjudicate upon matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity;   The ECEA will have no jurisdiction over any matter related to regulation or determination of tariff or any dispute involving tariff.      It is mandated that every contract entered between a generating company and a licensee (which will include a trader as well) are required to be filed with the Appropriate Commission within 30 days of its execution. However, there appears to be an error, as Clause (3) of Section 109A should mention that contracts are to be filed with the ECEA, and not the Commissions.   The intent of the aforesaid provision is to bring seriousness to the contracting parties, including those contracts which are entered under Section 49(2). However, it should also be mandated that contracts executed with consumers, under open access, should also be required to be filed. This will create discipline amongst consumers as well.   Under Section 109B, it is mandated that a proceeding has to be initiated before ECEA within a period of six months from the non-performance of the obligation under the concerned contract.   If there is delay in approaching ECEA beyond six months, then the delay will be condoned based on reasons under the ambit of “sufficient cause”. In this context, the term “sufficient cause” shall attract the settled jurisprudence that delays ought to be liberally construed, however, at the same time the said delay should not be inordinate which could affect the rights of the other parties prejudicially, or the delay should not be a result of negligence.   By specifically providing for a limitation period, the present jurisprudence of the said period being 3 years in case of contractual disputes, will not be applicable. If the Bill becomes an Act, then the limitation will be ascertained qua each and every dispute which arises between the parties qua a particular contract.   It is necessary for the entities seeking legal recourse, pursuant to a breach of a contract, to immediately initiate proceedings within 6 months of the said breach. The present practice of clubbing certain disputes under a contract in a single proceeding, may have to be re-visited, for the reason that each of the breaches/ claims will have to justify limitation period of 6 months separately.    It is also mandated under the Bill that when a proceeding is initiated before ECEA, the said Authority will first hold hearings for deciding as to whether there exists a valid contract between the parties; and whether any party is in violation of any of its obligations under the contract.   After the aforesaid decision is made, the Authority will have to pass orders for immediate compliance with the contractual obligations. This can be at an interim stage also, with the rights of the parties subject to final adjudication of the matter. ECEA shall also be entitled to order payment of costs on account of a breach of a contract, or non-fulfilment of obligations of the contract, and any further amount it may deem fit as compensation.   Sub-section (7) of Section 109B further stipulates that if any proceeding could not be disposed off within the period of 120 days, ECEA will then be required to record its reasons in writing for not disposing of the said proceeding within the said period.   As per Section 109C, the provision of Benches of ECEA is provided. Such benches will be constituted by the Chairperson of the ECEA, with each bench comprising of two or more Members as the Chairperson of the ECEA may deem fit.   However, it is mandated that every Bench shall have to include at least one Judicial Member and one Technical Member. It is also mandated that the Chairperson can only be a Judicial Member;   The Benches of the ECEA will be primarily sitting in Delhi. However, the Central Government may, in consultation with the Chairperson of the ECEA, notify Benches to be set up in other places;   The Central Government, in consultation with the Chairperson of the ECEA, will be notifying the areas in relation to which the different Benches shall exercise jurisdiction.   Under Section 109J, the Procedure and powers of ECEA has been provided. ECEA will not be bound by the procedure laid down by the Code of Civil Procedure, 1908, however, there shall be applicability of principles of natural justice. ECEA will also have the right to regulate its own procedure, by framing regulations, similar to the Central Commission and various State Commissions.   The ECEA shall have similar powers, as are available to Commissions under Section 94, including, amongst others, reviewing decisions, passing interim orders (including granting an injunction or stay), etc.   One important aspect which has been provided, under sub-section (3) of Section 109J, is that the ECEA shall have wide powers for enforcing compliance of its decisions. An order made by ECEA under this Act will be executable by the said Authority as a decree of civil court and, for this purpose, ECEA shall have powers of attachment and sale of property, arrest and detention in prison and appointment of a receiver.   Under sub-section (4), an alternate protocol [as compared to sub-section (3)] for enforcing orders by ECEA has been provided, whereby the said Authority can transmit any order made by it to a civil court having local jurisdiction and such civil court will have to execute the order as if the same were a decree made by that court. This has been inserted with the aim of providing the much-needed certainty and sanctity to judicial decisions, and to ensure compliance of obligations under the contracts. This will also instil confidence in the investors, that there claims will be decided in a professional and quicker manner, and further, no one can delay compliance of orders.   Section 109K mandates that the Chairperson of the ECEA has the power to transfer any case pending before one Bench, for disposal, to any other Bench.   Section 109 N stipulates that if a party is aggrievedby any decision or order made by the ECEA, then an appeal can be filed with the Appellate Tribunal for Electricity, within 60 days from the date of communication of the decision or order of the ECEA. The said period of 60 days, can be further relaxed for a period of another 60 days only, subject to sufficient reasons as to why an appeal could not be filed within the first 60 days.   Hence, the aforesaid proviso further means that, under any circumstance, the period for filing any appeal against any order passed by ECEA, is 120 days. This further means that the Appellate Tribunal will have absolutely no powers to condone any further delay beyond 120 days.     While creation of a separate forum altogether for adjudication of disputes pertaining to non-performance of contract, seems as a beneficial approach towards promotion of investment in the power market, ease of doing business, etc., however, there exists an ambiguity as to what matters are contractual and what are tariff related, for eg. Change in law, or a dispute over payment of monthly dues by Discoms, or short-supply of power, etc. Such disputes can be termed as both contractual and tariff related, as any payment to be made to the Discom will be factored in the ARR. So, this provision will certainly lead to multiplicity of proceedings, with cases filed over jurisdiction of Regulatory Commissions or ECEA over a dispute.   The apparent error in Clause (3) of Section 109A, has to be corrected, so that contracts should be mandated to be filed with ECEA, and not Commissions. Further, applying the maxim of ejusdem generis, also entails that there should be ECEA which needs to mentioned, in place of Appropriate Commission.   As such, if this Bill goes through and becomes an Act, then it will need to be seen whether such newly constituted authority will be contributing towards effective adjudication of disputes in a time bound manner, or it only will be yet another platform for post-retirement jobs for retiring judicial members.
35.   Section 110:   (Establishment of Appellate Tribunal): The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Appellate Tribunal for Electricity to hear appeals against the orders of the adjudicating officer or the Appropriate Commission under this Act.   Section 110 to be amended as follows:   (Establishment of Appellate Tribunal): The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Appellate Tribunal for Electricity to hear appeals against the orders of the adjudicating officer or the Appropriate Commission or the Electricity Contract Enforcement Authority under this Act. This amendment provides that orders passed by ECEA are appealable before the Appellate Tribunal for Electricity.  
36.   Section 111:   (Appeal to Appellate Tribunal): — (1) Any person aggrieved by an order made by an adjudicating officer under this Act (except under section 127) or an order made by the Appropriate Commission under this Act may prefer an appeal to the Appellate Tribunal for Electricity:       Sub-section (1) of Section 111 to be amended as:   (Appeal to Appellate Tribunal): — (1) Any person aggrieved by an order made by an adjudicating officer under this Act (except under section 127) or an order made by the Appropriate Commission or an order made by the Electricity Contract Enforcement Authority under this Act may prefer an appeal to the Appellate Tribunal for Electricity: This provision is for streamlining the creation of ECEA, and that any orders passed by the said Authority would be appealable before APTEL.
37.   Section 112:   (Composition of Appellate Tribunal): — (1) The Appellate Tribunal shall consist of a Chairperson and three other Members.   Sub-section (1) of Section 112 to be amended as:   (Composition of Appellate Tribunal): — (1) The Appellate Tribunal shall consist of a Chairperson and such number of other Members, not less than seven, as may be prescribed by the Central Government.   This provision provides that the Appellate Tribunal shall consist of minimum 8 members, including the chairperson.    The aforesaid provision further means that there would be more courts (atleast 4), than the existing two courts for adjudication of matters.
38.   Section 119:   Sub-section (4) to be inserted in Section 119:
“(4) The Chairperson of Appellate Tribunal shall exercise such financial and administrative powers as may be prescribed by the Central Government”  
The proposed amendment provides the necessary administrative powers to the Chairperson to effectively administer the functioning of the Appellate Tribunal.   Like other forums, such as Supreme Court, and High Courts, the Chairperson has been given the status of first among equals.     –
39.   Clauses (g) and (h) to sub-section (2) of Section 120: ……   Section 120. (Procedure and powers of Appellate Tribunal): — …….   (2) The Appellate Tribunal shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:- …….   (g) dismissing a representation of default or deciding it ex parte;   (h) setting aside any order of dismissal or any representation for default or any order passed by it ex parte;   Clauses (g) and (h) to sub-section (2) of Section 120, to be amended as:   “(g) dismissing an appeal or an application on default or deciding it ex-parte;   (h) setting aside an order of dismissal of an appeal or an application on default or an order passed by it ex-parte;”. This amendment makes the clauses restrictive, as earlier all proceedings were covered;   If the Bill becomes an Act, then clauses (g) and (h) will only apply to an appeal or an application. This means that this provision is not applicable to review petitions, or original petitions under Section 121. The Bill should correct this, and it should include all kinds of proceedings before Appellate Tribunal.  
40.   Section 121:   (Power of Appellate Tribunal): The Appellate Tribunal may, after hearing the Appropriate Commission or other interested party, if any, from time to time, issue such orders, instructions or directions as it may deem fit, to any Appropriate Commission for the performance of its statutory functions under this Act.]   Section 121 will be treated as 121(1), and further the said sub-section will have the following amendment:   (1) The Appellate Tribunal may, after hearing the Appropriate Commission or Electricity Contract Enforcement Authority or other interested party, if any, from time to time, issue such orders, instructions or directions as it may deem fit, to any Appropriate Commission or Electricity Contract Enforcement Authority for the performance of its statutory functions under this Act.   The following sub-section (2) shall be inserted in Section 121:   “(2) The Appellate Tribunal shall have the same jurisdiction, powers and authority to take action on wilful disobedience to any of its judgment, decree, direction, order or other process or wilful breach of an undertaking given to a it, as a High Court under the provisions of the Contempt of Courts Act, 1971 (70 of 1971) on its own motion or on a motion made by the Advocate General or such Law Officer as the Central Government may, by notification in the Official Gazette, specify in this behalf, or any other person, with the consent in writing of such Law Officer or the Advocate General, and a reference in the Contempt of Courts Act, 1971 to a High Court shall be construed as including a reference to the Appellate Tribunal.”     This provision establishes supervisory jurisdiction of Appellate Tribunal over Commissions and ECEA;   The sub-section (2) gives powers to Appellate Tribunal to issue contempt, and carry out contempt proceedings.   This is a welcome provision, as we have seen that various entities fail to implement the orders of Appellate Tribunal. The provision will instill discipline amongst the players in the electricity sector.   Regarding contempt proceedings, the Bill should permit any aggrieved party also to file/ initiate contempt proceedings, without requiring the consent to designated law officers only. This will give more teeth to the contempt powers of Appellate Tribunal.
41.   Section 142:   (Punishment for non-compliance of directions by Appropriate Commission): In case any complaint is filed before the Appropriate Commission by any person or if that Commission is satisfied that any person has contravened any of the provisions of this Act or the rules or regulations made thereunder, or any direction issued by the Commission, the Appropriate Commission may after giving such person an opportunity of being heard in the matter, by order in writing, direct that, without prejudice to any other penalty to which he may be liable under this Act, such person shall pay, by way of penalty, which shall not exceed one lakh rupees for each contravention and in case of a continuing failure with an additional penalty which may extend to six thousand rupees for every day during which the failure continues after contravention of the first such direction.   Section 142 will be treated as 142(1), and further the said sub-section will have the following amendment:   (1)  In case any complaint is filed before the Appropriate Commission by any person or if that Commission is satisfied that any person has contravened any of the provisions of this Act or the rules or regulations made thereunder, or any direction or order issued by the Commission, the Appropriate Commission may after giving such person an opportunity of being heard in the matter, by order in writing, direct that, without prejudice to any other penalty to which he may be liable under this Act, such person shall pay, by way of penalty, which shall not exceed one crore rupees for each contravention and in case of a continuing failure with an additional penalty which may extend to upto one lakh rupees for every day during which the failure continues after contravention of the first such direction.   The following sub-section (2) shall be inserted in Section 142:   “(2) Notwithstanding anything contained in sub-section (1), in case any complaint is filed before the Appropriate Commission by any person or if that Commission is satisfied that any person, with effect from such date as may be notified by the Central Government, has not purchased power from renewable or hydro sources of energy as specified by it using its powers under the Act, the Appropriate Commission shall after giving such person an opportunity of being heard in the matter, by order in writing, direct that, without prejudice to any other penalty to which he may be liable under this Act, such person shall pay, by way of penalty, a sum calculated at the rate of fifty paise per kilowatt-hour for the shortfall in purchase in the first year of default, one rupees per kilowatt-hour for the shortfall in purchase in the second successive year of default and at the rate of two rupees per unit for the shortfall in purchase continuing after the second year.”   The scope of Section 142 is being widened, under sub-clause (1), by also including an order. Hence, any non-compliance with any order or direction passed by a Commission can be made subject to Section 142.   The Proposed Amendment imposes a uniform penalty on non-compliance of Renewable Purchase Obligation by a person. Till date, the State Commissions used to determine the penalty that shall be imposed for non-fulfillment of RPO norms but the proposed amendment brings about a uniformity in the renewable energy procurement mechanism.   ECEA should also be given 142 powers, in addition to Section 109J;   The addition of sub-section (2) in Section 142, is ill-advised, as the same takes away any discretion of a State Commission to condone any non-compliance with Renewable Purchase Obligations (RPO);   Further, and most importantly, sub-section (2) does not envisage reasons beyond control in fulfilment of RPOs, which could be due to various reasons, including renewable potential in a State, the tied up renewable capacity did not come in time, there are hardly any merchant renewable power plants left today as all new projects are coming under bids for sale to Distribution Licensees, and there has been a dramatic reduction in REC based projects, etc.   The aforesaid is important to be addressed in the Bill itself, otherwise this will lead to extreme prejudice, as Commissions will have no option but to impose penalty, irrespective of any bonafide reason for non-compliance of RPO norms.    
42.   Section 146:   (Punishment for non-compliance of orders or directions): Whoever, fails to comply with any order or direction given under this Act, within such time as may be specified in the said order or direction or contravenes or attempts or abets the contravention of any of the provisions of this Act or any rules or regulations made thereunder, shall be punishable with imprisonment for a term which may extend to three months or with fine, which may extend to one lakh rupees, or with both in respect of each offence and in the case of a continuing failure, with an additional fine which may extend to five thousand rupees for every day during which the failure continues after conviction of the first such offence:   Provided that nothing contained in this section shall apply to the orders, instructions or directions issued under section 121.   Section 146 to be amended as follows:   (Punishment for non-compliance of orders or directions): Whoever, fails to comply with any order or direction given under this Act, within such time as may be specified in the said order or direction or contravenes or attempts or abets the contravention of any of the provisions of this Act or any rules or regulations made thereunder, shall be punishable with imprisonment for a term which may extend to three months or with fine, which may extend to one Crore rupees, or with both in respect of each offence and in the case of a continuing failure, with an additional fine which may extend to one lakh rupees for every day during which the failure continues after conviction of the first such offence:   Provided that nothing contained in this section shall apply to the orders, instructions or directions issued under section 121.   The proposed amendment increases the fine that can be imposed on someone who fails to comply with the directions given under the Bill, thus increasing accountability of the parties to perform/ follow the respective orders or directions.  
43.   Section 176: ……   (Power of Central Government to make rules): — ……   (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: – In sub-section (2) of section 176, after clause (a), the following clauses shall be inserted, namely:-   “(aa)  the minimum percentage of purchase of electricity from renewable and hydro sources of energy under Section 3A;   (ab)  allowing and facilitating cross border trade of electricity and any matter related to it under sub section (1) of section 49A;   (ac) laying down the modalities of bundling of renewable energy (including hydro) with thermal energy;   (ad) Renewable Generation Obligation;   (ae) regarding maintaining adequate capacity resources;”   In sub-section (2) of section 176, after clause (d), the following clauses shall be inserted, namely:-   “(da) payment security mechanism under section 49;”   In sub-section (2) of section 176, after clause (p), the following clauses shall be inserted, namely:-   “(pa) the form, the manner of verifying the form, and fee for filing the application under sub-section (4) of section 109B;   (pb) the number of Judicial and Technical Members to be included in the Electricity Contract Enforcement Authority under sub-section (1) of section 109C;   (pc) the salaries and allowances and other terms and conditions of service of the officers and other employees of the Electricity Contract Enforcement Authority under sub-section (3) of section 109I;   (pd) the exercise of financial and administrative powers by the Electricity Contract Enforcement Authority under sub-section (4) of section 109I”   In sub-section (2) of section 176, after clause (q), the following clauses shall be inserted, namely:-     “(qa) the number of Members to be included in the Appellate Tribunal under sub section 1 of section 112;”;   In sub-section (2) of section 176, after clause (s), the following clauses shall be inserted, namely:-   “(sa) exercise of financial and administrative powers by the Chairperson of Appellate Tribunal under sub section 4 of section 119.”   As the Bill introduces new concepts in addition to the existing ones under the existing Act, which pertains to introduction of concepts including, but not limited to cross border trade of electricity, distribution supply franchisee, authority, Electricity Contract Enforcement Authority, National Renewable Energy Policy, focus on payment security, etc, Central Government has been entrusted with the powers to make Rules for implementation of the various new initiatives mentioned in the Bill.   The Bill talks about Renewable Generation Obligation, a concept which has not been defined under the Act nor finds a mention anywhere other than this provision.   If the same is not defined, then it will give rise to excessive/ unbridled powers with the Central Government to make rules regarding the same, when no benchmark or protocol has been provided in the Bill itself.
44.   Section 178:   (Powers of Central Commission to make regulations): — (1) The Central Commission may, by notification make regulations consistent with this Act and the rules generally to carry out the provisions of this Act.   (1) The Central Commission may, by notification make regulations consistent with this Act and the rules generally to carry out the provisions of this Act. ……   (j) payment of the transmission charges and a surcharge under-subclause (ii) of clause (d) of sub-section (2) of section 38;   (k) reduction of surcharge and cross subsidies under second proviso to sub-clause (ii) of clause (d) of sub-section (2) of section 38;   (l) payment of transmission charges and a surcharge under sub-clause (ii) of clause(c) of section 40;   (m) reduction of surcharge and cross subsidies under the second proviso to sub-clause (ii) of clause (c) of section 40; …….   (r) the manner of reduction of cross subsidies under clause (g) of section 61; …..   (ze) any other matter which is to be, or may be, specified by regulations.   Sub-section (1) of Section 178 is to be substituted with the following:   “(1) The Central Commission may, by notification, make regulations in respect of the functions assigned to it in the Act.”   In sub-section (2) of section 178, after clause (a), the following clauses shall be inserted, namely:-   “(aa) Cross border trade of electricity, if any, under sub section (2) of section 6A”   In sub-section (2) of section 178, clause (j) shall be amended as:-   “(j) payment of the transmission charges under-subclause (ii) of clause (d) of sub-section (2) of section 38;   In sub-section (2) of section 178, clause (k), as existing in the present Act, is to be omitted.   In sub-section (2) of section 178, clause (l) shall be amended as:-   (l) payment of transmission charges under sub-clause (ii) of clause(c) of section 40;   In sub-section (2) of section 178, clauses (m), (r) and (ze), as existing in the present Act, is to be omitted.       The proposed amendment makes the powers of the Central Commission more specific;   Under the existing provision, the Central Commission is entitled to make regulations and rules generally to carry out the provisions under the Act. The existing provision gives wide powers to Central Commission to frame regulations even in case of certain matters not “specifically” assigned, but is necessary for proper implementation of the Act, for example creation of RECs, creation of exchanges, etc;   Hence, the provision proposed in the Bill seeks to restrict the powers of the Central Commission.   There is an error in the Bill. There is no amendment proposed as Section 6A, which sub-clause (aa) of Section 178(2) proposes.   Clauses (j), (l), (m) and (r) of sub-Section 178(2) have been amended, as the Bill takes away the power of Central Commission to determine any surcharge (CSS) for CTU.   The deletion of Clause (ze) of Section 178(2), is wrong.   The existing provision ought to be retained as it gives powers to the Central Commission to frame regulations, if as a sector regulator, the said Commission feels so.   One major challenge is that there are certain issues on which there needs to be a certainty, and for the purpose that the SERCs should function qua an issue uniformly, the Central Commission enacts a regulation/ protocol, which is general in nature and is a guiding force for the SERCs.   However, the Bill, by restricting the ability of Central Commission to make regulations, is taking away the reference point for various SERCs. As such, the existing provision ought to be retained.   The Bill needs correction in sub-clause (aa) of Section 178(2), whereby instead of Section “6A”, it should mention Section “49A”.   Scope of Section 178 should not be curtailed. The Central Commission enjoys the status of first among equals (i.e. amongst all Commissions), by virtue of Section 61(a). This status will get a hit, and the same may result in State Commissions not working as mandated under Section 61, while taking decisions which impact tariff/ ARR, etc.
45.   Section 181:   (Powers of State Commissions to make regulations): — (1) The State Commissions may, by notification, make regulations consistent with this Act and the rules generally to carry out the provisions of this Act.   (2) In particular and without prejudice to the generality of the power contained in sub-section (1), such regulations may provide for all or any of the following matters, namely: – ……   (i) payment of the transmission charges and a surcharge under subclause (ii) of clause(d) of sub-section (2) of section 39;   (j) reduction of surcharge and cross subsidies under second proviso to sub-clause (ii) of clause (d) of sub-section (2) of section 39;   (k) manner and utilisation of payment and surcharge under the fourth proviso to sub-clause(ii) of clause (d) of sub-section (2) of section 39;   (l) payment of the transmission charges and a surcharge under subclause (ii) of clause (c) of section 40;   (m) reduction of surcharge and cross subsidies under second proviso to sub-clause (ii) of clause (c) of section 40;   (n) the manner of payment of surcharge under the fourth proviso to sub-clause (ii) of clause (c) of section 40; …..   (p) reduction of surcharge and cross-subsidies under the third proviso to sub-section (2) of section 42; …..   (zc) the manner of reduction of cross-subsidies under clause (g) of section 61;   (zp) any other matter which is to be, or may be, specified.   Sub-section (1) of Section 181 is to be substituted with the following:   “(1) The State Commissions may, by notification, make regulations in respect of the functions assigned to it in the Act.”   In sub-section (2) of section 178, clause (i) to be amended: –   “(i) payment of the transmission charges under subclause (ii) of clause(d) of sub-section (2) of section 39;”   In sub-section (2) of section 181, clauses (j), (k), (l), (m) and (n), as existing in the present Act, are to be omitted.   In sub-section (2) of section 181, after clause (o), the following shall be inserted, namely:-   “(oa) determination and payment of surcharge and wheeling charges under the first proviso to sub-section (2) of section 42;”   In sub-section (2) of section 178, clause (p) to be amended: –   “(p) reduction in surcharge and cross subsidies, as may be provided for in the Tariff Policy under the third proviso to sub-section (2) of section 42;”;   In sub-section (2) of section 181, after clause (p), the following shall be inserted, namely: –   “(pa)  the manner of payment and utilization of the surcharge under the fifth proviso to sub-section (2) of section 42;”       The proposed amendment makes the powers of the State Commissions more specific;   Under the existing provision, the State Commissions are entitled to make regulations and rules generally to carry out the provisions under the Act. The existing provision gives wide powers to State Commissions, as sector regulators, to frame regulations even in case of certain matters not “specifically” assigned, but is necessary for proper implementation of the Act;   Hence, the provision proposed in the Bill seeks to restrict the powers of the State Commissions.   Clause (i) of sub-Section 181(2) is being wrongly amended, as the amended Section 39 of the Bill requires State Commissions to determine surcharge (CSS) for STU.   However, the amendment to Clause (1) of sub-Section 181(2) does not give power to the State Commissions to specify a protocol for determining such surcharge, if applicable.   Clauses (j), (k), (l), (m) and (n) of sub-Section 181(2) have been omitted, so as to give primacy to the National Tariff Policy.   In addition, the omission of Clauses (k), (l) and (n) would give excessive/ unbridled discretion to the State Commission to determine surcharge (CSS) for STU, if made applicable.   The Bill obligates the State Commissions to provide for reduction in cross subsidies and surcharge (CSS), as per the protocol provided under the Tariff Policy. This is a good step, as it will bring uniformity of CSS and cross subsidies across States.   The addition of Clause (pa) in sub-Section 181(2) gives power to the State Commissions to frame regulations for the purpose of payment mechanism of surcharge (CSS), and how the said surcharge will be utilised. Amendment to Clause (i) of sub-Section 181(2) would lead to unbridled powers to the State Commissions, if they choose to determine surcharge (CSS) for STU.   Giving primacy to Tariff Policy amounts to provide a side-door to amend/ introduce any requirement under the Bill without seeking parliamentary approval, which may lead to a challenge before Constitutional Courts (High Courts and Supreme Court).

You are advised accordingly.

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Hemant Singh is founder of Charter Law Chambers, a full-service law firm. Before founding the firm, he was the Co-Founder and Managing Partner of Praxis Counsel since 2014. Mr. Singh started his career in Corporate and Regulatory Litigation under the mentorship of Mr. Sanjay Sen, who is now a designated Senior Counsel. Overall, Mr. Singh has over 12 years of experience in regulatory and corporate litigation with over 60 reported judgments.

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