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LAW OF INFRASTRUCTURE DEVELOPMENT & COMPETITION LAW
PROJECT ON
ENERGY SECTOR REGULATION & ISSUES
DATE OF SUBMISSION:- 5/3/2016
SUBMITTED TO: SUBMITTED BY:
Mr. ROHAN THOMAS ANSHU KUMAR
TEACHING ASSISTANT ROLL. NO.656
FACULTY OF LAW LL.M. (2SEMESTER)
NATIONAL LAW UNIVERSITY CORPORATE LAW
JODHPUR

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Table of contents
1- Introduction
2- Electricity law in India
3- Historical background
4- Salient features of electricity Act 2003
5- Electricity generation
6- Transmission
7- Distribution
8- Consumer protection
9- Trading/market development
10- Electricity and human right
a- Access to electricity in India
b- Statutory framework in India
c- Central Government schemes on rural electrification
d- Rajiv Gandhi Grameen Vidyutikaran Yojana
e- Remote villages electrification program
f- Village Energy security test projects
11- Nuclear energy
12- Advantages of Nuclear energy
13- Future prospects of nuclear energy
14- Power sector infrastructure
15- Oil &gas energy sector
a- Market strength
b- Government initiatives
16- India’s renewable energy targets
a- Losing appeal
b- Infrastructure hurdles

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INTRODUCTION
India is one of those countries which have the lowest per capita energy consumption1. Inspite of
this, it has a huge energy demand. The integrated energy policy report prepared by an expert
committee under the aegis of the planning commission of India clearly mentions that by the 2031-
32 the power generating capacity in the country must increase to nearly 8,00,000 MW from the
current capacity of around 1,60,000 MW inclusive of all captive plants. India is often seen by
many countries of the world as one of the parties that prioritizes its economic development over
the environmental concerns2. This is possible since, being a developing country it has continued
with its industrialisation goals, however in-spite of this and in-spite of all the criticism, it has to
mitigate the impact of the continuous climate change, which seems inevitable3.
1- India had the per capita energy consumption of 439 kgoe in the year 2003. See IEA (2005) Key world
Energy statics 2005, International Energy Agency,Paris (www.iea.org).
2- Divya Badami Rao and MVRamana, the Indian approach to climate and energy policy, july 3, 2008,
available at http://www.thebulletin.org/web-edition/features/the-indian-approach-toclimate-andenergy-
policy.
3- Ibid.

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ELECTRICITY LAW IN INDIA
Historical background
The electricity Act of 18874
was the first legislation regulating the generation supply and use of electricity
in India. It was intended to protect the public by means of rules that deal with the use of electricity energy.
The British government in India also passed the Calcutta electricity lightning Act5
in 1895 and the Howrah
Bridge Electricity Act6
of 1902. The electricity Act of 1887 was later replaced by the Indian electricity Act
of 1903 and these two legislation established the need for electricity regulations in India. Under the 1903
Act the local Government had the power to grant licenses for electricity generations.
Subsequent to this came up the Act of 1910 which created the basic legal framework for electricity sector
in India. Under the Act the State government had the power to grant licenses for the supply of electricity.
The legislation even provided for the non licenses to supply of electricity with the sanction of state
government. Another notable feature of the legislation was that it permitted the grant of multiple licenses
in the same area of supply and hence brought in more competition in distribution of electricity.
The next significant legislation after the 1910 Act was the electricity (supply) Act of 19487
. The Act aimed
to provide for the rationalization of the production and supply of electricity and generally for taking
measure conductive to electrical development8
. The electricity (supply) Act 1948 promoted a state owned
vertically integrated structure of electricity industry through the mandatory creation of the state electricity
board. SEB in every state, The main job of the board was to provide the technical advice to state
government and it also had the power to make regulations on severalaspects.
Another step in electricity reforms came in the year 1998 with the enactment of the electricity regulation
commission Act9
which provided for electricity regulatory commission at the centre and the state level for
rationalizing the electricity tariff and also having transparent policies regarding subsidies etc. with this Act
the government directly distanced itself from tariff regulation.
4- Act no. XIII of 1887
5- Bengal Act IX of 1895
6- Bengal Act I of 1902
7- Act no. 54 of 1948
8- Preamble of the Act
9- Act no. 14 of 1998

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Salient features of the electricity Act, 2003
The next significant legislation came in the form of electricity Act of 200310
which is the applicable law for
electricity generation and regulation. This act repealed and replaced the electricity supply Act 1948. The
preamble lays down that this Act of 2003 consolidates the laws relating to generation, transmission,
distribution, trading and use of electricity and generally for taking measures conductive to development of
electricity industry, promoting competition therein, protecting interest of consumers and supply of
electricity to all areas, rationalization of electricity tariff, ensuring transparent policies regarding subsidies
promotion of efficient and environmental benign policies, constitution of central electricity authority,
regulatory commissions and also a appellate tribunal.
Electricity generation
The central government was given the responsibility to prepare, publish, review and revise the national
electricity policy and plan11
and also to notify a national policy on stand-alone systems for rural areas and
non conventional energy sources in consultations with the states12
. Section 6 provides for the state
government and central government to work together for supplying electricity to every village and hamlet.
The act also waived the requirement of a license if a person intends to generate and distribute electricity in
notified rural area13
. Through section 7 of the Act the government tend to liberalise the generation process
by doing away with the requirement if a techno economic clearance of the central electricity agency for a
thermal energy project.
Transmission
Section 38 provides for a central transmission utility and also lays down its functions. This is more or less
similar to the provisions as contained in section 27 A of the Indian Electricity Act, 1910. The concept of
transmission utility was first conceived in 1998 through an amendment to the erstwhile Indian electricity
Act 1910. However the Electricity Act 2003 brought in certain changes such as taking away its power to
engage in trading of power and also it had to provide non- discriminatory open access to its transmission
system to all the licences. The Act also retains the provisions for a state transmission utility14
.
10- Act no. 36 of 2003
11- Section 3 of the Act
13- Proviso to section 14 of the Act

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Distribution
Regarding the distribution of electricity one of the primary provisions in section 12 which provides for the
distribution to be licensed by the state electricity regulatory commissions (SERCs) section 13 gives the
power to the commission the power to exempt any authority, panchayats, co-operative societies, N.G.O or
franchisees from the licensing system. The SERC also has the power to determine the tariff for supply
transmission, wheeling and retail sale of electricity and also fix a minimum and maximum ceiling for the
same15
. There is no undue preference to any consumer by the commission but it has the authority to
differentiate according to the load, power factor, voltage and total consumption of electricity during the
specified period.
Open access in distribution means choice to consumer to get supply from any source of his choice. The
phrase ‘’get supply from any source of his choice’’ ensures the right of the consumers to get supply from a
person other than the distribution licensee. Unlike in transmission open access in distribution has not been
allowed from the outset primarily because of considerations of cross subsidies.
Consumer Protection
The licensee is bound to give electricity connection within one month of application from the consumer
and with - in six months/such reasonable period as prescribed by the state commission, if established of
new sub-stations or network expansion is involved16
. And in case he fails to do so within the stipulated
period, then he shall be liable to pay a penalty which extends to thousand rupees for each day of default17
.
This provision will definitely lead to the licensee providing better services to the consumer to avoid this
penalty. Section 47 allows the distribution licences to take security from the person making an application
for supply for electricity. Section 166 talks about the setting up of a district level committee to deal with
the electrification in the region review power supply quality and to promote energy efficiency.
Trading/marketdevelopment
Trading has been defined to mean the activity of purchase of electricity for resale thereof18
. The electricity
Act 2003 recognizes trading as an independent licensed activity. The earlier laws did not define trading nor
for that matter recognise trading as a separate activity. Section 12 lays down that only authorized persons
can take up activities relating to electricity generation and distribution.
17- Section 43(4) ofthe Act
18- Section 2(71) ofthe Act

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ELECTRICITY & HUMAN RIGHTS
Human right to development
The right to development is nothing but the ability to participate in, contribute to and enjoy the
political, economic, cultural and social development. Since it is recognised a universal human
right 19 this puts an individual at the core of the sustainable development paradigm. The
international energy agency an autonomous body, aims at ‘participating in the globally effort to
provide electricity for those currently without access20.
a- Access to electricityin India
International instruments like convention on elimination of discrimination against women, 1979
have recognised the right to electricity. The United Nations sustainable energy for all initiative is
to provide universal access to energy to all by the year 203021. It is pertinent to note that ensuring
access to electricity to all persons has become an objective of laws, policies, regulations, rules,
central government schemes in India in the post liberalization era. Recently even the Indian
judiciary has recognised access to electricity as a human right.
India has the fifth largest electricity system in the world with an installed capacity of 180GW1922.
India’s power demand is going to double by the year 2035 which is going to be a huge challenge.
19- world conference on human rights, Vienna declaration and programme of action, UN secretary, general
report, UN Doc. A/CONF, 157/24 (partI) (1993), chapter3, para. 10
20- International energy agency, statement on sustainable development for the WSSD, Johannesburg, (2002),
para 7, available at www.iea.org/dbtw-wpd/textbase/papers/2001/sustdev.pdf
21- UNIDO, energy must be fully integrated into the post 2015 development agenda, say Vienna forum
participants (may 28th, 2013) available at http://www.unido.org/news/press/energy-parti.html
22- Sonia Luthra India’s energy policy available at
http://www.nbr.org/research/activity.aspx?id=18#UqB2z9JDt-k

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b- Statutory frameworkinIndia
The legal provisionson access to electricity in India are contained in the constitution of India. Electricity
act 2003, electricity rules 2005, National Electricity policy, 2005, Rural electrification policy 2006, central
electricity Authority regulation 2006 various schemes of the central government and the case of T.M
Prakash v. The District Collector & the superintending Engineer, Tamil Nadu Electricity Board23
.
Electricity is entry 38 in list III of the seventh schedule of the constitution of India 195023
. It is the subject
in the concurrent list and both the state government list & central government listhave the power to
legislate on the matters relating to electricity industry except for nuclear power which is in the domain of
Central Government24
.
c- Central Government schemes on rural electrification
The five most pertinent schemes by the central government in India are, first, Rajiv Ghandhi Grameen
Vidyutikaran Yojana (RGGVY), second Remote Villages electrification program (RVEP), third, Village
Energy security test projects (VESP),fourth, security package (SP).
d- Rajiv Gandhi GrameenVidyutikaran Yojana
The scheme was launched in april 2005 with the objective of qualitative information of the rural
electricity infrastructure25. It had the target of electrification of 7.8 crore households by the year
200926.
23-T.M Prakash v. The District collector & the superintending engineer, Tamil Nadu Electricity Board 2013(6)
CTC 849, (2014) 1 MLJ 261.
24-Devendra Kodwani, Institutional Endowments and electricity regulations in India
http://regulation.upf.edu/bath-06/10_kodwani.pdf
25- RGGVY at a glance http://rggvy.gov.in/rggvyportal/index.html
26- Ministry of power, RGGVY, 1, http://powermin.nic.in/whats_new/pdf/Rajiv_ghandhi.pdf

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e- Remote villages electrificationprogram
The objective of this program is electrification of remote hamlets amd remote villages. Those villages have
been selected which are not covered by the RGGVY scheme.
f- Village Energysecurity test projects
The objective of this is to conduct test projects of energy security in remote villages and hamlets. This
project targeted 1000 villages. The budgetary allocation for this scheme was rupees 225 crore during the
11th
five year plan. However a large amount of this remained unspent.

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Nuclearenergy
With the world waking up to realize the need for green energy to meet its ever-gaping energy needs, the
million dollar question remains as to how these climate change conventions would effect the interest of the
developing countries, which are still grapping to meet their energy deficit and do not have the luxury to
deviate from the tried and tested conventional sources due to economic and technological reasons. The
Kyoto protocol provides for the clean development mechanism (‘’CDM’’) which promises to support the
developing countries efforts to develop their economies in a sustainable, climate friendly manner while
also allowing the annex I contries a cost effective means for achieving their GHG emission targets27
.
Advantages of nuclear energy
Helps in reduction of pollution from pollutant gases like carbon dioxide and carbon monoxide generating
of electricity by nuclear energy helps reducing the levels of pollution generated by burning of fossil fuels.
Coal burning releases large amounts of sulphur dioxide and nitrogen oxide where as nuclear energy emits
none.
Creation of immense amount of energy lesser amounts of raw material can produce immense amount of
energy. Process of fusion inside the reactor can go for a long timr. Since the process is natural electricity
can be generated at all times. Production of electricity generation is continuous. A nuclear power plant is
generating electricity for almost 90% ofthe hours of the year 28. A 1,000 MWe nuclear plant, if it replaced
an oil burning plant it would save the large amount of fuel.
Economic advantage of nuclear energy
One obvious way to make energy law focus more on sustainability is to replace its current functioning
energy sources like fossil fuels and adapt more economically stable sources of energy law. Nuclear energy
is economical. Other form of energy producing sources include coal, natural gas etc. which even though
available in abundance, do not have much potential energy as nuclear materials. Agreed it is difficult and
expensive to mine and transport uranium, but money is saved when mass production of energy takes place
with the help of less amount of raw material. In environmental circles the three Es environment, economy,
equity should be followed.

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Future prospects ofnuclear energy
India is placed in a unique position amongst the emerging economies as it faces the biggest challenge of
striking a balance between the industrialization and rising concern over climate change. India needs to
incorporate new solutions in terms of reducing usage of fossil fuels as a source of energy and
accommodating greater share of cleaner and sustainable form of energy. Nuclear energy has the capacity to
provide abundant amount of energy to the fast growing economy and also address the problems of
urbanization. At present, only 3percent of India’s total electricity comes from nuclear plants27
. With the
help of the agreement Indo-U.S Civilian Nuclear agreement has highlighted the importance and need for
the nuclear energy in India. With the help of agreement India is able to envision a realistic and sustainable
future of nuclear energy as per the department of atomic energy, India plans to increase its nuclear energy
production to 20,000 MWe by 2020 and 63,000 MWe by 203228
. Currently India has an installed 2
capacity of 4560 MWe of nuclear power. According to nuclear power corporation of India Limited
(NPCIL) there are currently seven new nuclear reactors are under construction. There are two, thousand
MWe each reactors (2X1000) being built in Kundakulam; two, 700 MWe reactors in Rajasthan by june and
December 2016, one 220 MWe reactor kaiga district Karnataka; two 700 MWe reactors (2X700) in
Kakrapar, Gujarat (june 2015 & December 2015)29
. Russia’s Atomstroy has agreed to build six more light
water pressurised reactors in Kundakulam by 2017 and four in hirapur by 2017. Atomic energy of Canada
Ltd and Korean electrical power Co have also signed similar agreements with India regarding servicing
India’s existing PHWRs30
.
27- Julian Gumperz and J.H Spigelman, prospects for nuclear energy, financial analysts journal vol. 20 No. 1
(Jan-Feb, 1964), pp 95-101 published by stable available at http://www.jstor.org/stable/4469601.
28- A strategy for the growth of electrical energy in India. (DAE). http://www.dae.gov.in/publ/doc10/index.htm
29- ‘’status of projects under construction’’ (NPCIL)
http://www.npcil.nic.in/main/projectconstructionstatus.aspx
30- “Nuclear power in India, March 2010, World Nuclear Association. Available at http://www.world-
nuclear.org/info/inf53.html.

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Power sectorinfrastructure
Total infrastructure spending is expected to be about 10 per cent of Gross Domestic Product
(GDP) during the 12th Five-Year Plan (2012–17), up from 7.6 per cent during the previous plan
(2007–12).
Increased impetus to develop infrastructure in the country is attracting both domestic and
international players. Private sector is emerging as a key player across various infrastructure
segments, ranging from roads and communications to power and airports.
Significant allocation to the infrastructure sector in the 12th Five-Year Plan, and investment
requirement of US$ 1 trillion is expected to create huge demand for construction equipment in
India.In the road’s sector, the government’s policy to increase private sector participation has
proved to be a boon for the infrastructure industry with a large number of private players entering
the business through the public-private partnership (PPP) model. As on March 2015, projects
worth US$ 32.69 billion have been awarded through PPP model, with as many as 165 PPP
projects still under progress. During the next five years, investment through PPP is expected to be
US$ 31 billion In FY15, major ports handled 581.3 million metric tonnes (MMT) of cargo, while
non-major ports handled 471.2 MMT of cargo. Since ports handle almost 95 per cent of trade
volumes in India, the rising trade has contributed significantly to the country’s cargo traffic. To
support the growing demand, cargo capacity in India is expected to increase to 2,493.1 MMT by
201731.
31- http://www.ibef.org/industry/infrastructure-presentation

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Oil & gas sector
In India the most influential energy sector in terms of economy and consumption is the oil & gas sector.
The oil & gas sector is influenced by the demand & supply policy which keeps on changing from time to
time for which new form of the Exploration Licensing policy was framed. A clear cut anticipation points
out that it will be US $ 139.8 billion by 2015. The major policy government has adopted to increase the
strength of this sector and to face the demand & supply issue was the increase in the FDI of 100 % which
includes the all major products of oil & gas like petrol natural gas etc.
Strength in oil & gas
India faces issue of Gas Importation, as it is the fifth largest importer of the gas which is going to increase
by the CAGR of 33% during 2012-2017. The hope in decrease of the importation in oil & gas is that by
new explorations and new oil field the domestic generation will grow from the year 2016. ONGC
dominates in the segment of the exploration & production with approximately 68 % of its total oil output.
The IOCL (Indian Oil Corporation Limited) operates about 11,214 km of pipelines of crde & gas product
with 10 million metric standard cubic meter per day of capacity which is largest in the country.
Initiatives by Government
Some of the major initiatives taken by the Government of India to promote oil and gas sector are:
a- The new policy called the “Marginal Fields policy” by Ministry has been announced which
sets to bring into production 69 marginal oil & gas fields with 89 million tones or Rs 75,000
Crore value reserves by providing incentives to oil and gas explorers through various
exemptions on equipment and machinery.
b- The new bilateral agreemtn with Norway to extend co-operation in the hydrocarbon
exploration has been signed.The new agreements have been signed with the hydrocarbon rich
countries to strengthen the energy security.

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c- The new PAHAL direct transfer for LPGconsumers scheme was launched in 54 districts on
November 11, 2014 which got its hold all over the country from jan. 2015 which will hold
15.3 crore LPG consumers.
d- The “give it up” plan was launched to cut down the LPG subsidy which helped in protecting
the Rs. 140 crore on july 2015 and near about 12.6 lakhs of house hold registered for this cause
and according to data from oiol ministry about 30,000 to 40,000 household are following this
policy each day.
e- Special pacakage for the north east region has been provided through the 40% of subsidy on
gas price which has been extended to private companies along with the ONGC.
f- The new program of ethanol blended petrol has been approved by the Cabinet committee on
Economic affairs to market it.

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India's renewable energytargets
India has a set target of making a 40 % of its energy consumption out of the renewable or non –
conventional sources. From present prospective it is the the 37,000MWe of power and it amounts to 15 of
total power capacity & consumption of the country. After the Paris climate change agreement India sets a
40% of the energy consumption from the renewable energy sources till 2030.
The experts reports lays down that it will be near about 300,000 to 350,000 MWe energy from the non
conventional sources till 2030. To achieve this India will have to add 175,000 MWe of capacity from non
conventional sources by 2022 which may amount about 60% from Solar & 30% from the wind energy rest
may come from biomass or small hydro sources. From recent project’s like Jawaharlal Nehru National
Solar Mission the growth of solar power in India has been extravagant which comes out to be from 2
MWe to 4,200 MWe at present. Moreover India ranks fifth in the energy production from wind energy
producing about 24,000 MWe. In India the current status of solar energy production is 1,000 MWe
annually. The Union ministry sets a target of 15,000 MWe production of solar energy which willbe
achieved by the year 2020, the secretary of ministry of renewable energy is confident about this target as
the ministry has opened the investments in the power generation & grid capacity.
Infrastructure hurdles
There are more hurdles in achieving the set targets of the non conventional energy sources utilisation as
from the year 2011 the government started the green energy corridor which still need a proper start up with
no major lines being built or tendered in. It is form the year 2015 that the government has started taking up
calls from the state owned power grid corporations to built the proper infrastructure of the non
conventional sources. The power grid was the one which estimated the cost of total expenditure about
40,000 crore. The major problem or hurdle in the non conventional method is the expense of the means or
methods are too expensive the tariff related issues covering the bundling or handling & are at still.
the issue related to the prices are such that the solar power cost about the Rs 6-8 a unit and wind power
generation cost about the Rs 4 a unit and bundeled power cost about the Rs. 3.5-4 a unit thats why there are
less buyers for this expensive power sources. There are less number of financing options available to the
power purchasers so the issue of low cost power generation remains a hurdle in the path of non
conventional energy sector.

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RESEARCH OBJECTIVES & QUESTIONS.
1- To study the regulatory policies in energy sector.
a- What are the restrictive & liberal regulations in energy sector?
b- How the regulations need to be improvised?
c- Whether the regulations and legislation for energy sector in relation to the distribution and
supply are sufficient?
2- To find out the critical problems related to energy sector.
a- What are the particular areas of the energy sector which lack the market incentives and weak
strategy?
b- How carbon emission can be reduced?
c- How the distribution & supply policy is to be maintained?
3- To analyse the role of International agencies in energy Sector.
a- What are the policies and effect of those policies of the various agencies on the energy sector?
b- How the International agencies help in improvement in the energy sector?
c- Whether the uniform policy on energy sector will work for every country?
4- To identify the investment strategy in the energy sector.
a- What are the investment policies and the financial challenges before the energy sector?
b- How the energy sector can be assessed in economic development?
c- What are the implications of the recent/new energy use trends?

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BIIBLIOGRAPHY
1- India had the per capita energy consumption of 439 kgoe in the year 2003. See IEA (2005) Key world
Energy statics 2005, International Energy Agency,Paris (www.iea.org).
2- Divya Badami Rao and MVRamana, the Indian approach to climate and energy policy, july 3, 2008,
available at http://www.thebulletin.org/web-edition/features/the-indian-approach-toclimate-andenergy-
policy.
3- world conference on human rights, Vienna declaration and programme of action, UN secretary, general
report, UN Doc. A/CONF, 157/24 (partI) (1993), chapter3, para. 10
4- International energy agency, statement on sustainable development for the WSSD, Johannesburg, (2002),
para 7, available at www.iea.org/dbtw-wpd/textbase/papers/2001/sustdev.pdf
5- UNIDO, energy must be fully integrated into the post 2015 development agenda, say Vienna forum
participants (may 28th, 2013) available at http://www.unido.org/news/press/energy-parti.html
6- Sonia Luthra India’s energy policy available at
http://www.nbr.org/research/activity.aspx?id=18#UqB2z9JDt-k
7- T.M Prakash v. The District collector & the superintending engineer, Tamil Nadu Electricity Board 2013(6)
CTC 849, (2014) 1 MLJ 261.
8- Devendra Kodwani, Institutional Endowments and electricity regulations in India
http://regulation.upf.edu/bath-06/10_kodwani.pdf
9- RGGVY at a glance http://rggvy.gov.in/rggvyportal/index.html
10- Ministry of power, RGGVY, 1, http://powermin.nic.in/whats_new/pdf/Rajiv_ghandhi.pdf
11- Julian Gumperz and J.H Spigelman, prospects for nuclear energy, financial analysts journal vol. 20 No. 1
(Jan-Feb, 1964), pp 95-101 published by stable available at http://www.jstor.org/stable/4469601.
12- A strategy for the growth of electrical energy in India. (DAE). http://www.dae.gov.in/publ/doc10/index.htm
13- ‘’status of projects under construction’’ (NPCIL)
http://www.npcil.nic.in/main/projectconstructionstatus.aspx
14- “Nuclear power in India, March 2010, World Nuclear Association. Available at http://www.world-
nuclear.org/info/inf53.html.
15- http://www.ibef.org/industry/infrastructure-presentation

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