INDIA Law and Practice Contributed by: Anupam Varma, Poonam Verma Sengupta, Sakshi Kapoor and Rajesh Jha, JSA
on the condition that the user pays the applicable wheeling and transmission charges (and, in the case of consumers, an additional open-access surcharge to subsidise state utilities). Regulatory Approval and Charges Access must be routed through the relevant nodal agency, such as the CTU for inter-state networks or the STU for intra-state lines, subject to regulations laid down by CERC or the SERC. While the procure- ment of energy through open access can be cheaper, open access consumers must still pay specific regu- lated charges to local utilities to use the infrastructure. These include wheeling charges, cross-subsidy sur- charges and additional surcharges. Transmission service rights are non-exclusive. If there are grid or transmission constraints, services are cur- tailed in an order of priority; namely, short-term open access customers are cut first, followed by medium- term open access customers, while GNA users have the highest priority. Under recent reforms, states and generating stations have the flexibility to acquire, hold and transfer transmission capacity to other parties as market conditions change. 5. Distribution 5.1 Constructing and Operating Electricity Distribution Facilities What Constitutes a “Distribution System”? Under Section 2 (19) of the Electricity Act, a “distribu- tion system” is the system of wires and associated facilities between the delivery points on the transmis- sion lines (or the generating-station connection) and the point of connection to the consumer’s installation. Who May Construct and Operate? • Distribution companies (“ Discoms ”): In the ordinary course, these facilities are built and operated by the distribution licensee or deemed licensee, which carries the duty under Section 42 and the powers under Sections 67 and 68. • Consumers and developers : High Tension or Extra High Tension consumers, such as industrial units, malls, group-housing societies, Special Economic Zones or developers, may construct, own and
operate the distribution facilities on their own premises (substation, transformers and internal network) only below a particular delivery voltage. This is permitted provided the conditions in the CEA regulations and the State Supply Code (see below) are met. Principal Laws Under the Electricity Act, distribution is a licensed activity (Sections 12 and 14), and the distribution licensee has a statutory duty to develop and main- tain an efficient distribution system (Section 42) and a universal obligation to supply on request (Section 43). The distribution licensee is empowered to lay lines and carry out works (Sections 67 and 68). The SERC regulates intra-state distribution under Section 86. Rules and CEA Technical Standards • Electricity Rules , 2005 : As amended by the Elec- tricity (Amendment) Rules, 2024 (dedicated lines and open-access charges) and 2025 (legal status of energy storage), these govern several aspects of ownership and classification of the distribution network. • CEA construction and safety standards : The CEA (Technical Standards for Construction of Electrical Plants and Electric Lines) Regulations, 2022 and the CEA (Measures relating to Safety and Electric Supply) Regulations, 2023 prescribe how distribu- tion plant and lines are built, operated and ener- gised. • Electricity ( Rights of Consumers ) Rules , 2020 : These prescribe service levels for the operation of the distribution system, including connection time- lines, metering and time-of-day tariff. State Supply Codes Each SERC notifies a Supply Code that specifies the definition of the distribution system and prescribes the technical and commercial conditions of construction and supply. Storage and Microgrids • Energy storage : The Electricity (Amendment) Rules, 2025 clarify that an energy storage system may be established independently or as part of the distri- bution system, and that storage co-located with a
137 CHAMBERS.COM
Powered by FlippingBook