Power Ministry’s Draft Electricity Rules Proposes Major Reforms

The Ministry of Power recently released the Draft Electricity (Amendment) Rules, 2023, which proposes several reforms to facilitate the development of the power sector. The proposed changes are as follows: –

• Withdrawal of Transmission License Requirement for Bulk Consumers – The proposed reforms aim to modify the existing framework under the Electricity Act, 2003, which currently mandates transmission licenses for bulk consumers to connect to inter-state transmission systems. It is put forward that bulk consumers having a specified quantum of load and Electricity Storage Systems (ESS) would be allowed to set up dedicated transmission lines without a transmission license.
• Open Access Charges – The draft proposes reforms to the calculation formula of the Open Access Charges, while also imposing a cap on the additional charges that can be levied on consumers using short-term open access.
• ARR and Annual Revenue – Under the proposed amendment, the Ministry emphasizes that the approved tariff must be cost-reflective, ensuring no gap exists between the approved Annual Revenue Requirement (ARR) and the estimated annual revenue from the approved tariff, except in cases of natural calamities.
• Steps Against Frivolous Litigations – Taking note of the judgment of the Hon’ble Supreme Court in the case of GMR Warora Energy Limited v. Central Electricity Regulatory Commission (CERC) & Ors.(CA No.11095 of 2018), wherein the Hon’ble Court emphasized the need to address frivolous litigations in the power industry, the Ministry has proposed a few reforms. These reforms require upfront partial payment of the amount due as per order of the appropriate commission for filing an appeal before the Appellate Tribunal for Electricity, thus discouraging unnecessary litigations. Further, if the appeal is adjudged by the tribunal or the Supreme Court to be frivolous or without any cogent ground whatsoever, the rate of late payment surcharge would be 18%.

Through its letter, the Ministry has invited comments from the concerned stakeholders, to be sent in by July 28, 2023.