Introduction

The Indian Power sector is subject to both the State level and Central level regulation. The sector was initially governed by two key legislations—The Indian Electricity Act, 1910 and The Indian Electricity (Supply) Act, 1948. The Government of India announced a policy of liberalization in 1991 and the Electricity (Supply) Act, 1948 was suitably amended in order to open up the power sector and invite private sector participation and investment into the sector.

Given the steadily deteriorating health of the State Electricity Boards (SEBs) owing to reasons such as social objective overriding the commercial objectives, consequent government intervention in tariff fixation, inability of the SEBs to function as commercial entities and to maintain financial prudence, and the inability of the State Governments to support the ever increasing financial deficits—it was only a matter of time before the Indian power sector thought of industry reforms.

In light of the above, most State Governments were forced to initiate reform related measures in order to aim at affecting a turnaround of the deteriorating state of power sector in most Indian states. The Government of India announced various policy initiatives such as:

• The Electricity Regulatory Commissions Act, 1998 was promulgated in order to set up independent regulatory bodies both at the Centre and the State level.
  
  
• The Central Electricity Regulatory Commission was established to function as the national level regulatory authority for the power sector. This led to many states setting up the State Electricity Regulatory Commissions and also introducing State Level Reform Acts.
  
  
• The Government introduced the Electricity Bill 2001 which after deliberations and amendments received presidential assent and the Electricity Act 2003 by came into force from June 10, 2003. The EA 2003 seeks to supersede the existing laws on electricity.