PowerMin proposes legal check to state curbs on export of electricity

The changes seek to dissuade tendency among states to curb export of power

The Union power ministry, in a serious bid to check the growing tendency among states to restrict export of electricity generated within their borders, has proposed amending the Electricity Act 2003.

The relevant section here is 11 of the Act, resorted to by several states on the justification of rising power shortage.

The ministry has sought comments and suggestions of stakeholders by November 15 on the draft amendments. These have been discussed since August 2012, by the ministry and also by the Forum of Regulators (FOR), a representative body of the central and state electricity regulatory commissions.

Jayant Deo, member of the Maharashtra Electricity Regulatory Commission, said the proposed amendments were likely to remove the impediments in the development of competition in the sector as envisaged in the Act.

The amendment proposes that the appropriate government might, subject to payment of the compensation determined within the time and in the manner directed by the appropriate commission, specify that a generating company shall, in extraordinary circumstances, operate and maintain any generating station in accordance with its directions.  However, such a direction is not to affect the capacity of the generating station already committed under a valid and binding contract and open access for conveyance of such capacity duly taken.

Further, such a government direction shall not be valid for more than 30 days. According to the ministry, the “extraordinary circumstance'' means those arising out of threat to security of the state, public order or a natural calamity or such other circumstances arising in the public interest. The appropriate commission shall offset the adverse financial impact of the directions on any generating company as it considers appropriate.

Moreover, the state government notwithstanding, will have to pay in advance the grant of any subsidy to any consumer or class of consumers. No such state direction shall be operative if the payment is not made in accordance with the provisions in this section and the rate fixed by the state electricity regulatory commission.

Ajoy Mehta, Maharashtra's principal secretary (energy) told Business Standard: ''This change is welcome and it is in keeping with the reality and the demands of the sector.''