Power Ministry asks CERC to consult before drafting, changing rules

The power ministry has directed the quasi-judicial regulatory body, Central Electricity Regulatory Commission (CERC), to consult the government before drafting or amending any regulation.

The ministry’s notice comes at a time when discussions are going on over the proposed Electricity Bill, which is set to bring sweeping changes in the sector.

In a letter dated May 8, the ministry has said the CERC should “consult with the ministry of power in the initial stages of regulation making".

The ministry has said it is issuing this as there have been several instances where it had to intervene to the CERC for change in regulations.

“In the recent past, the power ministry came across a number of critical issues to address which it had to issue policy directions to CERC necessitating amendments in its regulations. Frequent changes in regulations are not in interest of predictable and stable regulatory framework,” the notice said.

The ministry further said the CERC is required to consult all stakeholders before framing regulations and the government is the most important stakeholder.

“In view of the above, the CERC must consult the power ministry in detail at the stage of forming regulations. This will ensure regulations are consistent with the rules framed by the government and the government's reform agenda,” said the notice.

Business Standard has reviewed a copy of the notice.  The ministry has issued this notice under the Section 107 of the Electricity Act, 2003, wherein it can issue directions to the CERC. 

Last year, bypassing any regulatory changes, the ministry invoked Section 11 of the Act during the coal supply shortage for allowing coal import and then subsequent passing of the cost.

In October last year, the Forum of Regulators (FOR), the collective apex body of all Electricity Regulatory Commissions (ERCs), in its special meeting on the proposed Electricity (amendments) Bill, 2022, had criticised the Centre for diluting the premise of the legislature which it said would hinder the functioning of the power sector.