CERC chairman SL Rao said the grid code is aimed at regulating inter-state transmission system. CERC has already started hearing on the code drafted by the Central Transmission Utility (CTU).

The grid code sets out the roles for the different entities, a planning code, connectivity conditions, an operating code which includes demand estimation, demand control, reporting, liaison, comprehensive scheduling and despatch code and review procedure.

Once issued, the code would be a legal document and subject to enforcement by the CERC and both the Central and State Commissions have penal powers available to them if there are violations. He was speaking at a one-day conference on `SEB reforms and financing allied infrastructure in Karnataka' here on Monday.

"The CERC has also been hearing the new availability tariff mechanism, which was to be notified by the Government, but instead it has come to us for decision. The fundamental need of SEB reforms is a change in the mindset, for which there is a need for far-sighted political leadership and political consensus," he said.

Rao said the new tariff mechanism consists of the availability tariff, charges for unscheduled inter-changes which relate to violation of schedules by generator or beneficiary. "However, it is the violation of frequency range that has to be prevented because this causes damage to all parts of the system," he added.

The conference was jointly organised by the Independent Power Producers Association of India (IPPAI) and the Federation of Karnataka Chambers of Commerce and Industry (FKCCI).