Two key provisions in the Electricity Act 2003 relate to captive generation and open access. Their effect is to break the veto power of state electricity boards. Now anyone can buy and sell electricity. Captive includes consuming units that along with the generator are part of a cooperative or association. It no longer signifies only the use of electricity by the owner in his own factory. SEBs were able to enforce their veto by denying access to transmission lines that were owned by them. They can no longer do so. But regulatory commissions (RCs) have to publish the rules for giving effect to these provisions.

Open access recognises that transmission and distribution wires are rarely duplicated on the same route. So the wires must be accessible to any generating company for moving its electricity. RCs will determine the tariffs for using the wires and an additional surcharge not applicable to captive generated electricity to pay for cross-subsidies till they are eliminated.

Thus private generators can now produce and sell electricity to anyone. They can use inter and intra-state transmission lines to transmit power. If the user is part of a captive network only the normal transmission tariffs shall be paid. If its not, there will be a surcharge. A certain amount of choice is now available to producers and users. Competition has entered electricity.

However, SEBs fear that they will lose many good paying customers. Some state commissions have yet to issue rules for open access. Others have announced unviable surcharges. The CERC has asked SERCs to announce their rules. If the central government succumbs to pressure and reverses the Act, a key element in electricity reform will be abandoned.

The writer is former chairman, CERC