The Power Ministry has proposed the eligibility criteria for the selection of the chairman and members of the State Electricity Regulatory Commissions (SERC) and Joint Electricity Regulatory Commission (JERC).

Last week, it floated the draft Electricity (Amendment) Rules, 2023, on which it is seeking responses from stakeholders by February 17.

Under the proposed rules, the chairperson and members of SERCs have to be the heads of an organisation dealing with the generation, transmission, or distribution of electricity. For members, the person should be a member of the board of such an entity.

Another is that the person should be at least a principal secretary to the State government or at an equivalent post in the central or State government for the chairman of SERCs. For members, the concerned person should be at least a Secretary to state government or at an equivalent post in the central/ state government.

“Provided that a person who has served in the past in a power sector utility under the control of the concerned state government within 3 years from the date of the advertisement for the post shall not be eligible. Provided also that preference shall be given to a person having adequate knowledge of and experience of not less than two years in the power sector,” the draft rules state.

License period

The draft rules also try to remove the ambiguity on the license period for certain entities. It proposed that where a person or entity, including a government company, was functioning as a licensee under the previous (Electricity) Act and continues to function as a licensee under the provisions of Section 14 of the Electricity Act, 2003 (EA 03), and where the duration of the license was not prescribed, the license period will be 25 years.

“Licensees are required to apply for and obtain the renewal of their license before the expiration of their license. The license shall be renewed for a period of 25 years at a time,” it proposes.

Explaining the rationale of the proposed rules, Nangia Andersen Partner (Power Advisory) Arindam Ghosh said that Rule 4A overlaps Section 15(8), which states the tenure of a license as 25 years.

“Furthermore, this Rule is diluting the powers of SERC under Section 16 (Conditions of License), since the central government’s rules will now be an integral part of license conditions. It would be a matter of jurisdiction between the State and the central government,” he explained.

A clarification is needed concerning the duration of licenses that were issued prior to EA03, which indicate a tenure between 20 and 30 years. Even though tenancy was not discussed in the earlier Act, a clarification may be required on the applicable time period—tenure mentioned in the license or tenure mentioned in the rules. Unless it is clearly spelled out, a possible dispute may arise over the sanctity of the contract, the validity of the applicable law, and the application of the new rules, he pointed out.

“Also, it is unclear under Rule 4A which Act would apply (EA03 or previous act) on the term of license and how it will be calculated under Rule 4A. By putting a different taxonomy for EA 03 (referred to as “Act” in EA rules 2023, read with EA rules 2005) and the previous Act, which is not defined in this notification, the ambiguity can be removed to provide more clarity,” Ghosh emphasised.