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Overview of the Commission

The Odisha Electricity Reform Act, 1995 (Odisha Act 2 of 1996), in short OER Act, 1995 was enacted for the purpose of restructuring the electricity industry, for rationalization of Generation, Transmission, Distribution and Supply of Electricity, for opening avenues for participation of private sector entrepreneurs and for establishment of a Regulatory Commission for the State, independent of the state government. OER Act, 1995 is the first of its kind in the country. The Electricity Act, 2003 has been modeled mostly on the provisions of the OER Act, 1995.

An important component of power sector reform is establishment of an independent autonomous Regulator, the Odisha Electricity Regulatory Commission for achievement of objectives enshrined in the OER Act, 1995. It became functional on 01.8.1996 with the joining of its three members, as the pioneer electricity regulators of the country.

The property, interest in property, rights and liabilities belonging to the erstwhile Odisha State Electricity Board (OSEB) were vested in the State Government as on 1.4.1996. All loans, subventions and obligations of the Board towards the State stood extinguished. The State Government classified the assets, liabilities and proceedings acquired by the State as well as the assets, liabilities and proceedings relating to the undertakings owned by the State Government to (a) Generation Undertaking (b) Transmission Undertaking and those not classified within (a) & (b) to residual assets. The State Government was empowered to vest the Undertakings in GRIDCO & OHPC which the State executed only after upvaluation of assets on the same day and restructured the Balance Sheet of GRIDCO and OHPC.

The Grid Corporation of Odisha Limited (GRIDCO) was incorporated under Companies Act, 1956 on 20.4.1995. All Transmission and Distribution Undertakings were transferred to GRIDCO on 01.4.1996 with upvalued cost with a restructured Balance Sheet. It was to engage in the business of procurement, transmission & bulk supply of electric energy apart from planning, co-ordination & load forecast.

The Odisha Hydro Power Corporation Limited (OHPC) was incorporated under the Companies Act, 1956 on 21.4.1995. All the generating assets of Government as well as OSEB were transferred to OHPC on 01.4.1996. This Corporation takes care of all the operating and ongoing Hydro Power Stations. 49% of the share of the Odisha Power Generation Corporation (OPGC) were disinvested to the US based AES company in January, 1999.

As a sequel to the passing of the Act, the distribution of power was privatized in Odisha and the management of the four subsidiary companies in charge of distribution in the Central Northern, Southern and Western zones of Odisha, namely CESCO, NESCO, SOUTHCO and WESCO were entrusted to private companies which took over 51% of the shares. GRIDCO became a deemed trading licensee from 10.6.2005. The Odisha Power Transmission Corporation Ltd. (OPTCL) took over intra-state transmission & functions of the State Load Despatch Centre (SLDC) on the same date.

The Electricity Act, 2003 was enacted by Govt. of India and came into force w.e.f. 10.06.2003. The Electricity Act, 2003 aims to promote competition, protect interest of consumers while supplying electricity to all areas, rationalize electricity tariff, ensure transparent policies regarding subsidies and provide an enabling regulatory environment. Besides allowing private investments in all the segments of the electricity supply chain, the Act provides various measures to introduce competition in the electricity industry. Now, the Chairperson and Members of OERC are appointed under section 82(5) of the Electricity Act, 2003 (No. 36 of 2003) which is a Central Act.

The OERC completed 24th year of its operation on 01.08.2020. Since 09.05.2016 the Commission is operating at its New Building at Plot No.4, Chunokoli, Sailashree Vihar, Bhubaneswar – 751 021.

Function of the State Commission

  1. Section 86 of the Electricity Act, 2003 deals with the functions of the State Commission. As per Section 86(1) the State Commission shall discharge the following functions, namely:-
    1. Determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the state.
    2. Regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State;
    3. Facilitate intra-State transmission and wheeling of electricity;
    4. Issue licenses to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State;
    5. Promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;
    6. Adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration;
    7. Levy fee for the purpose of this Act;
    8. Specify State Grid Code consistent with the Grid Code specified under clause (h) of subsection (1) of Section 79 of the Electricity Act, 2003.
    9. Specify or enforce standards with respect to quality, continuity and reliability of service by licensees;
    10. Fix the trading margin in the intra-state trading of electricity; if considered, necessary; and
    11. Discharge such other functions as may be assigned to it under the Electricity Act, 2003.
  2. As per Section 86(2) of the Electricity Act, 2003, the State Commission shall advise the State Government on all or any of the following matters, namely:-
    1. Promotion of competition, efficiency and economy in activities of the electricity industry;
    2. Promotion of investment in electricity industry;
    3. Reorganization and restructuring of electricity industry in the State;
    4. Matters concerning generation, transmission, distribution and trading of electricity or any other matter referred to the State Commission by that Government.
  3. As per Section 86(3) the State Commission shall ensure transparency while exercising its powers and discharging its functions. Section 86(4) envisages that in discharge of its functions, the State Commission shall be guided by the National Electricity Policy, 2005, National Electricity Plan and Tariff Policy, 2016 published under Subsection(2) of Section 3 of the Electricity Act, 2003.
  4. Besides, the other provisions of the Electricity Act, 2003 which have a direct bearing on the functioning of the Commission are extracted below for reference.
    1. Section 11 – Directions to generating companies:-
      1. The Appropriate Government may specify that a generating company shall, in extraordinary circumstances operate and maintain any generating station in accordance with the directions of that Government. Explanation - For the purposes of this section, the expression “extraordinary circumstances” means circumstances arising out of threat to security of the State, public order or a natural calamity or such other circumstances arising in the public interest.
      2. The Appropriate Commission may offset the adverse financial impact of the directions referred to in sub-section (1) on any generating company in such manner as it considers appropriate.
    2. Section 23 - Directions to Licensees:-

      If the Appropriate Commission is of the opinion that it is necessary or expedient so to do for maintaining the efficient supply, securing the equitable distribution of electricity and promoting competition, it may, by order, provide for regulating supply, distribution, consumption or use thereof.

    3. Section 37 – Directions by Appropriate Government:-

      The Appropriate Government may issue directions to the Regional Load Despatch Centres or State Load Despatch Centres, as the case may be to take such measures as may be necessary for maintaining smooth and stable transmission and supply of electricity to any region or State.

    4. Section 108 – Directions by State Government:-

      In the discharge of its functions, the State Commission shall be guided by such directions in matters of policy involving public interest as the State Government may give to it in writing. If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the State Government thereon shall be final.

  5. Organisaational Structure of the Commission:-

    The OERC is a three-member Commission headed by the Chairperson. The Commission has four Divisions namely, Tariff, Engineering, Regulatory Affairs and Secretariat Division. The organization structure is given at Annexure-1. Tariff Division is entrusted upon the responsibilities of assisting the Commission in preparing various Tariffs and/or Commercial Orders based on applications of licensees, generators, consumers, government and other stakeholders. Engineering Division assists the Commission in monitoring technical performance of the Utilities under various technical parameters, including License Conditions and Performance Standards. The Commission is assisted by Regulatory Affairs Division on all legal matters. This Division renders necessary legal advice to the Commission and with help of advocates represents the Commission in various Courts, Fora and Tribunals. The Secretariat Division assists the Commission in day-to-day administrative functioning. It is the repository of the Commission’s order and records and carries out all correspondences on behalf of the Commission. This Division authenticates all the orders passed by the Commission. A State Advisory Committee (SAC) is functional and its meetings are held in OERC once in a quarter to discuss various practical issues facing the licensees/consumers/other stakeholders. The Commission benefits by interacting with the Members of the SAC, who represent every corner of the State.