Central Electricity Regulatory Commission (CERC)

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 Context

• The Central Electricity Regulatory Commission (CERC) was recently in the news due to significant developments and decisions impacting the electricity sector in India.

Central Electricity Regulatory Commission (CERC)

• The Central Electricity Regulatory Commission (CERC) is a key regulator of the power sector in India.
• It is a statutory body functioning with quasi-judicial status under Section 76 of the Electricity Act, 2003.
• CERC was initially constituted on 24 July 1998 under the Ministry of Power's Electricity Regulatory Commissions Act,
• Its primary objectives include the rationalization of electricity tariffs, establishing transparent policies regarding subsidies, promoting efficient and environmentally benign policies, and regulating electricity tariffs for power generating companies.
• The Ministry of Power published the Electricity Regulatory Commissions Act, 1998, which also provided for the establishment of State Electricity Regulation Commissions (SERCs) to set tariffs at the state level without needing separate state laws.

Composition of CERC

• The Commission consists of a chairperson and three other Members.
• Additionally, the Chairperson of the Central Electricity Authority serves as an ex-officio Member of the Commission.

Obligations

Tariff Setting Mechanism

• CERC is responsible for formulating an efficient tariff-setting mechanism that ensures speedy and time-bound disposal of tariff petitions.
• It aims to promote competition, economy, and efficiency in pricing bulk power and transmission services, ensuring minimal cost investments.

Regulation of Tariffs

• Regulation of tariffs of central generating stations.
• Regulation of tariffs for electric power generated and sold across states in a composite package.
• Regulation of interstate transmission tariffs and facilitation of open access in interstate transmission.

Licensing and Adjudication

• Issuing licenses to transmission licensees and electricity traders for interstate operations.
• Adjudicating disputes involving generating companies or transmission licensees.

Operational and Management Improvement

• CERC works to improve the operations and management of regional transmission systems through mechanisms such as the Indian Electricity Grid Code (IEGC) and Availability Based Tariff (ABT).

Quality and Reliability Standards

• CERC specifies and enforces standards for quality, continuity, and reliability of service by licensees.

Market Development

• The Commission promotes the development of the power market and may fix the trading margin in interstate trading of electricity if deemed necessary.

Dispute Adjudication

• The Commission adjudicates disputes to promote competition, efficiency, and economy in the electricity industry. It also aims to encourage investment in the electricity sector.

Advisory Functions

Policy Formulation

• CERC advises on the formulation of National Electricity Policy and Tariff Policy.

Industry Promotion

• The Commission promotes competition, efficiency, and economy in the electricity industry, as well as investment in the sector.

Central Government Matters

• CERC addresses any other matters referred to it by the Central Government.

PRACTICE QUESTION Q. Which of the following statements regarding the Central Electricity Regulatory Commission (CERC) are correct? 1.CERC was established under the Ministry of Power's Electricity Regulatory Commissions Act, 1998. 2.It operates with a quasi-judicial status under Section 76 of the Electricity Act, 2003. 3.CERC is composed of a chairperson, four members, and the Chairperson of the Central Electricity Authority as an ex-officio member. 4.Its primary objectives include regulating electricity tariffs for power generating companies and promoting environmentally benign policies.  Options: A) 1 and 2 only B) 2 and 3 only C) 1, 2, and 4 only D) 1, 2, 3, and 4  Answer: C) 1, 2, and 4 only

 SOURCE: PIB