Licensing of Transmission and Supply

Requirement of Licence


(1) No person, other than those authorised to do so by license or by virtue of exemption under this Act or authorised to or exempted by any other Authority under the Electricity (Supply) Act, 1948, shall engage in the State in the business of:

(a) transmitting electricity; or

(b) supplying electricity, including bulk supply.

(2) Where any difference or dispute arises as to whether any person is or is not engaged or about to engage in the business of transmitting or supplying electricity as described in sub-section (1), the matter shall be referred to the Commission and the decision of the Commission shall be final.

(3) The Commission shall have the power to order any unlicensed person to cease to operate and disconnect its apparatus.

(4) Notwithstanding anything contained in the other provisions of this Act and until the establishment of the Commission in terms of section 3, the State Government shall have the power to grant provisional licenses under this section having a duration not exceeding twelve months to any person or persons to engage in the State in the business of transmission or supply of electricity on such terms and conditions as the State Government may determine consistent with the provision of this Act , subject however, to the following conditions:

(a) upon the establishment of the Commission, each of the provisional licenses granted by the State Government shall be placed before the Commission and shall be deemed to constitute an application for grant of a license by the Commission under the provisions of this Act ; and

(b) each provisional license granted under this section shall cease to be valid and effective on the date on which the decision of the Commission is communicated to the provisional licensees

(5) The State Government shall be entitled to confer on the provisional licensees under sub-section (4) such powers, rights and authorisation as the Commission is entitled to grant to the licensees under this Act.

(6) All licenses issued under the provisions of Indian Electricity Act, 1910, by the State Government or any competent authority shall be deemed to be a provisional licence and shall be subject to the conditions provided under sub-sections (4) and (5). All Power Purchase agreements, transmission services agreements and other contracts entered into shall continue in full force and effect and will be transferred to the successor entities.


Grant of licences by the Commission

(1) The Commission may on an application made in such form and on payment of such fee as may be specified by regulations, grant a license authorising any person to:

(a) transmit electricity in a specified area of transmission; and/or

(b) supply electricity in a specified area of supply or supply in bulk to the licensees or any person.

(2) In respect of the grant of any such license, the following provisions shall apply:

(a) Any person applying for a license shall publish a notice of his application in such manner and with such particulars as may be specified by regulations within fourteen days after making the application;

(b) The Commission shall not grant a license until:

(i) all objections received relating to the application for the license have been considered by the Commission, provided that no objection shall be considered by the Commission unless it is received within such time from the date of the first publication of the notice under clause (a), above as may be specified by regulations, which shall not be less than forty five days; and

(ii) in the case of an application for a license to supply or transmit in an area which includes the whole or any part of any cantonment, aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Central Government for defence purposes, the Commission has ascertained that there is no objection to the grant of the license on the part of the Central Government;

(c) Where an objection is received from any local authority concerned, the Commission shall, if in its opinion the objection is insufficient, record in writing and communicate to such local authority its reasons for such opinion; and

(d) No application for a license shall be made by any local authority except pursuant to a resolution passed at a meeting of such authority held after one month’s previous notice of the same specifying the purpose thereof has been given in the manner in which notices of meetings of such local authority are usually given.

(3) There shall be specified in the license the duration, extent to which and the terms and conditions under which the transmission or supply of energy is to be made and it shall also contain such other conditions as the Commission may consider appropriate for achieving the purposes of the Act .

(4) Without prejudice to the generality of sub-section (3), the conditions included in a license by virtue of that sub-section may require the licensee to:

(a) enter into agreements on specified terms with other persons for the use of any electric lines, electrical plant and associated equipment operated by the licensee;

(b) comply with any direction given by the Commission;

(c) act in accordance with the terms of the license;

(d) refer all disputes arising under the license for determination by the Commission;

(e) furnish information, documents and details which the Commission may require for its own purpose or for the purposes of the Central or State Government or Central Electricity Authority or Central Electricity Regulatory Commission;

(f) comply with the requirements of the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 or rules framed thereunder in so far they are applicable;

(g) undertake such functions and obligations of the Board under the Indian Electricity Act, 1910 and Electricity (Supply) Act, 1948 as the Commission may specify by regulation;

(h) obtain the approval of the Commission of such things that are required under the license conditions or for deviation from the same;

(i) notify the Commission of any scheme that he is proposing to undertake including the schemes in terms of the provisions of the Electricity (Supply) Act, 1948;

(j) purchase power in an economical manner and under a transparent power purchase procurement process;

Explanation:- The contracts concluded by the State Government or the Board with generating companies and transmission companies prior to the date of commencement of the Act shall stand assigned to KPTC in terms of section 14 and KPTC may continue the purchase or transmission of power under such contracts for effecting bulk sales, distribution and supply to other licensees;

(k) the purchase of power from KPTC to the extent necessary to enable the KPTC to perform its obligations under the contracts concluded by the State Government or the Board referred to in clause (j).

(l) supply of electricity in bulk to other licensees or to customers.

(5) Without prejudice to the generality of sub-section (3), conditions included in a license granted by the Commission may require the holder of such a license to establish a tariff or to calculate its charges from time to time in accordance with the requirements specified by regulations by the Commission.

(6) The provisions contained in the Schedule to the Indian Electricity Act, 1910 shall be deemed to be incorporated with and form part of, every supply license granted under this Part save in so far as they are expressly varied or excepted by the supply license and shall, subject to any such additions, variations or exceptions which the Commission is empowered to make having regard to the purposes of the Act , apply to the undertaking authorised by the license in relation to its activities in the State :

Provided that where a supply license is granted by the Commission for the supply of energy to other licensees for distribution by them, then in so far as such license relates to such supply, the provisions of clauses IV, V, VI, VII, VIII and XII of the said Schedule shall not be deemed to be incorporated within the supply license.

(7) The conditions included in a license may contain provision for the conditions to cease to have effect or be modified at such times, in such manner and in such circumstances as may be specified in, or determined by or under, the conditions.

(8) Any provisions included by virtue of sub-section (7) in a license shall have effect in addition to the provisions made under sections 22(5) and 23 with respect to the amendment of the conditions of a license.

(9) Unless if so indicated in the terms of a license, the grant of a license under this section to a person shall not in any way hinder or restrict the grant of a license to another person within the same area of supply for a like purpose and the licensee shall not claim any exclusivity.

(10) The license granted by the Commission in terms of this Act may provide that the licensee shall have the powers and authority to take appropriate actions for revenue realisation, prosecution for theft, meter tampering, diversion of electricity and all such and similar matters affecting the distribution and supply of electricity to the consumer.

(11) The Commission shall be entitled to authorise the licensees and persons to exercise such power and authority as the licensees and persons could be given under the provisions of the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948.



Exemption from the requirement to have a licence

(1) The Commission may make regulations to grant exemption from the requirement to have a supply license, but subject to compliance with such conditions (if any) as may be specified in the order; provided that the Commission shall not, under any such regulation, grant any exemption except with the consent:

(a) of the local authority, if any, constituted in the area where energy is to be supplied;

(b) in any case where energy is to be supplied in any area forming part of any cantonment, aerodrome, fortress, arsenal, dockyard or camp or any building or place in the occupation of the Central Government for defence purposes, of the Central Government;

(c) in any area falling within the area of supply of a licensee, of that licensee;

Provided that except in a case falling under sub-clause (ii), no such consent shall be necessary if the Commission is satisfied that such consent has been unreasonably withheld.

(2) An exemption may be granted:-

(a) to a person; or

(b) to a class of persons,

(c) for a certain period

(3) An exemption granted shall be published in such manner as the Commission considers appropriate.

(4 ) The exemption granted may be revoked by the Commission at any time for reasons to be recorded in writing.

(5) An exemption, unless previously revoked, shall continue in force for such period as may be specified in, or determined by or under, the exemption.



General duties and powers of the licensees

(1) It shall be the duty of the holder of a supply license or a transmission license in respect of a particular area to develop, provide and maintain an efficient, co-ordinated and economical system of electricity supply or transmission in the area of supply, as the case may be.

(2) Each licensee in discharge of its duties shall comply with the provisions of the regulations framed from time to time governing the terms and conditions for the operation and maintenance of power system and electric supply lines.

(3) Subject to sub-section (4), Sections 12 to 19 of the Indian Electricity Act, 1910 (which relate to the carrying out of Works) shall have effect in relation to a person authorised by a license under this Act to transmit or supply electricity, as if he is a licensee in that Act.

(4) Where any of the sections mentioned in sub-section (3) above is applied to a license holder by his license, it shall have effect subject to such restrictions, exceptions and conditions as may be included in the license.



Revocation of licence

(1) The Commission may inquire into the conduct or functioning of any licensee in carrying out the obligations under the Act or rules or regulations framed thereunder or the terms and conditions of its license:-

(a) on receiving a complaint from any consumer or consumer association or any trade association; or

(b) on a reference made to it by the State Government or by the Central Government or the Central Electricity Authority or the Central Electricity Regulatory Commission; or

(c) on receiving a complaint from any company or person involved in the generation, transmission, distribution or supply of electricity; or

(d) on its own knowledge or information derived from any source.

(2) Upon making such inquiry, the Commission may, if in its opinion in the public interest so requires, revoke a license in any of the following cases, namely:

(a) where the licensee, in the opinion of the Commission, has committed a willful or unreasonable default in doing anything required of him by or under this Act , the Indian Electricity Act, 1910 or the Electricity (Supply) Act, 1948 or rules made thereunder to the extent applicable in the State, read with the provisions of this Act ;

(b) where the licensee commits a breach of any of the terms and conditions of his license the breach of which is expressly declared by such license to render it liable to revocation;

(c) where the licensee fails within the period specified in his license or any longer period which the Commission may allow by order:

(i) to show, to the satisfaction of the Commission, that he is in a position to fully and efficiently discharge the duties and obligations imposed on him by his license; and

(ii) to make the deposit or furnish the security required by his license; and

(d) where in the opinion of the Commission the financial position of the licensee is such that he is unable to fully and efficiently discharge the duties and obligations imposed on him by his license.

(3) Notwithstanding the provisions of sub-section (1) and (2), where in its opinion the public interest so requires, the Commission may, on the application or with the consent of the licensee and if the licensee is not a local authority, after consulting the concerned local authority, if any, revoke a license as to the whole or any part of the area of transmission or supply upon such terms and conditions as it thinks fit.

(4) No license shall be revoked under sub-section (2) or (3) unless the Commission has given to the licensee not less than three months’ notice in writing, stating the grounds on which it is proposed to revoke the license and has considered any cause shown by the licensee within the period of that notice, against the proposed revocation and has given reasons for such revocation.

(5) The Commission may, instead of revoking the license, permit it to remain in force subject to such further terms and conditions as it thinks fit to impose and any further terms or conditions so imposed shall be binding upon and be observed by, the licensee and be of like force and effect as if they were contained in the license.


Amendment of licence

(1) The Commission may, where in its opinion the public interest so permits or requires, on the application of the licensee or otherwise and if the licensee is not a local authority, after consulting the concerned local authority, if any, make such alterations and amendments to the terms and conditions of a license as it thinks fit taking into account the object and purposes of the Act :

Provided that no such alterations or amendments, other than an alteration or amendment pursuant to a license condition referred to in sub-section (7) of Section 19 or sub-section (5) of Section 22 shall be made except with the consent of the licensee.

(2) Where the licensee has made an application under sub-section (1) proposing any alterations or amendments in his license, the following provisions shall apply:

(a) The licensee shall publish a notice of the application in the manner and with the particulars as may be specified by regulations;

(b) The Commission shall not make any alterations or amendments until all objections received by it with reference to the application within such time from the date of the first publication of the notice have been considered as the Commission may specify by regulations, which shall not be less than 45 days; and

(c) In the case of an application proposing alterations or amendments in an area of supply comprising the whole or any part of the cantonment, aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Central Government for defence purposes, the Commission shall not make any alterations or amendments except with the consent of the Central Government.

(3) Before making any alterations or amendments in a license otherwise than on the application of the licensee, the Commission shall publish the proposed alterations or amendments and consider all objections received by it with reference to the proposed alterations or amendments within such time from the date of the first publication of the notice which the commission may specify by regulations, which shall not be less than 45 days.


Provisions where licence is revoked

(1) Notwithstanding the provisions of Sections 6 and 7 of the Indian Electricity Act, 1910, where the Commission revokes a license, under sub-section (2) of Section 22 the following provisions shall apply:-

(a) The Commission shall serve a notice of revocation upon the licensee and shall fix a date on which the revocation shall take effect.

(b) The Commission shall invite applications for acquiring the undertaking of the licensee whose license has been revoked and determine the terms and conditions of the sale of the undertaking;

(c) The Commission may by notice in writing require the licensee to sell, and thereupon the licensee shall sell the undertaking to the person whose application has been accepted by the Commission. Such person is referred to in this Section as the “purchaser”; and

(d) The Commission may make such interim arrangement in regard to the undertaking of the licensee for maintaining the electricity transmission and supply as may be considered appropriate including the appointment of administrators and additional directors for the undertaking.

(e) On and with effect from the date of revocation or where the undertaking of the licensee is sold to a purchaser earlier to the date of revocation in pursuance of any of the provisions of the Act , on and with effect from such date of purchase, all the rights, duties, obligation and liabilities of the licensee under this Act shall cease and stand determined except for any liabilities that have accrued prior to that date;

(2) Where an undertaking is sold under sub-section (1), the purchaser shall pay to the licensee the purchase price of the undertaking determined in accordance with the application submitted by the purchaser, subject however to the Commission’s directions to deposit any part of the purchase price towards payment of any fines, charges, or compensation levied on the licensee or any other amount due or outstanding from the licensee under any orders passed by the Commission.

(3) Where the Commission issues any notice under sub-section (1) requiring the licensee to sell the undertaking, it may by such notice require the licensee to deliver and thereupon the licensee shall deliver on a date specified in the notice, the undertaking to the designated purchaser pending the payment of the purchase price of the undertaking :

Provided that in any such case, the purchaser shall pay interest at such percent not less than the Reserve Bank lending rate ruling at the time of delivery of the undertaking as the Commission may decide, on the purchase price for the period from the date of delivery of the undertaking to the date of payment.

(4) Where before the date fixed in the notice issued under sub-section (1)(a) as the date on which the revocation of the license shall take effect, no notice has been issued to the licensee requiring him to sell the undertaking or where for any reason no sale of the undertaking has been effected under that sub-section, the State Government shall acquire the undertaking on the date of revocation of the license and shall pay to the licensee the book value of the undertaking as on the date of acquisition and shall perform all the obligations of the licensee until such time as the State Government is able to sell the undertaking to a new licensee, which it shall endeavor to do when reasonably practicable. The State Government shall make payment of the book value of the undertaking on the date of acquisition after State Government is able to sell the undertaking to a new licensee, provided that such payment in any case be made within a period of one year from the date of such acquisition by the State Government.

(5) The licensee shall duly implement the orders of the Commission, notwithstanding that the licensee may be aggrieved by the orders of the Commission and intends to take legal action challenging the orders of the Commission.



General restriction on the licensees

(1) No licensee or generating company shall, at any time, without the previous consent in writing of the Commission, acquire by purchase or otherwise the licence or the undertaking of, or associate himself with, so far as the business of generating, transmitting, distribution or supply of energy is concerned, any other licensee or person generating, transmitting, supplying or intending to generate, transmit or supply electricity :

Provided that before granting consent the Commission may publish such notices inviting objection and hear such persons or authority as the Commission may consider appropriate and specify by regulations.

(2) The licensee shall not, at any time, assign his licence or transfer his undertaking, or any part thereof, by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the Commission.

(3) A holder of a supply or transmission licence may, unless expressly prohibited by the terms of its licence, enter into arrangements for the purchase of electricity from:

(a) the holder of a supply licence which permits the holder of such licence to supply energy to other licensees for distribution by them; and

(b) any person or generating company with the consent of the Commission.

(4) Any agreement relating to any transaction of the nature described in sub-sections (1), (2), or (3) unless made with, or subject to, such consent as aforesaid, shall be void.



Annual accounts of licensee

Every licensee shall, unless expressly exempted by the licence, prepare and render to the Commission on or before the date in each year specified in the licence an annual statement or statements of accounts of its undertaking and of each separate business unit as specified in the licence made up to such date, in such form and containing such particulars, as may be set out in the licence and it shall be a term of the licence that such statements shall be published in the manner specified by regulations.