APSERC Introduces Regulations For Granting Electricity Distribution Licenses In Arunachal Pradesh

Introduction

On June 27, 2024, the Arunachal Pradesh State Electricity Regulatory Commission (APSERC) issued a set of new regulations titled “Procedure, Terms and Conditions for Grant of Distribution Licence and other Related Matters Regulations, 2024.”[1] These regulations, which came into effect after being published in the state gazette on July 3, 2024, provide a comprehensive framework for granting electricity distribution licenses within Arunachal Pradesh. Enacted under Section 181 of the Electricity Act, 2003, and other relevant provisions, the new rules are set to streamline the process of licensing distribution services, ensuring that only qualified and financially stable entities are granted the responsibility of distributing electricity in the state.

Explanation (Key Points)

Comprehensive Framework for Licensing

The primary objective of the new regulations is to establish a clear and comprehensive framework for the granting of electricity distribution licenses in Arunachal Pradesh. The regulations cover a wide array of aspects, ranging from the procedures for application submission to the specific conditions and requirements that potential licensees must meet. This structured approach ensures transparency and fairness in the licensing process, promoting efficiency and reliability in the state’s power supply.

Preliminary Definitions and Interpretations

The regulations begin with a section dedicated to definitions and interpretations. This is crucial for ensuring that all terms used throughout the document are clear and unambiguous. Terms such as ‘Act’, ‘Annual Accounts’, ‘Applicant’, ‘Distribution’, and ‘Licensee’ are precisely defined to avoid any confusion. The regulations also define what constitutes a ‘Force Majeure’ event, which includes natural disasters and other extraordinary circumstances beyond the control of the licensee. This clarity in definitions helps in maintaining consistency and understanding across all parties involved.

Procedure for Granting Licenses

One of the most significant sections of the regulations deals with the procedure for granting distribution licenses. Any person or entity wishing to apply for a license must meet specific criteria regarding capital adequacy and creditworthiness, as stipulated by the Ministry of Power, Government of India. Applicants are required to demonstrate their financial capability, including a mandatory norm of 30% equity on the cost of investment. Additionally, the regulations ensure that applicants have a clean record by requiring them to prove that they have not been found guilty or disqualified under laws such as the Companies Act, Income Tax Act, and SEBI Act within the last three years.

Detailed Application Process

The application process itself is highly detailed, with specific requirements for the submission of various documents. Applicants must submit six printed copies and one soft copy of the application, along with three signed copies of maps indicating the proposed service area. These maps should clearly differentiate between existing systems and new facilities required for providing electricity. The regulations also mandate the submission of a detailed project report and other supporting documents, including financial statements for the previous three years and, if applicable, a copy of the applicant’s Memorandum and Articles of Association.

Scrutiny and Approval Process

Once an application is submitted, it undergoes a thorough scrutiny process conducted by the Secretary of the Commission or a designated officer. If the application is found to be incomplete or deficient, it is returned to the applicant with instructions for rectification. If the application is complete, it is certified as ready for consideration by the Commission. Furthermore, the regulations require the publication of a public notice regarding the application unless exempted by applicable laws, ensuring transparency and allowing for public scrutiny and input.

Ensuring Adequate Resources and Competence

The regulations emphasize the importance of ensuring that applicants have adequate competent personnel and infrastructure facilities to construct, operate, and maintain the distribution system effectively. This requirement is vital for maintaining the reliability and efficiency of electricity distribution within the state. The APSERC’s focus on the availability of necessary resources and competent personnel underscores its commitment to ensuring that only capable entities are granted distribution licenses.

Conclusion

The new regulations introduced by the Arunachal Pradesh State Electricity Regulatory Commission mark a significant advancement in the regulatory framework governing electricity distribution in the state. By setting clear procedures, stringent financial requirements, and a transparent scrutiny process, the regulations aim to ensure that only qualified and financially sound entities are entrusted with the distribution of electricity. This structured approach is expected to enhance the efficiency and reliability of the power supply in Arunachal Pradesh, contributing to the overall development and stability of the region’s energy infrastructure.

[1] https://apserc.nic.in/pdf/Regulations/41-280.%20EOG-280.pdf