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Highlights of the Act | Regulatory Mechanism | Functions of the OERC


Orissa has been a pioneer among States in India in embarking on a comprehensive reform of the electricity industry of the State. The aim of the reform is to address the fundamental issues underlying poor performance of the Orissa State Electricity Board and restructure the power sector. The objective to make power supply more efficient, meet the needs of a growing economy and develop an economically viable power industry which will enable Orissa to attract private capital while safeguarding the interests of the consumers.

The reform programme was announced by the Chief Minister of Orissa in November, 1993, formally approved by the council of Ministers in April, 1994 and was endorsed by the new state government which took office in March, 1995. On April 20, 1995, the government issued a formal statement of its power policy.

A new legislation, namely, the Orissa Electricity Reform Act, 1995 (Orissa Act 2 of 1996) was enacted for the purpose of restructuring the electricity industry, for taking measures conducive to rationalization of generation, transmission and supply system, for opening avenues for participation of private sector entrepreneurs and for establishment of a Regulatory Commission independent of the state government and power utilities.

Advance clearance of the legislation by the central government was issued by the Ministry of Home Affairs in early November 1995. The legislation was approved by the State Assembly on November 28, 1995. The President gave his assent in January 1996 and the Act became effective in April 1996. The restructuring of the industry became effective from the same date and the Regulatory Commission became functional on 01.08.1996 after all the three members including the Chairman had taken oath of office. Up


The reform legislation contains several fundamental building blocks.

  • Restructuring - The former OSEB has been corporatised and is designed to be managed on commercial principles in its new form GRIDCO. While the newly formed GRIDCO has been put in charge of transmission and distribution, the hydro power- generating stations owned by the government has been taken over by the Orissa Hydro Power Corporation (OHPC).

  • Unbundling - The reform structure has incorporated principles of functional unbundling with regard to generation, transmission and distribution to be managed by separate corporations/companies.

  • Privatisation - The OER Act, 1995 aims at fostering private sector participation in generation and gradual privatisation of transmission and distribution.

  • Regulatory Commission - An important component is establishment of the Orissa Electricity Regulatory Commission for ensuring achievement of objectives given in the Orissa Electricity Reform Act, 1995.

  • Licensing - Government ownership and direct control has given way to a licensing system in respect of transmission and distribution activities.

  • Tariff - Determining tariff which would ensure commercial rate of return for investment in the electricity industry while protecting rights of all categories of consumers with respect to cost, efficiency and quality of service.

The new regulatory supervision is designed to be qualitatively and structurally different from the command and control exercised by the government so far as the electricity industry is concerned. The Orissa government's objective is to withdraw from the power sector as an operator of utilities and give way to privately managed utilities operating in a competitive and appropriately regulated power market. The Commission is designed to be an autonomous authority responsible for regulation of the power sector while policy-making power continues to be retained by the State Government. The Commission is a three member body with the necessary supporting staff.

Structural EvolutionUp


The new regulatory regime is designed to insulate the electricity industry from short term political decisions and rigid bureaucratic control. It aims at ensuring that industry operates on commercial lines so that the scarce resources of the state are available for development. It has been the experience that state owned industry is utilised for achieving social and political ends such as creating avenues for employment, and giving subsidy to certain categories of consumers. This becomes detrimental to the industry resulting in non-availability of resources for maintenance and expansion, lack of accountability in performance, poor quality of service, financial sickness of the industry and unwillingness of private sector to invest in any significant manner.

The new regulatory regime, on the pattern prevalent in USA and UK, is designed to create clear and transparent rules and procedures for open hearing by which the Regulatory Commission can monitor and control the essential utility industries while the interests of all those who participate in it and those who are served by it can be balanced and protected.

As an independent Regulatory OERC

  • Issues and enforces licenses

  • Determines tariff and charges

  • Monitors financial viability of operators

  • Sets service standards and monitors compliance

  • Arbitrates in disputes between licensees

  • Arbitrates in disputes between licensees and consumers

  • Provides information and advice to the Government

  • Handles consumer grievances

  • Promotes competition in all sectors of electricity industry

An independent Regulatory Commission operating in a transparent manner creates comfort and confidence of investors from private sector by allaying the apprehension that political and personal considerations may create an uncertain climate and that the interests of Govt. or selected persons shall not be unduly favoured.

Regulatory StructureUp


  • to aid and advise, in matters concerning generation, transmission, distribution and supply of electricity in the State;

  • to regulate the working of licensees and to promote their working in an efficient, economical and equitable manner;

  • to issue licenses in accordance with the provisions of the Reform Act and determine the conditions to be included in the licenses;

  • to promote efficiency, economy and safety in the transmission, distribution and use of electricity in the State including and in particular in regard to quality, continuity and reliability of service so as to enable all reasonable demands for electricity to be met;

  • to regulate the purchase, distribution, supply and utilization of electricity, the quality of service, the tariff and charges payable keeping in view both the interest of the consumer as well as the consideration that the supply and distribution cannot be maintained unless the charges for the electricity supplied are reasonably levied and duly collected;

  • to promote competitiveness and progressively involve the participation of the private sector, while ensuring a fair deal for the customers;

  • to collect data and forecast on the demand for and use of electricity and to require the licensees to collect such data and make such forecasts;

  • to require licensees to formulate perspective plans and schemes in coordination with others for the promotion of generation, transmission, distribution and supply of electricity; and

  • to undertake all incidental or ancilliary things.

The Orissa Electricity Regulatory Commission has taken up its role earnestly in the aforesaid historical and legal perspective. The Commission's task is all the more difficult because there has been no precedent of an independent regulatory Commission in electricity industry in any of the developing countries in Asia. The Commission has formulated its rules, regulation and procedure in a tailor-made manner to suit the economic and industrial development in general, and need of electricity sector in particular, in the state of Orissa while safeguarding the interests of all categories of consumers. Up








All Orissa (as on 01.01.2007)


Number (%)

Load in MVA (%)

LT (Domestic, General Purpose etc.)

2363552 (99.93%)

3497.713 (68.37%)

HT (CD >= 110 KVA)

1569 (0.06%)

801.882 (15.68%)


54 (0.01%)

816.127 (15.95%)





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