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Section 3: National Electricity Policy and Plan

Electricity Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 2003
Section 2 All 185 Sections of Electricity Act Section 4

Legal Commentary & Landmark Judgments: Section 3

Section 3 of the Electricity Act, 2003 mandates the Central Government, in periodic consultation with State Governments and the Central Electricity Authority (CEA), to formulate and notify the National Electricity Policy and National Electricity Plan for the optimal, unified, and environmentally sustainable development of the national power infrastructure.

  • Mandatory Formulation of National Policy and Plan: Directs the Central Government to formulate and publish policies covering power generation, transmission, distribution, rural electrification, and renewable energy, reviewing and notifying revisions at statutory five-year intervals.
  • Inter-Institutional Collaborative Planning Framework: Mandates institutional consultation with State Governments and the CEA, tasking the CEA with preparing the draft National Electricity Plan and soliciting public objections and suggestions before final governmental notification.
  • Guiding Normative Impact on Regulatory Commissions: Serves as the overarching statutory framework guiding the CERC and SERCs under Sections 61, 79, and 86 when determining multi-year tariffs, licensing conditions, and grid capacity expansion benchmarks.
Key Landmark Precedents:
  • PTC India Ltd. v. Central Electricity Regulatory Commission (2010) 4 SCC 603: The Constitution Bench held that while the National Electricity Policy framed under Section 3 provides overarching policy direction, it cannot override or restrict subordinate legislative regulations framed by Commissions under Sections 178 or 181.
  • Tata Power Co. Ltd. v. Reliance Energy Ltd. (2009) 16 SCC 659: The Supreme Court ruled that the National Electricity Policy under Section 3 articulates the legislative intention to promote competition and open access, requiring Regulatory Commissions to align their regulatory determinations with these directional policies.
Courtroom Practice & Strategic Litigation Guidance:

In appellate proceedings before APTEL challenging regulatory orders or state tariff regulations, deploy Section 3 policy principles as persuasive interpretive tools to expose arbitrary deviations, while ensuring the primary legal challenge remains rooted in enforceable provisions of the Act or binding Commission regulations.

Section 2 All 185 Sections of Electricity Act Section 4