Energy Conservation (EC) Act, 2001

Why in NEWS ?

• Ministry of Power mandates all DISCOMs to comply Energy Conservation (EC) Act , 2001

About

• The Ministry of Power issued notification to cover all the Electricity Distribution Companies (DISCOMs) under the preview of the EC Act.
• As per the notification, which was formulated in consultation with Bureau of Energy Efficiency (BEE)- "All entities having issued distribution license by State/Joint Electricity Regulatory Commission under the Electricity Act, 2003 (36 of 2003)" are notified as Designated Consumers (DCs).
• After this notification, all the DISCOMs will be governed under the various provisions of EC Act, such as Appointment of Energy Manager, Energy Accounting & Auditing, identification of Energy Losses Category wise, Implementation of energy conservation & efficiency measures etc. for each DISCOMs.
• Earlier, the DISCOMs whose annual energy losses were equal to or above 1000 MU were only covered as DCs. Now with this notification, the number of DISCOMs covered under the EC Act will increase from 44 to 102.
• This decision will facilitate Energy Accounting & Auditing as mandatory activity for all the DISCOMs, leading to the actions towards reducing losses and increase profitability of DISCOMs.

Significance of the Amendment

• The amendment is expected to help DISCOMs to monitor their performance parameters and bring in transparency in the Distribution sector through professional inputs.
• It will also assist in developing projects for reducing the electricity losses by DISCOMs and implementing effective solutions.
• The amendment is expected to improve the financial state of the DISCOMs.
• The quarterly data of these DISCOMs will be collected and monitored by the government to suggest measures for increasing the efficiency and reduce the energy loss.
• This move is expected to gradually become more effective if extended upto the level of end consumers.

What is DisCom ?

• Discom stands for ‘Distribution Company’.
• Meaning companies are not generating electricity themselves, rather purchasing it from someone else and just supplying to the final consumers.
• Discoms are the companies that are responsible for the distribution of the electricity to the consumers.
• Usually the term is used with power distribution companies run by central and state governments.
• Electricity is a concurrent list subject at Entry 38 in List III of the seventh Schedule of the Constitution of India. Both the central government and India's state governments are involved in establishing policy and laws for its electricity sector.
• The Ministry of Power is India's apex central government body regulating the electrical energy sector in India.
• Distribution Companies (DisComs) have been called the lynchpin(backbone) but also the weakest link in the electricity chain.

Bureau of Energy Efficiency

• Bureau of Energy Efficiency (BEE) is a statutory body under the Ministry of Power, Government of India.
• It assists in developing policies and strategies with the primary objective of reducing the energy intensity of the Indian economy.
• BEE coordinates with designated consumers, designated agencies, and other organization to identify and utilize the existing resources and infrastructure, in performing the functions assigned to it under the EC Act.

Energy Conservation Act

• Considering the vast potential of energy savings and benefits of energy efficiency, the Government of India enacted the Energy Conservation Act, 2001 (52 of 2001).
• The Act provides for the legal framework, institutional arrangement and a regulatory mechanism at the Central and State level to embark upon energy efficiency drive in the country.
• Five major provisions of EC Act relate to Designated Consumers, Standard and Labelling of Appliances, Energy Conservation Building Codes, Creation of Institutional Set up (BEE) and Establishment of Energy Conservation Fund.
• The Energy Conservation Act became effective from 1st March, 2002 and Bureau of Energy Efficiency (BEE) operationalized from 1st March, 2002.
• Energy efficiency institutional practices and programs in India are now mainly being guided through various voluntary and mandatory provisions of the Energy Conservation Act.
• The EC Act was amended in 2010 and the main amendments of the Act are given below:

1. The Central Government may issue the energy savings certificate to the designated consumer whose energy consumption is less than the prescribed norms and standards in accordance with the procedure as may be prescribed.
2. The designated consumer whose energy consumption is more than the prescribed norms and standards shall be entitled to purchase the energy savings certificate to comply with the prescribed norms and standards.
3. The Central Government may, in consultation with the Bureau, prescribe the value of per metric ton of oil equivalent of energy consumed.
4. Commercial buildings which are having a connected load of 100 kW or contract demand of 120 kVA and above come under the purview of ECBC under EC Act.