As per our Constitution, power industry is the combined responsibility of the Central Government and the State Governments. The ESA (Electricity Supply Act) envisaged three kinds of entities in the power-sector: State Electricity Boards (SEBs), generating companies, and licensees. SEBs are allowed to generate, transmit, and distribute electricity within a state; they enjoy all the powers of a licensee. They account for 65 per cent of the power generated in the country.
Generating companies are responsible for supplying power to the grid without the specific responsibility of retail distribution. Major players in this category are NTPC (National Thermal Power Corporation), NHPC (the Hydro-electric analogue of NTPC), and NPCIL (Nuclear Power Corporation of India Limited). Though ESA allowed only the governments to set up generating companies till 1991, thereafter it was de-reserved. Independent Power Producers (IPPs) now fall under this category.
Existing licensees are private-sector utilities licensed by a State Government for power generation, distribution, or both within a specified area. For example, Gujarat Industrial Power Corporation is only into generation and Central Electricity Supply Corporation (in Orissa) is confined to distribution, whereas Bombay Suburban Electric Supply Limited (BSES) and Tata Electric Company (TEC) are involved both in generation and distribution.
The interdependence among these players in the electricity sector can be gauged from the fact that their performances are closely linked. The industry value-chain is captured by Chart-1 below. (PGCIL is the Power Grid Corporation of India Limited.)
Chart - 1
Some instances of such interdependence are easy to find. High generation tariffs affects the performance of SEBs and transmission companies, just as MSEB (Maharahstra State Electricity Board) got badly affected by the high tariff imposed by Dabhol Power Company.