The Central Electricity Regulatory Commission (CERC) is a statutory body and a key regulator of the Indian power sector, functioning with quasi-judicial status under Section 76 of the Electricity Act, 2003. It was initially constituted on July 24, 1998, under the Electricity Regulatory Commissions Act, 1998, to address issues like irrational tariffs, high cross-subsidies, and the absence of an independent regulatory authority in the power sector. The Electricity Act, 2003, later replaced the 1998 Act, guiding the CERC's current operations.
The CERC's primary mechanism is to regulate the tariff of generating companies owned or controlled by the Central Government and those with a composite scheme for generation and sale of electricity in more than one State. It also regulates and determines the tariff for the inter-State transmission of electricity and issues licenses for inter-State operations to transmission licensees and electricity traders. The Commission also adjudicates disputes involving generating companies or transmission licensees and specifies the Grid Code for the operation of the power system.
The CERC is closely connected to the State Electricity Regulatory Commissions (SERCs), which perform similar functions at the state level, primarily determining retail tariffs and regulating intra-state transmission. Appeals against CERC's orders are heard by the Appellate Tribunal for Electricity (APTEL).
Recently, the CERC has been actively involved in market reforms, such as proposing Market Coupling to centralize power price discovery by designating Grid Controller of India Limited (Grid India) as the sole Market Coupling Operator, as per the draft amendments to the Central Electricity Regulatory Commission (Power Market) Regulations, 2021. Furthermore, the CERC has made significant changes to the Renewable Energy Certificate (REC) mechanism, including doing away with floor and forbearance prices, introducing a multiplier concept for different technologies, and expanding eligibility to widen the scope of the renewable energy market.