By S&S Co. Advocates & Solicitors · Published 4 June 2026 · Informational content, not legal advice: see our disclaimer
The Statutory Basis for Transmission Licensing
Under Section 14 of the Electricity Act, 2003, transmission of electricity requires a licence, save for exceptions the Act itself carves out. Inter-state transmission licences are granted by the Central Electricity Regulatory Commission (CERC), while intra-state transmission licences fall within the jurisdiction of the relevant State Electricity Regulatory Commission. The licensing framework is designed to ensure that transmission, a natural-monopoly function, is undertaken only by entities meeting prescribed technical, financial and operational standards.
Conditions Attached to the Licence
A transmission licence is not an unconditional, one-time grant: it comes with ongoing conditions covering system availability standards, periodic technical and financial reporting, adherence to the Central Electricity Authority's technical standards for construction and maintenance of transmission lines, and compliance with connectivity and open-access obligations under the CERC (Connectivity and General Network Access) framework. A licensee's continued entitlement to operate depends on sustained compliance with these conditions, not merely the initial grant.
Tariff for Transmission Services
Transmission tariff is separately determined by CERC (for inter-state transmission) under cost-of-service principles, factoring in approved capital expenditure, operation and maintenance norms, and system-availability incentives or penalties. A transmission licensee's actual revenue realisation is therefore closely tied to maintaining system availability above the regulatory threshold, since under-performance can result in tariff disincentives.
Enforcement for Non-Compliance
Where a licensee falls short of its licence conditions, whether reporting delays, maintenance lapses, or availability shortfalls, CERC can initiate show-cause proceedings, impose penalties under Section 29 of the Electricity Act, and in serious or persistent cases, take action affecting the licence itself. Regulatory practice has shown a preference for graded enforcement, show-cause and corrective compliance plans in the first instance, over immediate licence revocation, but persistent non-compliance materially raises that risk.
Interconnection and General Network Access
Transmission licensees are also subject to the CERC's Connectivity and General Network Access (GNA) framework, which governs how generators, including renewable energy projects, obtain and retain access to the inter-state transmission system, including milestone requirements for land documentation, financial closure and commercial operation that connectivity grantees must meet to retain their allotted network access.
Frequently Asked Questions
Who grants an inter-state transmission licence?
The Central Electricity Regulatory Commission (CERC) grants inter-state transmission licences; intra-state transmission licences are granted by the relevant State Electricity Regulatory Commission.
Is a transmission licence a one-time grant?
No: it comes with ongoing conditions covering system availability, reporting, technical standards and connectivity obligations, and continued entitlement to operate depends on sustained compliance.
How is transmission tariff determined?
On cost-of-service principles, factoring in approved capital expenditure and operation and maintenance norms, with system-availability incentives or penalties affecting actual revenue realisation.
What happens if a transmission licensee fails to meet its licence conditions?
CERC can initiate show-cause proceedings and impose penalties under Section 29 of the Electricity Act, with licence-affecting action reserved for serious or persistent non-compliance.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Electricity Act, 2003, Sections 14, 15 and 29.
- CERC (Connectivity and General Network Access) Regulations, as amended.
- Central Electricity Authority technical standards for construction and maintenance of transmission lines.