INTRODUCE YOURSELF TO - ENERGY CONSERVATION ACT

INTRODUCE YOURSELF TO - ENERGY CONSERVATION ACT

Nandimath Omprakash V.,[1]

INTRODUCTION

Under the new act of Energy Conservation there is clear shift in the policy focus from energy conservation to energy efficiency.  It is amazing to note that, earlier to this enactment energy efficiently measures were purely on self motivated drive of very few industries in India.  Some industries that were energy conscious were having some energy cell established in them to see the pattern of energy used and the ways and means of reducing the use of energy levels – leading to the better efficiency of energy use. Power sector reforms started almost along with the complete package of economic sector reforms in India.  Unfortunately any rational analysis would reveal that the power sector in India continues to remain in a precariously unhealthy condition, despite sporadic efforts at reforms that should have been put in place years ago.  The result is inadequate unreliable and poor-quality power throughout the country.  Given their state of financial bankruptcy, state electric utilities are unable to invest resources either in creating new capacity or providing acceptable levels of maintenance.  The experience further, with independent power producers clearly provide a lesson, that private sector investments cannot be expected in an industry that is unable to pay for its inputs.[2]    From the point of view of state initiatives also – there was absolutely not proactive stance in this regard, expect few states having some policy papers addressing the issue of energy conservation and enhancement of energy efficiency. 

There is no integrated approach to power reforms; on one hand we find state talking about the conservation measures on the other some minister speaking about free supply of power to agriculture sector etc.  In a seminar few years back, where several chairmen of electricity boards participated, the Chairman of Punjab State Electricity Board presented his plan for doing away with metering of electricity for farmers and charging a flat rate of fees on the basis of horse-power of pump sets used.  Now, it has reached stage of being decisive election manifesto. In this background the initiative of Energy Conservation Act is welcome sign for Indian power sector.  This paper attempts to briefly introduce the reader (mainly the non-lawyers) to elements of Energy Conservation law.

ENERGY CONSERVATION LAW:

On the first day of March 2002, the Energy Conservation Act, 2001 came into force.[3] The Bureau of Energy Efficiency was also constituted by the Central Government to achieve the mandate of the law.

The effort to bring energy conservation is an out come of effective consultation with various stake-holders in the arena.  The opinion of line ministries such as Coal, Petroleum and Natural Gas, Atomic Energy, MNES was sought.  When introduced first in the Lok Sabha on 24^th February 2004 the Hon’ble Speaker referred the same to Standing Committee on Energy for examination and detailed report.  The Committee also conducted several stakeholder consultations before submitting its favorable report.  To further strengthen the draft bill, one man committee was constituted.  After obtaining approval of the Cabinet, the Energy Conservation Bill was then introduced to Lok Sabha, which took some time to become law of the land.

At the very outset the objectives of Energy Conservation Act may be summarized as follows:

·         Establishment of the Bureau of Energy Efficiency (BEE);

·         Creation of class of consumers as ‘Designated Consumers’

·         Putting in place energy consumption standards and labeling for equipments and appliances

·         Certification of energy managers and accreditation of energy auditing firms;

·         Prescribing energy conservation building codes for new commercial buildings;

ESTABLISHMENT OF BUREAU OF ENERGY EFFICIENCY:

The Bureau of Energy Efficiency replaces earlier energy Management Centre of Ministry of Power,[4] to provide the legal frame work and institutional arrangement for embarking on an energy efficiency drive.  The Bureau would, in simple, be responsible for implementation of policy programmes, coordination and implementation of energy conservation[5].  The Director General of Bureau[6] is the Chief Executive Authority of the Bureau.  The Director General of Bureau is appointed by the Central Government.  He shall be the person having adequate working knowledge and experience in the matters relating to energy, and also great reputation/standing the field.  His tenure will be three years from the date of assuming office or attainment of sixty years whichever is earlier.  The law mandates that all orders and decisions of the Bureau shall be authenticated by the signature of the Director General himself.[7]

There will be a Secretary of the Bureau – to assist the Director General in his affairs of the Bureau.  He shall be appointed by Central Government, whose rank will be at least of Deputy Secretary to the Government of India.  For effective functioning of the institution, the Central Government may appoint such officers and employees to the Bureau.  The terms and conditions of their service will be again decided by the Central Government itself.

To aid and advise the Bureau may constitute Advisory Committees,[8] within six months from the commencement of the Act.  Apart from these advisory committees the Bureau may also constitute technical committees[9] as well to formulate various standards under the act (such as energy consumption standards, norms in respect of equipment or process etc.).  According to this power there are various advisory and technical committees already constituted. 

For general superintendence, direction and management of the affairs of the Bureau there is Governing Council constituted under the Act.  This is very high power body to act as friend, philosopher and guide to the Bureau.  The membership of the Council may go up to twenty six members.  There are two categories of members in the council – one who become members by virtue of holding some positions named in the act, second are those who are nominated by the Central Government to the council for the term of three years.  Among  the first category of members one has the Minister In charge of Ministry or Department of the Central Government dealing with power (as the Chairman of the Bureau), the secretaries from power ministry, petroleum and natural gas, coal, non-conventional energy sources, atomic energy and consumer affairs, along with Chairman of the central electricity authority, Director of Central Power Research, Executive Director of the petroleum conservation research, Managing Director of central mine planning, Director General of bureau of Indian standards, Director General of national test house, Managing Director of the Indian renewable energy as members. Further the Central Government will nominate few more to the council.  They are one member each from five power regions, up to four persons who are capable of representing industry, equipment and appliance manufacture, architects and consumers, and up to two members whom the Central Government deems fit.  Finally the Director General of the Bureau will be the secretary of the Bureau.

THE FUNCTIONS OF THE BUREAU:

Looking to the structure of the law it is evident that the Bureau operates as a regulatory as well as recommendatory body with reference to enhancement of energy efficiency in the country.[10]  As a regulator the Bureau may do the following functions:

1.      specify qualifications for ‘energy auditors’

2.      maintain a list of accredited energy auditors as may be specified by regulations

3.      specify the manner in which energy audit is conducted and specify what shall be the time period for getting the energy audit done

4.      prescribe the certification procedure of ‘energy managers’ – who are to be appointed for the post of energy managers as stipulated under the act

5.      prepare educational curriculum on efficient use of energy and conservation for – educational institutions, educational boards, universities and autonomous bodies – to mainstream the concept of energy conservation

6.      implement international cooperation programmes relating to efficient use of energy and its conservation as may be assigned to it by the central government; and

7.      to perform such other functions specified from time to time;

Recommendatory functions of the Bureau are as follows:

1.      the process and energy consumption standards required to be notified;

2.      the way labeling of certain equipments requiring some input of energy, along with the prescription about the display standards upon such labels;

3.      to notify users or class of users as ‘designated consumers’ under this law;

In addition to these, the Bureau according to its functions under the law has to take suitable steps to:

1.      create awareness and disseminate information for efficient use of energy and conservation

2.      training of personnel;

3.      strengthen consultancy services;

4.      promote research and development in the field of energy efficiency

5.      the develop good testing and certification procedure;

6.      promote use of energy efficient process, equipment, devices and systems;

7.      promote innovative financing of energy efficiency projects; etc.,

CREATION OF CLASS OF CONSUMERS AS ‘DESIGNATED CONSUMERS’

The definition given in the act, explains that, a ‘designated consumer’ means any consumer specified under clause (e) of sec. 14.  The Central Government has enormous power under the act to enforce efficient use of energy and its conservation.[11]  This power includes prohibiting manufacture or sale or purchase or import of any equipment or appliance specified by it under the act.[12]  As a part of this power the Central Government may create ‘designated class’ depending some rational basis (like intensity or quantity of energy used or on the basis of investment made etc.).  After designation the class is described in the Schedule appended to the act, making the prescriptions of the law applicable to such class of consumers.  It is within the power of the Central Government to specify different norms for different class of ‘designated consumers’ as the need may be.  A designated consumer may then be directed to get energy audit[13] conducted for efficient use of energy.  The energy audit may be getting done through any of the accredited energy audit agency as specified by the Bureau of Energy Efficiency.  Further the designated consumer may also be directed to appoint an energy manager[14] to his establishment.  Such energy manager will be in-charge of all energy efficient use activities in his unit, and submit a report to such designated authority in this regard.

It is mandate that all designated consumer shall comply with specifications of law.  For non compliance, the Central Government may ask such designated consumer to prepare a scheme keeping in view of economic viability of the investment by prescribing some realistic time period for bringing that scheme into action.

ENERGY CONSUMPTION AND LABELING STANDARDS:

The Central Government may by notification introduce a mandatory labeling scheme for certain notified equipment/appliances.  This is major step taken under the act to facilitate the consumers/purchasers of the equipments to know the rate of energy consumption of that equipment which they are purchasing or about to buy.  This will go long way to help all the consumers to make informed choice, at the same time bringing the manufacture of equipments under additional pressure of competiting to reduce the energy intensity of his equipment.  Above all the Central Government may specify some standard energy consumption slabs to all such equipments and appliances.  The non compliant equipments’ sale, manufacture, import etc. may completely be prohibited under the act.  The labeling standards may also be prescribed, this includes the nature or information and the manner in which such information may be given on the label for the consumer make easy and prudent choice.

CERTIFICATION/ACCREDITATION OF ENERGY MANAGERS, AUDITING ETC.:

The law envisages a cadre of professionally qualified energy managers and auditors with expertise in policy analysis, project management, financing and implementation of energy efficient projects would be developed through Certification and Accreditation programme to design training modules, and conduct a national level examination.  Under the aegis of Bureau of Energy Efficiency the National Productivity Council has already conducted the national accreditation examination (to certify energy managers and energy auditors) in April 2004.  To facilitate all the deserving candidates to take the examination number of agencies held some training/coaching classes.

ENERGY CONSERVATION BUILDING CODES:

The Bureau of Energy Efficiency will prepare guidelines for energy conservation building codes.  The Central Government may then prescribe energy conservation building codes for efficient use of energy and its conservation in the building.  Those would be notified to suit local climate conditions or other compelling factors by the respective states for commercial buildings erected after the rules relating to energy conservation building codes have been notified.  In addition, these building should have a connected load of 500kW or contract demand of 600kVA and above, with an intention to be used for commercial purpose.  An energy audit of specific designated commercial building consumers would also be prescribed.

THE ROLE OF STATE GOVERNMENT IN THE ACT:

There is clearly laid-out provisions and functions in the enactment showing the role of state government in implementing the statute.  The state government may, amend to change the prescribed building codes, to suit the local climatic conditions.  The state government is also to designate an agency which will be in-charge of executing/implementing the Energy Conservation Act.  Direct the designated consumer to get energy audit conducted and specify matter to be included for the purpose of such audit and inspection are other main functions of the state government under the act.

There is clear prescription that, after five years from the commencement of this act such designated agency may go for appointing ‘inspectors’ for inspections conducted for actual implementation of the enactment.  There is window period of five years prescribed for such appointment, from the date of commencement of the act, by the state government.

The inspectors will – ensure compliance with standards, verify and certify display particulars on labels and do such other functions as assigned to them from time to time.  To effectively carry out these mandates inspector is vested with some statutory power, which includes – inspection of the place, equipment after taking entry into the designated consumer’s premises; check any inventory or document relating to such equipment in question and to record the statements of any persons/s.[15]

THE PENALTY FOR NON COMPLIANCE:

For non-compliance of the stipulations under the Energy Conservation Act there is scope for monetary penalty to be levied[16].  Rs.10,000 is marked as highest penalty to be levied and if it is non-compliance of continuing nature then for each day, in which the wrong continues – Rs.1,000 may be added for each continuing day of default.  Interestingly there is window period of 5 years from the date of commencement of the act is prescribed for levying such penalty, which is not a reasonable thing to have.  After five years when the penalty clause become ripe for execution the value of ten thousand or one thousand per day may become meaning less (considering the overall inflation in the economy).  There may be need to amend this provision soon.

THE ADJUDICATORY MECHANISM UNDER THE ACT:

          Another unique feature of this Energy Efficiency Act is the specialized adjudicatory system provided within itself.[17]  For the purpose of adjudication the State Commission shall appoint any of its members to be an ‘adjudicating officer’ for holding an inquiry in to the matter.  Here the State Commission means the concerned State Electricity Regulatory Commission.[18]   Where the establishment of state commission had taken place, then the state government may appoint any such officer who is not below the rank of Secretary dealing with legal affairs to deal with the matter or as ‘Adjudicating Officer.  The Adjudicating Officer is empowered to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case or to produce the evidence, which will enable the officer to effectively adjudicate.  Law also makes it very clear that, while adjudicating the officer shall have regard to the amount of disproportionate gain or unfair advantage (wherever quantifiable) made as a result of default in question and the repetitive nature of the default.[19]

          Appeal from the decision of Adjudicating Officer shall lie to the Appellate Tribunal for Energy Conservation.   Any person aggrieved, by the order of adjudicating officer or the Central Government or the State Government or any such other authority under this act may prefer an appeal to the Appellate Tribunal for Energy Conservation.  Once the appeal is filed the statute fixes general time mandate of 180 days for disposition of the appeal.  In special cases the Appellate Tribunal may after recording the reasons in writing cross the barrier of 180 days.[20]

CONCLUSION:

          In India there are plethora of environmental laws.  But the lacking part is efficient enforcement.  Somehow energy conservation was uncovered issue by the legislature, although long due the law is now in place.  How can the popular perception of poor implementation of environmental laws be disproved in the case of Energy Conservation Act, one has to wait and see.