CROSS-BORDER ELECTRICITY TRANSMISSION LAW

1. INTRODUCTION

Cross-border electricity transmission law governs the movement, import and export of electricity between India and neighbouring countries through interconnected transmission networks. It combines electricity regulation, international agreements, transmission law, grid security, energy diplomacy, commercial contracts, and national energy policy.

India's cross-border electricity framework is particularly important in relation to Bhutan, Nepal, Bangladesh and Myanmar. Cross-border electricity trade has developed through bilateral arrangements and is now supported by the Guidelines for Import/Export (Cross Border) of Electricity, 2018 and the CERC (Cross Border Trade of Electricity) Regulations, 2019.

2. LEGAL FRAMEWORK

The principal statutory foundation is the Electricity Act, 2003.

Important provisions include:

Section 2(26) – definition of electricity;

Section 2(71) – definition of trading;

Section 12 – requirement of authorisation for transmission, distribution and trading;

Section 28 – functions of Regional Load Despatch Centres;

Section 38 – Central Transmission Utility;

Section 79 – functions of the Central Electricity Regulatory Commission;

Section 86 – functions of State Electricity Regulatory Commissions.

Cross-border transactions are further governed by the CERC (Cross Border Trade of Electricity) Regulations, 2019.

These regulations apply to participating entities in India and neighbouring countries engaged in cross-border electricity trade with India. They permit transactions through bilateral government agreements, bidding mechanisms, or mutual agreements between entities, subject to the applicable legal framework.

3. INSTITUTIONAL STRUCTURE

Cross-border electricity transmission requires coordination between several institutions.

Designated Authority

The Ministry of Power's designated authority facilitates approval and procedures relating to electricity import and export.

Transmission Planning Agency

It coordinates transmission planning necessary for cross-border electricity flows.

Settlement Nodal Agency

It manages settlement of charges including:

transmission charges;

deviation charges;

operating charges;

other grid-related payments.

National Load Despatch Centre

NLDC acts as the System Operator for cross-border electricity trade and performs functions relating to short-term open access, billing, collection and disbursement of transmission charges.

Central Transmission Utility

CTU handles long-term and medium-term access relating to cross-border transactions.

This institutional architecture demonstrates that cross-border electricity transmission is not merely an international commercial transaction; it is also an integrated grid-management activity.

4. INTERNATIONAL AGREEMENTS AND SOVEREIGNTY

Electricity transmission across national borders creates a special legal problem because electricity is simultaneously:

a commercial commodity + a regulated utility + a strategic resource.

Accordingly, cross-border trade must operate within agreements between sovereign States.

The 2019 Regulations recognise bilateral agreements between governments as an important basis for cross-border electricity transactions.

This means that domestic regulators cannot be viewed entirely independently from India's foreign-policy and energy-security interests.

5. CASE LAW – PTC INDIA LTD. v. CERC

Case Name/Citation

PTC India Ltd. v. Central Electricity Regulatory Commission, Appeal No. 15 of 2009, APTEL, decided 18 February 2009

Facts

PTC India purchased electricity generated in Bhutan and subsequently sold that electricity to Indian utilities. PTC argued that the transaction was an international activity and that CERC lacked jurisdiction over it.

Legal Issue

Whether CERC could regulate the Indian portion of electricity trading where electricity was purchased from Bhutan under bilateral arrangements and subsequently resold to Indian utilities.

Judgment

The Tribunal examined the definition of “trading” under Section 2(71) of the Electricity Act, 2003.

It concluded that although electricity was purchased in Bhutan, the resale occurred within India. Therefore, once the electricity entered India and was sold to Indian utilities, the applicable Indian electricity regulations could govern the domestic resale transaction.

Legal Principle / Ratio Decidendi

A cross-border electricity transaction may contain distinct international and domestic components; Indian electricity regulation can apply to the domestic sale or resale occurring within India.

Significance

This case establishes an important jurisdictional principle:

International source of electricity ≠ complete immunity from Indian regulation.

Cross-border electricity transactions therefore may be divided into:

International governmental arrangement

Domestic regulated electricity transaction.

6. CASE LAW – SEMBCORP ENERGY INDIA LTD. v. STATE OF ANDHRA PRADESH

Case Name/Citation

M/s Sembcorp Energy India Ltd. v. State of Andhra Pradesh, Andhra Pradesh High Court, 26 August 2022

Facts

Sembcorp participated in a tender issued by the Bangladesh Power Development Board (BPDB) and received a contract for supply of electricity to Bangladesh. It entered into PPAs with BPDB and relied upon the Indian electricity regulatory framework governing cross-border electricity trade.

Legal Issue

Whether electricity generated in India for export to Bangladesh could be regulated through the cross-border framework created under the Electricity Act, 2003 and CERC's regulations and guidelines.

Judgment

The proceedings recognised that participating Indian entities engaged in cross-border electricity trade were subject to the approval mechanism established under the 2018 Cross-Border Electricity Guidelines and the regulatory framework created by CERC.

Legal Principle / Ratio Decidendi

Cross-border electricity exports from India remain subject to India's statutory and regulatory framework even where the ultimate purchaser is a foreign electricity authority.

Significance

The case illustrates the interaction between:

Indian electricity law + international PPA + foreign purchaser + regulatory approval.

7. TRANSMISSION ACCESS AND GRID SECURITY

Cross-border transmission cannot be permitted merely because commercial parties have entered into a contract.

The system operator must consider:

transmission capacity;

grid stability;

frequency;

congestion;

system security;

operational reserves;

deviation management;

emergency conditions.

The CERC regulations therefore place significant responsibility on the NLDC, CTU and settlement institutions.

This reflects the principle that energy security and grid reliability can limit commercial freedom.

8. CASE LAW – POWERGRID CORPORATION OF INDIA LTD. v. CERC

Case Name/Citation

Powergrid Corporation of India Ltd. v. Central Electricity Regulatory Commission, 2025 INSC 626

Facts

The dispute concerned inter-State transmission assets and the regulatory treatment of transmission infrastructure under the Electricity Act, 2003. Powergrid, as a central transmission utility, was responsible for establishing and operating transmission lines and associated assets.

Legal Issue

The dispute concerned the scope of CERC's regulatory authority over transmission assets and the consequences arising from implementation and use of inter-State transmission infrastructure.

Judgment

The Supreme Court examined the statutory framework governing inter-State transmission and the relationship between the transmission utility and CERC.

Legal Principle / Ratio Decidendi

Inter-State transmission is a heavily regulated statutory activity, and transmission infrastructure must operate within the regulatory architecture created by the Electricity Act.

Significance

The case is relevant to cross-border transmission because international electricity flows depend upon inter-State transmission systems within India. Cross-border electricity therefore cannot be separated from domestic transmission regulation.

9. INDIA'S REGIONAL ELECTRICITY INTEGRATION

India's cross-border electricity arrangements have progressively expanded.

Electricity trade has historically occurred with Nepal and Bhutan, while trade with Bangladesh and Myanmar subsequently developed. India's regional electricity connections include both high-voltage AC and HVDC arrangements.

The Central Electricity Authority presently records approved cross-border transactions involving Nepal, Bhutan and Bangladesh, including transactions through power exchanges and bilateral arrangements.

This demonstrates the movement from traditional government-to-government electricity exchanges toward a more diversified regional electricity market.

10. MAJOR LEGAL PRINCIPLES

Cross-border electricity transmission law is based upon several principles:

1. Sovereignty

International electricity transactions require compatibility with agreements between sovereign States.

2. Regulatory Approval

Cross-border transactions require compliance with applicable approval procedures.

3. Grid Security

Commercial arrangements cannot override technical requirements necessary to protect grid stability.

4. Non-Discriminatory Transmission Regulation

Access to transmission networks must operate according to applicable statutory and regulatory rules.

5. Financial Settlement

Transmission, deviation and other system charges must be properly calculated and settled.

6. Domestic Regulatory Jurisdiction

Once an international electricity transaction produces a regulated domestic sale or transmission activity, Indian electricity law may apply.

11. CONCLUSION

Cross-border electricity transmission law represents the intersection of international energy cooperation and domestic electricity regulation. India's framework has evolved from bilateral electricity arrangements toward a more structured regional trading system involving government agreements, bilateral contracts, bidding mechanisms and power exchanges.

The CERC Cross Border Trade Regulations, 2019 establish an institutional framework involving the Designated Authority, NLDC, CTU and settlement agencies.

PTC India Ltd. v. CERC demonstrates that international electricity transactions may still be subject to Indian regulation when the relevant resale occurs within India. Sembcorp Energy India Ltd. v. State of Andhra Pradesh demonstrates the importance of India's cross-border regulatory approval framework for exports, while Powergrid Corporation v. CERC reinforces the central role of regulated inter-State transmission infrastructure.

The central principle is that cross-border electricity transmission requires a balance between international energy cooperation, commercial freedom, national sovereignty, domestic regulatory jurisdiction, transmission access, and grid security.