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Section86
The Electricity Act, 2003

Functions of State Commission

In force From 10 Jun 2003 Act 36 of 2003 As on 14 Oct 2026

Act 36 of 2003 Ministry Power Enacted 26 May 2003 In force 10 Jun 2003 Cited by 3 provisions Instruments 30

Section 86 of the Electricity Act, 2003 deals with functions of State Commission. The State Commission shall discharge the following functions, namely:-- (a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State: Provided that where open access has been permitted to a category of cons The Act came into force on 10 Jun 2003.

(1) The State Commission shall discharge the following functions, namely:--

(a) determine the tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within the State:

Provided that where open access has been permitted to a category of consumers under section 42, the State Commission shall determine only the wheeling charges and surcharge thereon, if any, for the said category of consumers;

(b) regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State;

(c) facilitate intra-State transmission and wheeling of electricity;

(d) issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State;

(e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;

(f) adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration;

(g) levy fee for the purposes of this Act;

(h) specify State Grid Code consistent with the Grid Code specified under clause (h) of sub-section (1) of section 79;

(i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees;

(j) fix the trading margin in the intra-State trading of electricity, if considered, necessary;

(k) discharge such other functions as may be assigned to it under this Act.

(2) The State Commission shall advise the State Government on all or any of the following matters, namely:--

(i) promotion of competition, efficiency and economy in activities of the electricity industry;

(ii) promotion of investment in electricity industry;

(iii) reorganisation and restructuring of electricity industry in the State;

(iv) matters concerning generation, transmission , distribution and trading of electricity or any other matter referred to the State Commission by that Government.

(3) The State Commission shall ensure transparency while exercising its powers and discharging its functions.

(4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3.

Section 86, The Electricity Act, 2003 (Act 36 of 2003).

Cross-references

Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.

This section refers to

  1. s. 3 National Electricity Policy and Plan
  2. s. 42 Duties of distribution licensee and open access
  3. s. 79 Functions of Central Commission

Referred to by 3

  1. s. 2 Definitions
  2. s. 97 Delegation
  3. s. 103 Establishment of Fund by State Government

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

  1. Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran Nigam Ltd.

    Supreme Court of India 04 Dec 2019 Binding (Supreme Court) Reportable (2020) 16 SCC 794

    Court's Decision & Legal Precedent

    Judgement of Main Case order-10.pdf 2019-12-04 DATE VERIFIED. CA 9212/2019. Nariman / Bose / Ramasubramanian REPORTABLE (PDF concatenates the signed reportable with the pronouncement ROP). Isolates Electricity 86(1)(f): State Commission arbitration is only between licensees and generating companies, not between a distribution licensee and an open-access consumer; inherent want of jurisdiction cannot be cured by consent (Kiran Singh). Consumer/open-access disputes go under s.42 ombudsman / open-access regulations. Better labelled merits PDF than leftover Gujarat Urja pronouncement ROP. Do not pad 42 (the consumer path is contrasted, not the isolate).

    On this section: Electricity 86(1)(f): State Commission may adjudicate/arbitrate only disputes between licensees and generating companies, not licensee vs open-access consumer; want of jurisdiction cannot be cured by consent (HZL). Do not pad 42.

    Read the full order on eCourts India

  2. J. K. Tyre & Industries LTD vs Rajasthan Electricity Regulatory Commn

    Supreme Court of India 13 May 2015 Binding (SC) Reportable

    Court's Decision & Legal Precedent

    The Rajasthan Electricity Regulatory Commission has statutory power under Section 86(1)(e) read with Section 181 of the Electricity Act 2003 to impose renewable energy purchase obligations on captive power plants and open access consumers located in the area of distribution licensee, as the term 'total consumption in the area of distribution licensee' includes consumption from all sources within that geographical area. Such obligations, being designed to achieve constitutional mandates under Articles 21, 48A, and 51A(g) of the Constitution and to promote renewable energy as a matter of public policy, do not violate the de-licensing principle of the Act nor do they infringe fundamental rights under Articles 14 or 19(1)(g) of the Constitution. The surcharge imposed for non-compliance is a valid regulatory measure under Section 86(1)(g) and Sections 142, 147 of the Act, representing a compensatory mechanism based on the polluter-pays principle, not an unauthorized tax under Article 265.

    On this section: Appellants contended regulations were ultra vires this section; court held Section 86(1)(e) is independent power

    Read the full order on eCourts India

  3. Sas Realtors Pvt. LTD vs Sri Maruti Electrical Enterprises

    Supreme Court of India 11 Oct 2018 Binding (SC) Reportable Reportable - Supreme Court Judgment dated 11-10-2018

    Court's Decision & Legal Precedent

    The Limitation Act, 1963 applies to applications filed under Sections 7 and 9 of the Insolvency and Bankruptcy Code, 2016 from the Code's commencement on 01.12.2016. Time-barred debts cannot trigger the Corporate Insolvency Resolution Process. The expression 'debt due' in the Code refers only to debts that are not time-barred and are legally recoverable. Article 137 of the Limitation Act prescribes a three-year limitation period for applications under Sections 7 and 9, and applications filed beyond this period are barred unless delay is condoned under Section 5 of the Limitation Act.

    On this section: Cited for principle that claims barred by limitation cannot be entertained before regulatory commissions absent express legislative intent.

    Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.

Judgments citing this section

These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.

  1. Supreme Court of India 23 May 2025 SCIN010268762024

    … On its failure in eliciting a suitable reply, respondent No.1 filed a Petition bearing No.1373/2018 before the Rajasthan Electricity Regulatory Commission (hereinafter referred to as the " RERC "), invoking Section 86 of the Electricity Act, 2003 (hereinafter referred to as the " 2003 Act ") read with Article 10 of the PPA. While rejecting some of the reliefs, the RERC did allow some of the other prayers sought for by respondent No.1. Against the refusal of some of the claims, the respondent No. 1 filed an appeal before the …

    Read this order on eCourtsIndia

  2. Supreme Court of India 15 Mar 2023 SCIN010358342013

    … | Learned senior counsel appearing for the appellant submitted that the Power Purchase Agreement (PPA) on which the Tribunal has relied on to refuse the relief to the appellant was not approved by the concerned State Commission under Section 86(1)(b) of the Electricity Act and the same is not just and reasonable. Issue notice. (G. SUDHAKARA RAO) (SHARDA KAPOOR) COURT MASTER COURT MASTER …

    Read this order on eCourtsIndia

  3. Supreme Court of India 03 Mar 2023 SCIN010271832021

    … Analogous to Section 79, Section 86 of the Electricity Act defines the functions of the State Commission. Clause (b) of sub-section (1) of Section 86 of the Electricity Act requires the State Commission to regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution …

    Read this order on eCourtsIndia

Made under this section, and citing it

17 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.

Another 13 instruments name this provision in its title or its text without being made under it.

All subordinate legislation

Questions about Section 86

What have the courts held on Section 86 of the Electricity Act?

Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran Nigam Ltd. (04 Dec 2019) is the leading judgment on this section among those set out below: Electricity 86(1)(f): State Commission may adjudicate/arbitrate only disputes between licensees and generating companies, not licensee vs open-access consumer; want of jurisdiction cannot be cured by consent (HZL). Do not pad 42. Another 2 judgments on this section are set out below, all of them from the Supreme Court. They run from 2015 to 2019.

How do I find court cases under Section 86 of the Electricity Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Electricity Act 2003 86, section 86 Electricity Act 2003, section 86 of the Electricity Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran Nigam Ltd. (04 Dec 2019).

What should I read with Section 86 of the Electricity Act, and has it changed?

Its own text turns on section 3 (National Electricity Policy and Plan), section 42 (Duties of distribution licensee and open access), section 79 (Functions of Central Commission), so none of them can safely be read on its own. 3 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 17: most recently UPERC (MYT for Transmission) Regulations 2025 (2025), then Uttar Pradesh Electricity Regulatory Commission Multi Year Tariff for Distribution Regulations, 2025 (2025), and 15 more.

When did Section 86 of the Electricity Act come into force?

Section 86 of the Electricity Act, cited as Electricity Act 2003 86, came into force on 10 Jun 2003, having been enacted on 26 May 2003. It is in force as at the date shown on this page.

Other sections of this Act

Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.