A Critical Legal Analysis Of Competition In The Energy Sector

Dr. R.Bharat Kumar, Assistant Professor of Law, Damodaram Sanjivayya National Law University

ABSTRACT

The energy industry is a group of businesses involved in the production and distribution of energy. The energy industry includes businesses that explore, produce, refine, sell, store, and transport oil and gas, coal, and other consumable fuels, according to the Global Industry Classification Standard [“GICS”]. The energy industry is extremely cyclical and influenced by macroeconomic factors. Some macroeconomic drivers include GDP, disposable income, employment, new housing, and the industrial output index. The amount of economic activity has a major influence on the oil and gas consumption. Therefore, during times of growth, an increase in business activity and output raises oil demand and price. During a recession, reduced output levels reduce demand and price, weakening the industry. Even after the Electricity Act was passed, electricity remained a commodity that could be sold to state-owned monopolies in India. At the moment, insufficient fuel supply is impeding entrance into the generating sector, thus restricting competition. Even after the deregulation of the generating sector of the electrical sector, a list of permissions needed for the establishment of a power plant remained. The small number of private companies in the generating, transmission, and distribution sectors demonstrates the segment's low degree of competition. One explanation for this is the sector's high entrance hurdles. The entrance of new companies into the electrical industry is believed to be harmed by the impediments and obstacles to entry posed by the economies of scale needed for generation, transmission, and distribution, as well as by regulation of electricity tariff rates. Due to the nature of power generation, the technical advances used often have high initial costs and lengthy resource lifetimes.

Keywords: Energy, Competition Law, Electricity Act