If you are stuck in such a situation, here is what to do.

Mr. Rajesh Kumar, a resident of a sprawling farmhouse in the outskirts of Suryanagar, recently invested in a state-of-the-art solar power generation system. The system was highly efficient, producing far more electricity than his household could consume. His immediate neighbors, Mrs. Geeta Singh and Mr. Alok Verma, lived in an area plagued by frequent and long power outages from the local distribution company, “Prakash Power Distribution Ltd.” Seeing Mr. Kumar’s uninterrupted power supply, they approached him with a proposition: could they pay him a fair price for the surplus electricity he generated? This would ensure their homes had power during the frequent cuts. Mr. Kumar, while willing to help, was unsure about the legal implications of such an arrangement. He wondered if he could legally sell his privately generated solar power directly to his neighbors, bypassing the official electricity grid and the distribution company.

Advice in such cases

The direct sale of electricity from one private individual to another is a legally complex issue in India. The generation of power is largely delicensed, but its distribution and supply are regulated activities. Here is some general advice:

• Understand the Legal Framework: The Electricity Act, 2003, governs the generation, transmission, distribution, trading, and use of electricity. Under this Act, distributing electricity is a licensed activity. Selling power to your neighbors would likely be considered an unlicensed distribution of electricity, which is prohibited.

• Explore Legal Alternatives: Instead of direct private sales, the government promotes grid-tied solar systems through policies like “net metering” or “gross metering.” Under net metering, the surplus electricity you generate is fed back into the public grid, and your electricity bill is adjusted accordingly. This is the legally recognized method for individuals to benefit from surplus solar power generation.

• Group Net Metering/Virtual Net Metering: Some states have policies that allow for group or virtual net metering. This allows multiple consumers to benefit from a single, collectively owned solar power plant. This is a more complex setup but is a legally viable option for a community.

• Avoid Private Agreements: A private, informal agreement to sell electricity can lead to significant legal trouble. The state electricity distribution company (DISCOM) can impose heavy penalties for bypassing their network. Furthermore, such an arrangement poses safety risks, as the wiring may not meet regulatory standards, creating hazards like fire or electrocution.

• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

Applicable Sections of Law

The primary legislation governing this area is the Electricity Act, 2003. While this is a civil and regulatory matter, certain actions could attract provisions of the Bharatiya Nyaya Sanhita (BNS), 2023, if they involve theft or public endangerment.

• Section 14 of the Electricity Act, 2003: This section mandates that a license is required for transmitting, distributing, or trading electricity. A private individual selling power to a neighbor would not have this license.

• Section 43 of the Electricity Act, 2003: This section places a universal service obligation on the distribution licensee (DISCOM) to provide electricity to any applicant. Bypassing this system undermines the DISCOM’s role.

• Section 126 of the Electricity Act, 2003: This section deals with “unauthorized use of electricity,” which can be interpreted to include unapproved sale and distribution. This can lead to the levying of hefty penalties and assessments by the DISCOM.

• State Electricity Regulatory Commission (SERC) Regulations: Each state has its own regulatory commission that frames detailed rules for electricity supply, tariffs, and grid connectivity, including regulations for solar power generation and net metering. These regulations must be followed.

If you are the complainant

If you are in Mr. Kumar’s position (the person wanting to sell electricity), your primary goal should be to comply with the law rather than acting as a complainant against your neighbors.

• Do Not Proceed with the Sale: Do not enter into any agreement to sell electricity directly. Politely inform your neighbors that while you wish to help, the law does not permit such a direct sale.

• Contact the DISCOM: Approach your local electricity distribution company to understand the procedure for installing a grid-tied system with net metering. This is the proper channel to get financial benefits from your surplus generation.

• Explore Community Solar Options: Investigate if your state’s regulations permit “Group Net Metering,” which could be a legal way to share the benefits of your solar plant with your neighbors through the utility’s infrastructure.

• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

If you are the victim

If you are in the position of the neighbor (like Mrs. Singh or Mr. Verma) who wants to buy electricity, you are not a “victim” in a legal sense, but a party to a potentially illegal arrangement. Proceeding could have negative consequences.

• Understand the Risks: Buying electricity through an unauthorized connection is illegal. If discovered, the DISCOM can penalize you and disconnect your official supply. The connection may also be unsafe.

• Pursue Legal Channels: The correct course of action for dealing with power cuts is to file a complaint with the consumer grievance redressal forum of your DISCOM. You can also approach the State Electricity Regulatory Commission.

• Consider Your Own Solar Setup: A more viable long-term solution is to invest in your own rooftop solar system with a battery backup or a grid-tied net metering connection.

• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

How the police behave in such cases

The police generally do not get involved in such matters unless a specific criminal complaint is filed. This issue is primarily regulatory and falls under the jurisdiction of the electricity distribution company (DISCOM) and the State Electricity Regulatory Commission (SERC). The DISCOM’s enforcement wing would be the primary body to investigate and take action, such as conducting raids, disconnecting supply, and levying penalties. Police intervention would typically only occur in specific scenarios, such as:

• If the act involves theft of electricity from the grid (e.g., tampering with meters or drawing power from main lines illegally).

• If the unauthorized setup causes a public safety hazard, like a fire or accident, leading to injury or death.

• If a complaint of fraud or cheating is filed by one party against the other.

FAQs people normally have

• Can I legally sell my surplus solar power to my neighbor?
  No, direct person-to-person sale of electricity is generally not legal in India as electricity distribution requires a license. The legal method is to feed surplus power to the grid through a net metering arrangement with your local DISCOM.

• What is the penalty for unauthorized sale of electricity?
  Penalties are specified under Section 126 of the Electricity Act, 2003. The DISCOM can assess the amount of electricity used without authorization and charge a penalty, which can be several times the normal tariff rate. They can also disconnect the power supply of all parties involved.

• Is a private written agreement for selling electricity valid in court?
  No, an agreement to perform an illegal act is void from the beginning (void ab initio) and is not enforceable in a court of law.

• What is the difference between selling power and sharing a connection?
  Both are generally illegal. Extending your own metered connection to a neighbor’s property is considered subletting of the connection and is a violation of the supply agreement with the DISCOM.

What evidence is required?

If an investigation is initiated by the DISCOM, they would look for the following evidence:

• Physical evidence of wiring and connections running between the two properties.

• Metering data that shows discrepancies or patterns indicative of unauthorized supply.

• Photographic or video evidence of the illegal setup.

• Statements from witnesses, including the parties involved or other neighbors.

• Any written or digital records (like emails or messages) of the agreement to sell/buy electricity.

How long will the investigation take?

An investigation by a DISCOM’s enforcement wing is typically swift. Once they have a suspicion or a complaint, they can conduct a surprise inspection. The process of assessment, levying penalties, and disconnection can happen within a few days to a few weeks. If the matter is disputed and goes to the consumer forum or the regulatory commission, the resolution could take several months.

Advocate Sudhir Rao, Supreme Court of India