1.

15 The Energy Conservation Act, 2001 And Its Features

Policy Framework Energy Conservation Act 2001
With the background of high energy saving potential and its benefits, bridging the gap
between demand and supply, reducing environmental emissions through energy saving,
and to effectively overcome the barrier, the Government of India has enacted the Energy
Conservation Act 2001. The Act provides the much needed legal framework and
institutional arrangement for embarking on an energy efficiency drive. Under the
provisions of the Act, Bureau of Energy Efficiency has been established with
effect from 1 st March 2002 by merging erstwhile Energy Management Centre of
Ministry of Power. The Bureau would be responsible for implementation of policy
programmes and coordination of implementation of energy conservation activities.
Important features of the Energy Conservation Act are:
Standards and Labeling
Standards and Labeling (S & L) has been identified as a key activity for energy efficiency
improvement. The S & L program when in place would ensure that only energy
efficiency equipment and appliance would be made available to the consumers.
The main provision of EC act on Standards and Labeling are:
Evolve minimum energy consumption and performance standards for notified
equipment and appliances.
Prohibit manufacture, sale and import of such equipment which does not confirm to
the standards.
Introduce a mandatory labeling scheme for notified equipment appliances to enable
consumers to make informed choices
Disseminate information on the benefits to consumers
D esignated Consumers
The main provisions of the EC Act on designated consumers are:
The government would notify energy intensive industries and other establishments as
designated consumers;
Schedule to the Act provides list of designated consumers which covered basically
energy intensive industries, Railways, Port Trust, Transport Sector, Power Stations,
Transmission & Distribution Companies and Commercial buildings or
establishments;
The designated consumer to get an energy audit conducted by an accredited energy
auditor;
Energy managers with prescribed qualification are required to be appointed or
designated by the designated consumers;
Designated consumers would comply with norms and standards of energy
consumption as prescribed by the central government.
Certification of Energy Managers and Accreditation of Energy Auditing Firms
The main activities in this regard as envisaged in the Act are:
A cadre of professionally qualified energy managers and auditors with expertise in policy
analysis, project management, financing and implementation of energy efficiency
projects
would be developed through Certification and Accreditation programme. BEE to design

training modules, and conduct a National level examination for certification of energy
managers and energy auditors.
Energy Conservation Building Codes:
The main provisions of the EC Act on Energy Conservation Building Codes are:
The BEE would prepare guidelines for Energy Conservation Building Codes (ECBC);
These 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 buildings
should have a connected load of 500 kW or contract demand of 600 kVA and above
and are intended to be used for commercial purposes;
Energy audit of specific designated commercial building consumers would also be
prescribed. Central Energy Conservation Fund:
The EC Act provisions in this case are:
The fund would be set up at the centre to develop the delivery mechanism for large-scale
adoption of energy efficiency services such as performance contracting and
promotion of energy service companies. The fund is expected to give a thrust to R &
D and demonstration in order to boost market penetration of efficient equipment and
appliances. It would support the creation of facilities for testing and development and
to promote consumer awareness.
The designated consumer to get an energy audit conducted by an accredited energy
auditor;
Energy managers with prescribed qualification are required to be appointed or
designated by the designated consumers;
Designated consumers would comply with norms and standards of energy
consumption as prescribed by the central government.
Certification of Energy Managers and Accreditation of Energy Auditing Firms
The main activities in this regard as envisaged in the Act are:
A cadre of professionally qualified energy managers and auditors with expertise in policy
analysis, project management, financing and implementation of energy efficiency
projects
would be developed through Certification and Accreditation programme. BEE to design
training modules, and conduct a National level examination for certification of energy
managers and energy auditors.
Energy Conservation Building Codes:
The main provisions of the EC Act on Energy Conservation Building Codes are:
The BEE would prepare guidelines for Energy Conservation Building Codes (ECBC);
These 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 buildings
should have a connected load of 500 kW or contract demand of 600 kVA and above
and are intended to be used for commercial purposes;
Energy audit of specific designated commercial building consumers would also be
prescribed.
Central Energy Conservation Fund:
The EC Act provisions in this case are:

The fund would be set up at the centre to develop the delivery mechanism for large-scale
adoption of energy efficiency services such as performance contracting and
promotion of energy service companies. The fund is expected to give a thrust to R &
D and demonstration in order to boost market penetration of efficient equipment and
appliances. It would support the creation of facilities for testing and development and
to promote consumer awareness.
Bureau of Energy Efficiency (BEE) :
The mission of Bureau of Energy Efficiency is to institutionalize energy
efficiency
services, enable delivery mechanisms in the country and provide
leadership to energy
efficiency in all sectors of economy. The primary objective would be to
reduce
energy intensity in the Indian Economy.
The general superintendence, directions and management of the
affairs of the Bureau
is vested in the Governing Council with 26 members. The Council is
headed by
Minister of Power and consists of members represented by Secretaries
of various line
Ministries, the CEOs of technical agencies under the Ministries,
members
representing equipment and appliance manufacturers, industry,
architects, consumers
and five power regions representing the states. The Director General of
the Bureau
shall be the ex-officio member-secretary of the Council.
The BEE will be initially supported by the Central Government by way
of grants
through budget, it will, however, in a period of 5-7 years become selfsufficient. It
would be authorized to collect appropriate fee in discharge of its
functions assigned to
it. The BEE will also use the Central Energy Conservation Fund and
other funds
raised from various sources for innovative financing of energy
efficiency projects in
order to promote energy efficient investment.
Role of Bureau of Energy Efficiency
The role of BEE would be to prepare standards and labels of
appliances and
equipment, develop a list of designated consumers, specify
certification and
accreditation procedure, prepare building codes, maintain Central EC
fund and

undertake promotional activities in co-ordination with center and state

level agencies.
The role would include development of Energy service companies
(ESCOs),
transforming the market for energy efficiency and create awareness
through measures
including clearing house.
Role of Central and State Governments:
The following role of Central and State Government is envisaged in the
Act
Central - to notify rules and regulations under various provisions of
the Act, provide
initial financial assistance to BEE and EC fund, Coordinate with various
State
Governments for notification, enforcement, penalties and adjudication.
State - to amend energy conservation building codes to suit the
regional and local
climatic condition, to designate state level agency to coordinate,
regulate and enforce
provisions of the Act and constitute a State Energy Conservation Fund
for promotion
of energy efficiency.
Enforcement through Self-Regulation:
E.C. Act would require inspection of only two items. The following
procedure of
self regulation is proposed to be adopted for verifying areas that
require inspection of
only two items that require inspection.
The certification of energy consumption norms and standards of
production process
by the Accredited Energy Auditors is a way to enforce effective energy
efficiency in
Designated Consumers.
For energy performance and standards, manufacturers declared
values would be
checked in Accredited Laboratories by drawing sample from market.
Any
manufacturer or consumer or consumer association can challenge the
values of the
other manufacturer and bring to the notice of BEE.. BEE can recognize
for challenge
testing in disputed cases as a measure for self-regulation. BIS
certification scheme is
equivalent to the check testing system followed in Australia and hence
compliance

could be better by having both BIS certification scheme is equivalent to

the check
testing system followed in Australia and hence compliance could be
better by having
both BIS certification scheme as well as challenge testing.
Penalties and Adjudication:
Penalty for each offence under the Act would be in monetary terms
i.e. Rs.10,000 for
each offence and Rs.1,000 for each day for continued non Compliance.
The initial phase of 5 years would be promotional and creating
infrastructure for
implementation of Act. No penalties would be effective during this
phase.
The power to adjudicate has been vested with state Electricity
Regulatory
Commission which shall appoint any one of its member to be an
adjudicating officer
for holding an enquiry in connection with the penalty imposed.
Features Extracted from Energy Conservation Act, 2001.
CHAPTER -I
Definitions
In this Act, unless the context otherwise requires:
(a) accredited energy auditor means an auditor possessing
qualifications
specified under clause (p) of sub-section (2) of section 13;
(b) Appellate Tribunal means Appellate Tribunal for Energy
Conservation
established under section 30;
(c) building means any structure or erection or part of a structure or
erection,
after the rules relating to energy conservation building codes have
been
notified under clause (a) of section 15 of clause (l) of sub-section (2) of
section 56, which is having a connected load of 500kW or contract
demand
of 600 kVA and above and is intended to be used for commercial
purposes;
(d) Bureau means the Bureau of Energy Efficiency established under
subsection (l) of section 3;
(e) Chairperson means the Chairperson of the Governing council;
(f) designated agency means any agency designated under clause
(d) of
section 15;
(g) designated consumer means any consumer specified under
clause (e) of

section 14;
(h) energy means any form of energy derived from fossil fuels,
nuclear
substances or materials, hydro-electricity and includes electrical
energy or
electricity generated from renewable sources of energy or bio-mass
connected to the grid;
(i) energy audit means the verification, monitoring and analysis of
use of
energy including submission of technical report containing
recommendations for improving energy efficiency with cost benefit
analysis and an action plan to reduce energy consumption;
(j) energy conservation building codes means the norms and
standards of
energy consumption expressed in terms of per square meter of the
area
wherein energy is used and includes the location of the building;
(k) energy consumption standards means the norms for process and
energy
consumption standards specified under clause (a) of section 14;
(l) Energy Management Centre means the Energy Management
Centre set up
under the Resolution of the Government of India in the erstwhile
Ministry
of Energy, Department of Power No. 7(2)/87-EP (Vol. IV), dated the 5 th
July, 1989 and registered under the Societies Registration Act, 1860;
(21 of
1860)
(m) energy manager means any individual possessing the
qualifications
prescribed under clause (m) of section 14;
(n) Governing Council means the Governing Council referred to in
section
4;
(o) member means the member of the Governing Council and
includes the
Chairperson;
(p) notification means a notification in the Gazette of India or, as the
case
may be, the Official Gazette of a State;
(q) prescribed means prescribed by rules made under this Act;
(r) regulations means regulations made by the Bureau under this Act;
(s) schedule means the Schedule of this Act;
(t) State Commission means the State Electricity Regulatory
Commission

established under sub-section (l) of section 17 of the Electricity

Regulatory
Commissions Act, 1998; (14 of 1998)
(u) words and expression used and not defined in this Act but defined
in the
Indian Electricity Act, 1910 or the Electricity (Supply) Act, 1948 or the
Electricity Regulatory Commissions Act, 1998 shall have meanings
respectively assigned to them in those Acts. (9 of 1940, 54 of 1948,14
of
1998)
CHAPTER IV, SECTION 13
Powers and Functions of Bureau
(1) The Bureau shall, effectively co-ordinate with designated
consumers, designated agencies
and other agencies, recognise and utilise the existing resources and
infrastructure, in
performing the functions assigned to it by or under this Act
(2) The Bureau may perform such functions and exercise such powers
as may be assigned to
it by or under this Act and in particular, such functions and powers
include the function
and power to (a) recommend to the Central Government the norms for processes
and energy
consumption standards required to be notified under clause (a) of
section 14 ;
(b) recommend to the Central Government the particulars required
tobe displayed on
label on equipment or on appliances and manner of their display under
clause (d) of
section 14;
(c) recommend to the Central Government for notifying any user or
class of users of
energy as a designated consumer under clause (e) of section 14;
(d) take suitable steps to prescribe guidelines for energy conservation
building codes
under clause (p) of section 14;
(e) take all measures necessary to create awareness and disseminate
information for
efficient use of energy and its conservation;
(f) arrange and organize training of personnel and specialists in the
techniques for
efficient use of energy and its conservation;
(g) strengthen consultancy services in the field of energy conservation;
(h) promote research and development in the field of energy
conservation;

(i) develop testing and certification procedure and promote testing

facilities for
certification and testing for energy consumption of equipment and
appliances;
(j) formulate and facilitate implementation of pilot projects and
demonstration projects
for promotion of efficient use of energy and its conservation;
(k) promote use of energy efficient processes, equipment, devices and
systems;
(l) promote innovative financing of energy efficiency projects;
(m) give financial assistance to institutions for promoting efficient use
of energy and its
conservation;
(n) levy fee, as may be determined by regulations, for services
provided for promoting
efficient use of energy and its conservation;
(o) maintain a list of accredited energy auditors as may be specified by
regulations;
(p) specify, by regulations, qualifications for the accredited energy
auditors;
(q) specify, by regulations, the manner and intervals of time in which
the energy audit
shall be conducted ;
(r) specify, by regulations, certification procedures for energy
managers to be designated
or appointed by designated consumers;
(s) prepare educational curriculum on efficient use of energy and its
conservation for
educational institutions, boards, universities or autonomous bodies and
coordinate
with them for inclusion of such curriculum in their syllabus;
(t) implement international co-operation programmes relating to
efficient use of energy
and its conservation as may be assigned to it by the Central
Government;
(u) perform such other functions as may be prescribed.
CHAPTER V, SECTION 14
Power of Central Government to Facilitate and Enforce Efficient
use of Energy and its
Conservation
The Central Government may, by notification, in consultation with the
Bureau,
(a) specify the norms for processes and energy consumption standards
for any equipment,
appliances which consumes, generates, transmits or supplies energy;

(b) specify equipment or appliance or class of equipments or

appliances, as the case may be, for the purposes of this Act;
(c) prohibit manufacture or sale or purchase or import of equipment or
appliance specified under
clause (b) unless such equipment or appliances conforms to energy
consumption standards;
Provided that no notification prohibiting manufacture or sale or
purchase or import or
equipment or appliance shall be issued within two years from the date
of notification issued under clause (a) of this section;
(d) direct display of such particulars on label on equipment or on
appliance specified under
clause (b) and in such manner as may be specified by regulations;
(e) specify, having regarding to the intensity or quantity of energy
consumed and the amount of
investment required for switching over to energy efficient equipments
and capacity or
industry to invest in it and availability of the energy efficient machinery
and equipment
required by the industry, any user or class of users of energy as a
designated consumer for
the purposes of this Act;
(f) alter the list of Energy Intensive Industries specified in the Schedule;
(g) establish and prescribe such energy consumption norms and
standards for designated
consumers as it may consider necessary:
Provided that the Central Government may prescribe different norms
and standards for
different designated consumers having regard to such factors as may
be prescribed;
(h) direct, having regard to quantity of energy consumed or the norms
and standards of energy consumption specified under clause (a) the
energy intensive industries specified in the Schedule to get energy
audit conducted by an accredited energy auditor in such manner and
intervals of time as may be specified by regulations;
(i) direct, if considered necessary for efficient use of energy and its
conservation, any
designated consumer to get energy audit conducted by an accredited
energy auditor;
(j) specify the matters to be included for the purposes of inspection
under sub-section (2) of section 17;
(k) direct any designated consumer to furnish to the designated
agency, in such form and
manner and within such period, as may be prescribed, the information
with regard to the

energy consumed and action taken on the recommendation of the

accredited energy
auditor;
(l) direct any designated consumer to designate or appoint energy
manger in charge of
activities for efficient use of energy and its conservation and submit a
report, in the form
and manner as may be prescribed, on the status of energy
consumption at the end of the
every financial year to designated agency;
(m) prescribe minimum qualification for energy managers to be
designated or appointed under
clause (l);
(n) direct every designated consumer to comply with energy
consumption norms and
standards;
(o) direct any designated consumer, who does not fulfil the energy
consumption norms and standards prescribed under clause (g), to
prepare a scheme for efficient use of energy and
its conservation and implement such scheme keeping in view of the
economic viability of
the investment in such form and manner as may be prescribed;
(p) prescribe energy conservation building codes for efficient use of
energy and its
conservation in the building or building complex;
(q) amend the energy conservation building codes to suit the regional
and local climatic
conditions;
(r) direct every owner or occupier of the building or building complex,
being a designated
consumer to comply with the provisions of energy conservation
building codes for
efficient use of energy and its conservation;
(s) direct, any designated consumer referred to in clause (r), if
considered necessary, for
efficient use of energy and its conservation in his building to get
energy audit conducted in
respect of such building by an accredited energy auditor in such
manner and intervals of
time as may be specified by regulations;
(t) take all measures necessary to create awareness and disseminate
information for efficient
use of energy and its conservation;
(u) arrange and organise training of personnel and specialists in the
techniques for efficient
use of energy and its conservation;

(v) take steps to encourage preferential treatment for use of energy

efficient equipment or
appliances:
Provided that the powers under clauses (p) and (s) shall be exercised in
consultation
with the concerned State.
CHAPTER VI, SECTION 15
Power Of State Government To Facilitate And Enforce Efficient
Use Of Energy
And Its Conservation
The State Government may, by notification, in consultation with the
Bureau (a) amend the energy conservation building codes to suit the regional
and local climatic
conditions and may, by rules made by it, specify and notify energy
conservation building
codes with respect to use of energy in the buildings;
(b) direct every owner or occupier of a building or building complex
being a designated
consumer to comply with the provisions of the energy conservation
building codes;
(c) direct, if considered necessary for efficient use of energy and its
conservation, any
designated consumer referred to in clause (b) to get energy audit
conducted by an
accredited energy auditor in such manner and at such intervals of time
as may be
specified by regulations;
(d) designate any agency as designated agency to coordinate, regulate
and enforce
provisions of this Act within the State;
(e) take all measures necessary to create awareness and disseminate
information for
efficient use of energy and its conservation;
(f) arrange and organise training of personnel and specialists in the
techniques for efficient
use of energy and its conservation;
(g) take steps to encourage preferential treatment for use of energy
efficient equipment or
appliances;
(h) direct, any designated consumer to furnish to the designated
agency, in such form and
manner and within such period as may be specified by rules made by
it, information
with regard to the energy consumed by such consumer;

(i) specify the matters to be included for the purposes of inspection

under sub-section (2)
of section 17;
(1) The State Government shall constitute a Fund to be called the State
Energy
Conservation Fund for the purposes of promotion of efficient use of
energy and its
conservation within the State.
(2) To the Fund shall be credited all grants and loans that may be made
by the State
Government or, Central Government or any other organization or
individual for the
purposes of this Act.
(3) The Fund shall be applied for meeting the expenses incurred for
implementing the
provisions of this Act.
(4) The Fund created under sub-section (l) shall be administered by
such persons or any
authority and in such manner as may be specified in the rules made by
the State
Government.
(1) The designated agency may appoint, after the expiry of five years
from the date of
commencement of this Act, as many inspecting officers as may be
necessary for the
purpose of ensuring compliance with energy consumption standard
specified under
clause (a) of section 14 or ensure display of particulars on label on
equipment or
appliances specified under clause (b) of section 14 or for the purpose
of performing
such other functions as may be assigned to them.
(2) Subject to any rules made under this Act, an inspecting officer shall
have power to (a) inspect any operation carried on or in connection with the
equipment or appliance
specified under clause (b) of section 14 or in respect of which energy
standards under
clause (a) of section 14 have been specified;
(b) enter any place of designated consumer at which the energy is
used for any activity and may require any proprietor, employee,
director, manager or secretary or any other
person who may be attending in any manner to or helping in, carrying
on any activity
with the help of energy (i) to afford him necessary facility to inspect -

(A) any equipment or appliance as he may require and which may be

available at such
place;
(B) any production process to ascertain the energy consumption norms
and standards;
(ii) to make an inventory of stock of any equipment or appliance
checked or verified
by him;
(iii) to record the statement of any person which may be useful for, or
relevant to, for
efficient use of energy and its conservation under this Act.
(3) An inspecting officer may enter any place of designated consumer (a) where any activity with the help of energy is carried on; and
(b) where any equipment or appliance notified under clause (b) of
section 14 has
been kept, during the hours at which such places is open for
production or
conduct of business connected therewith.
(4) An inspecting officer acting under this section shall, on no account,
remove or cause to be removed from the place wherein he has
entered, any equipment or appliance or books of accounts or other
documents.
The Central Government or the State Government may, in the exercise
of its powers and
performance of its functions under this Act and for efficient use of
energy and its conservation, issue such directions in writing as it
deems fit for the purposes of this Act to any person, officer, authority
or any designated consumer and such person, officer or authority or
any designated consumer shall be bound to comply with such
directions.
Explanation For the avoidance of doubts, it is hereby declared that
the power to issue
directions under this section includes the power to direct
(a) regulation of norms for process and energy consumption standards
in any industry or
building or building complex; or
(b) regulation of the energy consumption standards for equipment and
appliances.
CHAPTER VIII, SECTION 26
Penalties and Adjudication
(1) If any person fails to comply with the provision of clause (c) or the
clause (d) or clause (h)or clause (i) or clause (k) or clause (l) or clause
(n) or clause (r) or clause (s) of section 14 or clause (b) or clause (c) or
clause (h) of section 15, he shall be liable to a penalty which shall not
exceed ten thousand rupees for each such failures and, in the case of

continuing failures, with an additional penalty which may extend to one

thousand rupees for every day during which such failures continues:
Provided that no person shall be liable to pay penalty within five years
from the date of
commencement of this Act.
(2) Any amount payable under this section, if not paid, may be
recovered as if it were an arrear of land revenue.
(1) For the purpose of adjudging section 26, the State Commission
shall appoint any of its
members to be an adjudicating officer for holding an inquiry in such
manner as may be
prescribed by the Central Government, after giving any person
concerned a reasonable
opportunity of being heard for the purpose of imposing any penalty.
(2) While holding an inquiry the adjudicating officer shall have power to
summon and enforce
the attendance of any person acquainted with the facts and
circumstances of the case of give
evidence or produce any document which in the opinion of the
adjudicating officer, may be
useful for or relevant to the subject-matter of the inquiry, and if, on
such inquiry, he is
satisfied that the person has failed to comply with the provisions of any
of the clauses of the
sections specified in section 26, he may impose such penalty as he
thinks fit in accordance
with the provisions of any of those clauses of that section:
Provided that where a State Commission has not been established in a
State, the Government
of that State shall appoint any of its officer not below the rank
equivalent to a Secretary
dealing with legal affairs in that State to be an adjudicating officer for
the purposes of this
section and such officer shall cease to be an adjudicating officer
immediately on the
appointment of an adjudicating officer by the State Commission on its
establishment in that State:
Provided further that where an adjudicating officer appointed by a
State Government ceased to be an adjudicating officer, he shall
transfer to the adjudicating officer appointed by the State Commission
all matters being adjudicated by him and thereafter the adjudicating
officer appointed by the State Commission shall adjudicate the
penalties on such matters. While adjudicating the quantum of penalty
under section 26, the adjudicating officer shall have due regard to the
following factors, namely:-

(a) the amount of disproportionate gain or unfair advantage, wherever

quantifiable, made as a result of the default;
(b) the repetitive nature of the default.
No civil court shall have jurisdiction to entertain any suit or proceeding
in respect of any matter which an adjudicating officer appointed under
this Act or the Appellate Tribunal is empowered by or under this Act to
determine and no injunction shall be granted by any court or other
authority in respect of any action taken or to be taken in pursuance of
any power conferred by or under this Act.
CHAPTER IX, SECTION 30
Appellate Tribunal for Energy Conservation
The Central Government shall, by notification, establish an Appellate
Tribunal to be known as the Appellate Tribunal for Energy Conservation
to hear appeals against the orders of the adjudicating officer or the
Central Government or the State Government or any other authority
under this Act
CHAPTER X,
Miscellaneous
SECTION 61
The provisions of this Act shall not apply to the Ministry or Department
of the Central
Government dealing with Defence, Atomic Energy or such other similar
Ministries or
Departments undertakings or Boards or institutions under the control
of such Ministries or Departments as may be notified by the Central
Government.
THE SCHEDULE
[See section 2 (s)]
List of Energy Intensive Industries and other establishments
specified
as designated consumers
1. Aluminium;
2. Fertilizers;
3. Iron and Steel;
4. Cement;
5. Pulp and paper;
6. Chlor Akali;
7. Sugar;
8. Textile;
9. Chemicals;
10. Railways;
11. Port Trust;
12. Transport Sector (industries and services);
13. Petrochemicals, Gas Crackers, Naphtha Crackers and Petroleum
Refineries;

14. Thermal Power Stations, hydel power stations, electricity

transmission companies
and distribution companies;
15. Commercial buildings or establishments;
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