This article is written by Amarnath Simha, pursuing a Certificate Course in Electricity and Renewable Energy Laws from LawSikho.
General outlook on Energy Laws as a career avenue
The electricity laws especially after the enactment of the Electricity Act, 2003 have increased the scope of lawyers practicing in the energy field. With the privatization of distribution licensing and freely setting up of the generation plants, the scope of lawyers have increased in many areas of the energy laws. During the setting up of the generation plants, an in depth knowledge of energy laws and other laws is still required even though there is no requirement of a license for setting them up. The setting up oftentimes requires the approval of the state environment impact assessment authority under the 2006 notification issued by the Ministry of Environment and Forests.
Moreover, apart from the Electricity Act and the rules thereunder, each of the state electricity regulatory commissions and the central electricity regulatory commissions have formulated many regulations which have to be taken into account before taking any step in this sector. Powergrid (Central Transmission Utility) and POSOCO (National Load Despatch Centre and Regional Load Despatch Centres) have their own procedures which one requires to be aware of before giving any advice. Establishment of Power Exchanges and allowing of trading brings with its own set of regulations enlarging the areas of law which one requires to be aware of and hence increases the scope of practice in this field. The renewable energy sectors are right now on the rise, especially solar and wind energy. Hence, specialized knowledge of the law regarding these areas is also in demand. As the areas of impact of the energy laws increase, the scope of work in that field for lawyers also increases. This is a specialized field of practice as the knowledge of lawyers in this field cannot be restricted to just awareness of acts, rules and regulations but also the commercial, political and technical factors to be able to give comprehensive advice and solutions to the clients.
Where do these career opportunities exist in the energy sector?
The career opportunities are of various types. They are sought to be broadly explained below as:
- Dispute Resolution: Lawyers have a lot of scope in this aspect at various levels of energy laws.
- Consultancy: requires an in depth knowledge of energy laws and associated laws to be in a position to give advice. It can be regarding the legal requirements for setting up and operating a power plant or a distribution license.
- In-house counsel: for energy companies to be able to broadly handle all the aspects and also be able to interact with lawyers handling the dispute resolution and consultancy
- Corporate opportunities: in the scope of acquisition of assets and energy companies. As privatization increases and more and more power generation plants get set up, it is inevitable that more mergers and acquisitions also take place, thereby increasing the scope of work for a lawyer.
Regulatory Litigation – Electricity laws
Regulatory litigation is one of the major areas of work for a lawyer. Central and State Electricity Regulatory Commission frame the tariff regulations and also fix the tariffs. Even a power purchase agreement can be modified by the regulatory authorities. Hence, in these aspects, a lawyer can represent the generating companies or the distribution companies for getting the proper tariff fixed. For any change in the tariffs, it is the regulatory commissions which have to approve the same consequently increasing the work for the lawyer. The appeals to the appellate tribunal and consequently to the Supreme Court only increase the scope of work of a lawyer in this field.
The disputes between the generating companies and the distribution licensees are also before the regulatory commissions wherein lawyers can appear. These disputes may also take place before arbitration wherein lawyers can appear. Here the lawyers can strategize for the clients, issue notices on their behalf, draft the petitions and objections etc.
Power Projects – finance and compliances (Projects practice)
The setting up of power projects brings with it a lot of compliances and financial requirements. Many times, foreign investment is involved and hence the work of a lawyer is increased there as it requires knowledge and compliances of many laws. It requires heavy funding from lenders and hence the scope of work a lawyer increases from both the lenders’ perspectives and the borrowers’ perspectives in drafting financing and security documentation. A lot of work is involved from conception till implementation. Lawyers will have to negotiate and draft the project documents, including Concession Agreements, O&M Contracts, EPC Contracts,, Power Purchase Agreements, Land Agreements, Implementation Agreement, Fuel Supply Agreements, Construction Agreements, Production Contracts, and BOOT projects. After the power plant is set up, it requires the compliances during connecting to the power grid as well as signing the power purchase agreement with the distribution licensees.
The Act and the regulations framed by the regulatory commissions require compliances like getting an approval from the Chief Electrical Inspector that the standards utilized in the setting up of the electricity plant are proper and according to standards before the connection to the power grid is allowed. Many projects are thermal based projects and hence knowledge of the emission norms and compliances there under also arise. advising clients on issues relating to renewable energy including solar energy and wind energy. Lawyers will have to advise the clients on insurance and guarantee, tax, loan, counter-guarantee documents, joint operation and maintenance agreements, joint venture, opportunity exploration memorandum of understanding and related agreements. Many big legal firms in India have set up specialized branches therein to cater to this sector.
Power Projects- PPAs
Once the power projects are set up, it will have to sign a power purchase agreement with the distribution companies. This would entail work for a lawyer because the way these PPAs are drafted will have an impact due to any changed scenarios affecting the commercial viability of the power plant itself. Hence an in-depth knowledge of commercial laws and drafting is also mandatory in this field.
Energy Policy Advisory
Since the energy sector is a very highly regulated sector, it is inevitable that policy matters play a very important role. Hence, both the Government as well as the Corporates in the energy sector will require advice as to the existing and future policy initiatives. Hence, it opens up many fields in advisory roles for the advocates.
Oil and Gas Contracts
The government has allowed 100% FDI in most of the oil and gas fields including the exploration, production, oil refining, marketing and oil product pipelines. This will involve work of the nature of negotiating, advising, representation, drafting a lot of agreements for the lawyers. The agreements can be in the nature of LNG Supply Agreement, exploration and Production Sharing Agreements, Gas Transmission Agreements, Power Purchase Contracts, Farm-in/ farm-out Agreements, Contracts for the Purchase and Leasing of Rigs and other drilling equipments, Pipeline Transportation Contracts, Fuel Supply Agreements, Shipping and Bulk Carriage Contracts, Natural Gas Gathering and Processing Agreements, Leasing agreements for mines etc.
Oil and Gas Projects – finance and compliances
They may work on development, mergers and acquisitions, joint ventures, privatizations, finance, tax, environmental or litigation work related to oil and gas transactions. These lawyers have to handle oil and gas transactions from upstream to downstream, including pipelines, liquefied natural gas (LNG), distribution networks, trading and petrochemicals.
The Civil Liability for Nuclear Damage, 2010 was passed by the Indian Parliament which has limited the damages payable to the victims of a nuclear incident through the no fault liability of the private operator of the nuclear reactors. The private sector is now allowed in the nuclear sector. The bill was primarily introduced to protect the US manufacturers and suppliers. But since the private investment is going to flow into the sector, the scope of the work for the lawyer is likely to increase.
Consumer disputes over electricity supply
Usually, lawyers are not allowed to appear in the consumers grievance redressal forum to be constituted by the distribution licensees or before the ombudsman. But distribution licensees can nominate its In-house counsel as its representative. But under the Electricity Act, 2003, a consumer is entitled to approach other forums for redressal of his grievances like the consumer forum where lawyers can represent both the consumer as well as the distribution licensee. The consumer forum disputes may be of the billing grievances, electricity supply and disconnection and/or electricity charges. Many of these have already been classified as deficient service by the consumer forums.
Rehabilitation and Resettlement of Project Displaced people
A few major power plants require a large land area but the land acquisition for the same is exempt from the provisions of section 105 of the RIGHT TO FAIR COMPENSATION AND TRANSPARENCY IN LAND ACQUISITION, REHABILITATION AND RESETTLEMENT ACT, 2013. But nevertheless, it is also likely to displace people who will have to be rehabilitated and resettled which requires the settlement of the claims of the displaced people. Hence, it would involve work for the lawyers in all the aspects of acquisition and rehabilitation.
It is inevitable as the field increases, the scope of work for the lawyers will increase and the demand for lawyers who are specialized will also increase.
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