"The draft Electricity Bill 2000 is ready and will in all probability be tabled during the monsoon session of Parliament," Kumaramangalam said at a workshop organised by Power Finance Corporation on operationalisation of State Electricity Regulatory Commissions (SERCs).

The new Bill would replace the Indian Electricity Act of 1910 and the Electricity (Supply) Act of 1948 and set the legal framework for restructuring and modernisation of power sector, he said adding generation, distribution and transmission would be separate functionaries operating on commercial lines.

Calling on regulators to take a rational and objective view while fixing tariffs, he said factors which would encourage competition, efficiency, economic use of resources, good industry practices and optimum investment should be considered.

The regulator has to set the right balance between the interests of consumer and the generator, Kumaramangalam said adding tariff should progressively reflect the cost of supply of electricity at an adequate and improving level of efficiency and also encourage private sector investment.

While cross-subsidisation among different classes of consumers should be reduced progressively, any subsidy given should be budgeted and payments made to the generating company, he added.

Earlier, inaugurating the workshop, secretary, power, A K Basu asked the state governments to give up the authority of fixing power tariffs paving the way for independent and non-interfering functioning of SERCs.

"The state governments should dispense themselves from fixing power tariff... state regulatory commissions should be free from any form of government control and should deal with important issues of tariff fixation purely on the basis of commercial consideration," he said.

State governments should also provide adequate infrastructure and budget for effective and efficient functioning of SERCs, Basu said.

Referring to the new Electricity Act 2000, he said electricity-generating companies would only be required to approach SERCs for fixing a tariff structure and would not be required to take clearance from Central Electricity Authority (CEA) for setting up a plant.

However, transmission and distribution companies would have to obtain licence from SERCs for setting shop, Basu said.