The chairman, Central Electricity Authority will be a member ex-officio of the commission. This is a major initiative to reform the highly-capital intensive power sector for attracting private investment in a big way for bridging an electricity deficit of over 11%.

Two of the Central Electricity Authority (CEA) members - G S Rajamani and D P Sinha are in the new commission, which also includes a R Ramanathan from the Company Law Board as the fourth member. Government's move to set up independent power regulators ran into troubled watersimmediately after the presidential ordinance, with AIADMK and Akali Dal, two alliance partners of ruling BJP, stiffly opposing some provisions relating to power subsidies.

The release said while helping to rationalise tariff, the panel would provide for subsidies wherever required so that state power utilities might function on financially viable lines. State governments could exercise the option of providing subsidies over and above those recommended by regulatory commission, on condition that the state governments compensate the State Electricity Boards by providing adequate budgetary support, the release said.

"When tariffs are rationalised and budgetary support provided, SEBs will improve their financial health and their capacity to invest on many critical activities," it said. It would help in flow of resources, both public and private into the power sector on much larger scale than now, thereby improving power position considerably. "This will go a long way in enabling the SEBs in investing on suchas renovation and modernisation of existing generation facilities, improvements of transmission and distribution systems," the release said.

In the long run, it would optimise operational performance, reduced transmission and distribution losses, promote integrated grid operation, improve power supply quality and reduce tariff for consumers. "The setting up of CERC is the single most important measure for making available reasonably price and adequate power to consumers," it said.

Meanwhile, the government plans to increase the country's power generation capacity to one lakh MW within the next ten years, both in public and private sectors, Union power minister, Rangarajan Kumaramangalam informed.