The Power Sector Reforms in the State of Orissa was started during November 1993 in an organized manner. The main objective of the reform was to unbundle generation, transmission and distribution and to establish an independent and transparent Regulatory Commission in order to promote efficient and accountability in the Power Sector.

           In order to implement the reform, in the first phase, two corporate entities namely Grid Corporation of Orissa Limited (GRIDCO) and Orissa Hydro Power Corporation Limited (OHPC) were established in April 1995. GRIDCO was incorporated under the Companies Act, 1956 in April 1995 to own and operate the transmission and distribution systems in the State. Similarly OHPC was incorporated to own and operate all the hydro generating stations in the State.

           The State Government enacted the Orissa Electricity Reform Act, 1995 which came into force with effect from 1.4.1996. In exercise of power under Section 23 and 24 of the Orissa Electricity Reform Act, 1995,the State Govt. notified the Orissa Electricity Reform (Transfer of Undertakings, Assets, Liabilities, proceedings and Personnel ) Scheme Rules 1996. As per the scheme, the transmission ,distribution activities of the erstwhile OSEB along with the related assets, liabilities, personnel and proceedings were vested on GRIDCO . Simultaneously the hydro generation activities of OSEB along with related assets, liabilities, personnel and proceedings were vested on OHPC.

           In order to privatize the distribution functions of electricity in the State, four Distribution Companies namely Central Electricity Supply Company of Orissa Limited (CESCO), North Eastern Electricity Supply Company of Orissa Limited (NESCO), southern Electricity Supply Company of Orissa limited (SOUTHCO) & Western Electricity Supply Company of Orissa Limited (WESCO) were incorporated under the Companies Act, 1956 as separate corporate entities. During November 1998 the State Govt. issued the “Orissa Electricity Reform (Transfer of Assets, Liabilities, Proceedings and Personnel of GRIDCO to distribution Companies) Rules 1998” wherein the electricity distribution and retail supply activities along with the related assets, liabilities, personnel and proceedings were transferred from GRIDCO to the four Distribution Companies. Through a process of international Competitive Bidding (ICB), the four Distribution Companies were privatized during 1999.

           After separation of Distribution business, GRIDCO left with electricity Transmission and Bulk Supply/Trading activities. GRIDCO was also declared as the State Transmission Utility and was discharging the functions of State Load Despatch Center(SLDC).

           The Government of India enacted the Electricity Act, 2003 which came into effect from 10th June 2003. Under the provisions of the said Act, trading in electricity has been recognised as a distinct licensed activity, which can only be undertaken by a licensee to be granted by the appropriate commission. The Act specifically prohibits the STU and Transmission Company in the State from engaging in the business of trading. GRIDCO being a State Transmission Utility was not permitted to engage itself in the trading in electricity and was required to segregate its activities in a manner within the transional period allowed under the Act that, the entity which will undertake transmission STU and SLDC function will not undertake the activities of Trading and Bulk Supply of Electricity.

           Keeping in view the statutory requirement of the Electricity Act for separation of trading and transmission functions into two separate entities, the State Govt incorporated Orissa Power Transmission Corporation Limited (OPTCL) to take over the transmission, STU/SLDC functions of GRIDCO.

           In exercise of the power conferred under Section 39,131, 133 & 134 of the Electricity Act, 2003, read with Section 23 & 24 of the Orissa Electricity Reform Act , 1995, the State Govt. issued the notification “Orissa Electricity Reform (Transfer of Transmission and Related Activities) Scheme 2005” on 9.6.2005. The Scheme was made effective from 1.4.2005.
           By virtue of the Transfer Scheme, 2005, OPTCL now undertaking the functions of transmission of electricity in the State of Orissa and has been declared as the State Transmission Utility. GRIDCO is also discharging the functions of SLDC.