New Delhi, Dec 18 (IANS): An independent public sector company responsible for power transmission system operations has been set up as the Power System Operation Corp (POSOCO), the government announced Thursday.

"With transmission coming under competition and multiple transmission licensees operating, need was felt to ensure the independence and neutrality of the system operation function," a union power ministry statement said.

POSOCO, whose creation is mandated under the Electricity Act 2003, "is also designated as the nodal agency for major reforms in the power sector such as the Renewable Energy Certificate (REC) Mechanism, transmission pricing, short-term open access in transmission, Deviation Settlement Mechanism, and Power System Development Fund (PSDF), among others," it added.

The company was earlier part of the central transmission utility Power Grid Corp (PGCIL).

It has now been set up into an independent company to ensure the independence and neutrality of the system operation

POSOCO operates the National Load Despatch Centre (NLDC) and Regional Load Despatch Centres (RLDCs) which are also responsible for operating the electricity market in the country.

The enquiry committee set up following the July 2012 grid collapse recommended putting in place zero tolerance systems, including setting up of an independent system operator, the ministry said.

"The decision also creates an example for implementing similar reforms at the state level to ensure independent system operation by the State Load Despatch Centres (SLDCs)," it added.