Electricity Came to Iran
It was in 1886 that the first electricity generator came to Iran with nominal power of 3 KW. It is imported to supply the power required for illuminating some parts of royal palace in Tehran. In 1904, a contract was signed which necessitated the construction of an electric power factory called "Cheragh Bargh". Three years later, the factory came into operation but as its Persian name means, its output power was entirely dedicated to illuminate a limited part of the city. The nominal power of this power station was 400 KW and supplied the electric power through a low voltage distribution system within a circle with the radius of 800 meters around the power station location. After the power station started to produce electric power, the factory owner got the authorization for selling electric power to public customers. All related services consisting distribution system development and customers' internal wiring were done by this company. Hence the starting point of electric industry was completely a private localized monopoly with a vertically integrated structure.
Primitive Organizational Principles of Iran Electricity Industry
Until 1963, there was not a specific organization for managing the electricity affairs in Iran. More precisely, the Interior Ministry had the responsibility to make the major decision about the related issues and pass out executive instructions to be followed by the existing companies through the country. At this time, local electricity companies had been establishing in Iran. The very first law associated with electricity affairs was legislated in 3th January 1963. It demonstrate the rules for managing the electric power in a major level and was called the law of Iran Electricity Organization. This law, necessitated the establishment of regional electricity companies by merging the existing companies locating in each defined geographical zone. Due to the shortcomings of this law, limiting the authority of Iran Electricity Organization, the law of establishing the ministry of "Water and Electricity" was legislated by the parliament later on 5th April 1964. According to this law, the ministry took over the stewardship of all existing electric companies. In 1965, another law was legislated declaring that all nongovernmental electric companies must conform the generation & distribution determined conditions and adhere to the selling tariffs. As a result of this law, the profits for the private electric companies were not satisfying anymore and all of the electric companies forced to be a subsidiaries of this ministry.
Generation and Transmission Company of Iran "TAVANIR' was established in 1970. The main activity of this company was to implement the major transmission and generation plans, operate the generation facilities, substations and high voltage (230 and 400 KV) transmission network efficiently. Major planning and coordination of all the energy related activities were assigned to the ministry of "Water and Electricity". It was in late 1975 that the name of "Ministry of Water and Electricity" was modified to "Ministry of Energy". After this modification, the statute of TAVANIR was revised and finally in 1976 "Iran Electric Power Generation and Transmission Management Company" was born. It is remarkable that it was called with the same old name, the "TAVANIR". Apparently, TAVANIR handled the electricity related issues as a part of ministry of energy.
As is seen, at the beginning, the electric industry that was completely nongovernmental becomes a thoroughly governmental industry and the electric power was considered as a public service. By advancing the power system restructuring and power electricity markets, there are obviously some motivations to perform this revolution in Iran.
It was in 1992 that the first activities were observed in Iran toward the decentralization of electricity industry. In this regard, independent generation management companies were established. New generation facilities were going to develop based on two major contract types "Building, Operation and Ownership" and "Building, Operation and Transfer" the BOO and BOT respectively. In BOO contract, as its name smacks, the building, operation and ownership of the generation facilities belongs to a certain party from beginning to the end. Conversely in BOT, the building and operation of the generation facilities were done by a party and finally the ownership was transferred to the governments. Distribution companies were also separated in 1994 and began their official activities. Similar to other countries convinced to proceed the power system restructuring revolution, there were several motivations for the power system restructuring in Iran
It was in late 2001 that IERB was established. The main activities of this committee were to study the existing electricity markets of the other countries. The goal of those studies was to exploit the past experiences in the world. After all, the model of IREMA was proposed and based on this model, the "buying and selling electricity regulations" was legislated by the ministers' council in September 2003. Finally it was in 23th November 2003 that the IREMA officially begins to work, a market that provides a competitive environment for trading of electric power. Following to this newly born electricity market, Iran Grid Management Company (IGMC) was established in fall 2004.
In fact this is the turning point of power system restructuring in Iran. This company functions as the power system operator and the market operator.