The Supreme Court on Wednesday directed all state electricity regulatory commissions to frame regulations under the law prescribing terms and conditions for determination of power tariff within a period of three months. The important direction from the top court came in a verdict by which it dismissed the appeal of TATA Power Company Limited Transmission (TPC-T) against a judgement of the Appellate Tribunal for Electricity (APTEL) which had upheld the grant of electricity transmission license to Adani Electricity Mumbai Infra Limited (AEMIL).
“We direct all State Regulatory Commissions to frame Regulations under Section 181 of the (Electricity) Act on the terms and conditions for determination of tariff within three months from the date of this judgment,” the court said.
While framing these guidelines on determination of tariff, the Appropriate Commission shall be guided by the principles prescribed in Section 61, which also includes the NEP (National Electricity Policy) and NTP (National Tariff Policy 2006), it said.
Granting relief to the Adani group firm, a bench comprising Chief Justice D Y Chandrachud and Justices A S Bopanna and J B Pardiwala said, “The threshold limit not having been notified by MERC, it was open to MERC to allot the HVDC project either under the RTM (Regulated Tariff Mechanism) or the TBCB (Tariff Based Competitive Bidding) route.”
“The MERC and APTEL have arrived at concurrent findings that the 1000 MW HVDC (High Voltage Direct Current) Aarey-Kudus project is an ‘existing project’ for the purpose of the applicability of the GoM’s GR (Government of Maharashtra’s Government Resolution) 2019. This Court deciding a statutory appeal under Section 125 of the Act cannot interfere with the concurrent findings on a question of fact. Nonetheless, even on an independent assessment of the facts, the HVDC project is an existing project,” Justice Chandrachud, writing the judgement for the bench, said.
The APTEL had on February 18, 2022 dismissed the plea of Tata firm TPC-T against the grant of electricity transmission license to AEMIL by the Maharashtra State Electricity Regulatory Commission (MERC) on March 21, 2021.
The MERC had granted the transmission licence to AEMIL for setting up a 1000 MW HVDC (VSC based) link between 400 kV MSETCL Kudus and 220 kV AEML Aarey EHV Station in Mumbai.
The Tata firm had challenged the MERC’s order granting licence to the Adani group company on the ground that the grant of the licence was not preceded by a TBCB (Tariff Based Competitive Bidding) process which was contrary to public interest and statutory mandate.
Welcoming the decision, Adani Electricity’s spokesperson said, “This order is a big win for Mumbaikars as it paves the way for bringing an additional 1,000 MW of affordable Renewable Energy to meet the City’s rising demand. This HVDC project is a landmark project for the City’s electrical infrastructure and we are confident of completing it in a timely manner”.
The bench, in its 93-page judgement, was also critical of the functioning of state transmission utilities (STUs) and highlighted the change of stand in the case related to grant of transmission licence to the Adani firm.
“This case has brought the ad-hoc nature of the functioning of the STU to the notice of this Court. MSETCL has been changing its stance on the HVDC technology without following any due procedure.
“The flip-flops by MSETCL have led to the loss of time and investment while the demand in the electricity sector has been increasing exponentially,” it said.
It said the court was cognizant that the state electricity regulatory panels and STUs are “usually bogged down” by factors such as technological uncertainty, requirement of heavy investment and issues of right of way.
“The adhoc functioning of the transmission utilities is also attributable to the lacunae in the regulations guiding the exercise of their functions,” it said.
The Electricity Act 2003 was enacted with the objective of providing the states with sufficient flexibility to regulate the intra-state electricity system and simultaneously allowed the regulatory commissions to determine tariffs, it said.
“Though the Government, both at the Centre and in the States, have framed statutory policies and guidelines regulating the electricity sector, we have noticed that the Regulatory Commissions have not framed the necessary regulations to put into effect the principles prescribed under the Act,” it said and directed them to frame these within a period of three months from date of judgement.
“The Electricity Act 2003 seeks to distance the State Governments from the determination and regulation of tariff, placing such power completely within the ambit of the Appropriate Commissions,” it said.