The Supreme Court on Wednesday dismissed Tata Power’s appeal against the Maharashtra power regulator’s decision to award a ₹7,000-crore transmission contract on a nomination basis to Adani Electricity in March last year.
Tata Power had questioned the Maharashtra Electricity Regulatory Commission’s (MERC) decision to award such a large infrastructure project without following the process of tariff based competitive bidding (TBCB) and by “excluding other developers”.
The project is for a 1,000-MW high-voltage direct current (HVDC) link between the 400 KV Kudus and 220 KV Aarey EHV stations. A bench, led by chief justice DY Chandrachud, upheld the appellate tribunal’s February 18 order that ruled that MERC’s decision to choose the RTM (regulate tariff mode) route under Section 62 of the Electricity Act 2003 to award the contract cannot be termed as “incorrect, perverse or inappropriate”.
On whether a large infrastructure project can be awarded on a nomination basis under Section 62 by departing from competitive bidding provided under Section 63, the court said that the Act provided sufficient flexibility to states to regulate the intra-state transmission systems, wherein the state commissions have the power to determine and regulate tariff.
Besides, the 2003 Act or the policy framework, particularly National Tariff Policy 2016 read with the Maharashtra government’s resolution (GR) of January 4, 2019, did not make it binding upon MERC to allot the HVDC project only through the TBCB route and the decision was in line with directions of empowered committee, the apex court stated.
“MERC and Aptel have arrived at concurrent findings that the 1000MW HVDC Aarey-Kudus project is an ‘existing project’ for the purpose of the applicability of the GoM’s GR 2019,” the judgment said. “This court deciding a statutory appeal 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.” Even if the HVDC project were to be considered a ‘new project,’ the MERC’s decision cannot be challenged as it is an independent body with statutory powers to determine and regulate tariff, added the court.
The bench also asked the state regulatory commissions to frame regulations under Section 181 of the Act for the determination of tariffs within three months. Commissions having already framed tariff regulations are supposed to amend them to include provisions on the criteria for choosing the modalities to determine the tariff.
The top court said the commissions shall “effectuate a balance that would create a sustainable model of electricity regulation in the states” which must be in consonance with the objective of the Electricity Act, which is to enhance investment of private stakeholders so as to create a sustainable and effective system of tariff determination that is cost efficient so that such benefits percolate to end consumers.