Electricity Act 2003 - The Legal Chamber

Supreme Court Upholds Ruling: Power Generators Must Share Coal Costs Fairly Among All Buyers

11Oct

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Upholds Ruling: Power Generators Must Share Coal Costs Fairly Among All Buyers

The Supreme Court dismissed appeals against concurrent orders of CERC and APTEL. It upheld that coal linkage for a power plant is allocated to the project as a whole, not to specific PPAs. Consequently, the additional cost from 'Change in Law' events must be apportioned pro-rata among all power procurers based on their energy drawal. Facts Of The Case: GMR Kamalanga Energy Limited (GKEL) set up a power plant and entered into long-term Power Purchase Agreements (PPAs) with three utilities: Haryana, Odisha (GRIDCO), and Bihar. The project was allocated coal from specific linkages and a captive block, intended for the entire plant. When changes in law and a coal supply shortfall increased GKEL's costs, it sought compensation. The Central Electricity Regulatory Commission (CERC) ruled GKEL w...

Supreme Court Settles Decade-Long Hydel Power Tariff Battle, Explains Limits of Private PPA Changes

1Oct

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Settles Decade-Long Hydel Power Tariff Battle, Explains Limits of Private PPA Changes

The Supreme Court affirmed that the electricity tariff and Power Purchase Agreements (PPAs) are not purely private contracts. Under Section 86(1)(b) of the Electricity Act, 2003, they must be reviewed and approved by the State Electricity Regulatory Commission. A generating company and distribution licensee cannot unilaterally set or modify tariffs without the regulatory commission's mandatory approval. Facts Of The Case: The case originated from a dispute over the tariff payable for electricity supplied by M/s. KKK Hydro Power Limited. The company initially established a 3 MW hydro plant under a 2000 Power Purchase Agreement (PPA) with a fixed tariff of ₹2.50/kWh. In 2007, it augmented the project's capacity to 4.90 MW. A new PPA was executed in 2008 for the revised capacity, but it ret...

Supreme Court Backs Discom: Upholds Right to Encash Bank Guarantee in Delayed Solar Project

29Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Backs Discom: Upholds Right to Encash Bank Guarantee in Delayed Solar Project

The Supreme Court held that the Power Purchase Agreement's explicit terms govern the parties' rights. The encashment of the performance bank guarantee was valid as the developer failed to seek an extension under the contractual mechanism or issue a mandatory Force Majeure notice. Regulatory commissions cannot rewrite the contractual risk allocation or grant remedies outside the agreed framework. Facts Of The Case: The dispute arose from a Power Purchase Agreement (PPA) executed between Chamundeshwari Electricity Supply Company Ltd. (CESC) and Saisudhir Energy Pvt. Ltd. for a 10 MW solar power project. The PPA stipulated that the developer was to achieve the Commercial Operation Date (COD) within 12 months, preceded by fulfilling certain Conditions Precedent within 240 days. A critical pr...

What Qualifies as ‘Goods’? Supreme Court Explains Why a Power Plant Isn’t Eligible for Export Benefits

20Sep

By The Legal ChamberNo Comments

Supreme Court

What Qualifies as ‘Goods’? Supreme Court Explains Why a Power Plant Isn’t Eligible for Export Benefits

The Supreme Court held that a press release announcing a policy change does not constitute a "Change in Law" under a Power Purchase Agreement, as only duly promulgated notifications have legal force. It further ruled that deemed export benefits under the Foreign Trade Policy are inapplicable to immovable, integrated power plants, as the policy is designed for movable "goods" and requires strict adherence to defined supply and procurement conditions. Facts Of The Case: The case involved appeals by Nabha Power Limited and Talwandi Sabo Power Limited against the Punjab State Power Corporation Limited (PSPCL). The dispute arose from a Power Purchase Agreement (PPA) executed following a tariff-based competitive bidding process. The appellants claimed that post-bid notifications from the...

Who Pays for Unpaid Power Bills? Supreme Court Explains ‘Regulatory Asset’ Mess and Orders a Fix

6Sep

By The Legal ChamberNo Comments

Supreme Court

Who Pays for Unpaid Power Bills? Supreme Court Explains ‘Regulatory Asset’ Mess and Orders a Fix

The Supreme Court ruled that Regulatory Assets, while a valid regulatory tool, must be created only in exceptional circumstances and liquidated in a time-bound manner. It upheld the legal framework under the Electricity Act, 2003, and directed strict adherence to the newly inserted Rule 23 of the Electricity Rules, which mandates a maximum 3% gap in revenue and a 7-year liquidation period for existing assets. The judgment emphasizes the duty of Regulatory Commissions to ensure cost-reflective tariffs and affirms APTEL's power under Section 121 to issue directions against regulatory failure. Facts Of The Case: The case originated from petitions and appeals filed by three private power distribution companies (Discoms) in Delhi—BSES Rajdhani, BSES Yamuna, and Tata Power Delhi—agains...

Supreme Court Clarifies When Electricity Contracts Beat Regulatory Caps

12Aug

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Clarifies When Electricity Contracts Beat Regulatory Caps

The Supreme Court ruled that Note 3 of Regulation 55 of the CERC Regulations, 2019, which caps free power supply to states at 13%, is only for tariff calculation and does not override contractual obligations under the Implementation Agreement. The Court held that writ jurisdiction was inappropriate, as disputes involving regulatory interpretation must first be addressed by the specialized CERC. The judgment reaffirms that contractual rights remain enforceable unless expressly prohibited by law. Facts Of The Case: The case involves a dispute between the State of Himachal Pradesh and JSW Hydro Energy Limited over the supply of free power from a hydroelectric project. In 1993, the state allotted the Karcham Wangtoo Hydroelectric Project to a predecessor company of JSW Hydro under a Memorand...

Supreme Court Clarifies Jurisdiction of Electricity Regulators in Franchisee Disputes

7Aug

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Clarifies Jurisdiction of Electricity Regulators in Franchisee Disputes

The Supreme Court ruled that Electricity Regulatory Commissions (ERCs) lack jurisdiction to entertain petitions solely based on public interest under the Electricity Act, 2003. It held that franchisees, as agents of distribution licensees, are not directly regulated by ERCs, and investigations under Section 128 must target licensees, not franchisees. The Court emphasized that ERCs cannot micromanage franchisee agreements, as their regulatory oversight is limited to licensees. The judgment clarified that contractual disputes between licensees and franchisees fall outside ERCs' adjudicatory scope under Section 86(1)(f). The appeal was allowed, setting aside APTEL's order. Facts Of The Case: The case involved a dispute between Torrent Power Limited (appellant) and the Uttar Pradesh Elec...

Supreme Court Late Payment Surcharge Valid: Coal India’s Levy Ruled as ‘Change in Law’

11Jun

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Late Payment Surcharge Valid: Coal India’s Levy Ruled as ‘Change in Law’

The Supreme Court upheld the Appellate Tribunal for Electricity's (APTEL) ruling that a Coal India Limited (CIL) notification imposing Evacuation Facility Charges (EFC) constitutes a "change in law" event under the Power Purchase Agreement (PPA). The judgment affirmed that the power generator is entitled to compensation from the notification date with carrying cost at Late Payment Surcharge (LPS) rates on a compounding basis, based on restitutionary principles. The Court clarified that only a substantial question of law is appealable, and the supplementary bill is required only after due adjudication. Facts Of The Case: A Power Purchase Agreement (PPA) was signed on January 28, 2010, between Rajasthan Discoms and Adani Power Rajasthan Ltd. for 1200 MW. On December 19, 2017, Coal India ...

“Who Pays for Delays in Power Projects? : Supreme Court Explains CERC’s Role in Tariff and Compensation”

22May

By The Legal ChamberNo Comments

Supreme Court

“Who Pays for Delays in Power Projects? : Supreme Court Explains CERC’s Role in Tariff and Compensation”

The Supreme Court held that the Central Electricity Regulatory Commission (CERC) can exercise regulatory powers under Section 79 of the Electricity Act, 2003 to impose compensation for delays, even without specific regulations under Section 178. It clarified that CERC’s orders under Section 79 are appealable to APTEL under Section 111, not through writ petitions unless jurisdictional or constitutional issues arise. The Court emphasized that regulatory gaps can be addressed via Section 79, distinguishing it from legislative rule-making under Section 178. The High Court erred in entertaining the writ petition when an alternative remedy existed. Facts Of The Case: The case involved a dispute between Power Grid Corporation of India Ltd. (PGCIL) and Madhya Pradesh Power Transmission Company L...