Electricity Act 2003 - The Legal Chamber

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...