Public Utility - The Legal Chamber

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...

The Supreme Court held that the electricity board was estopped from resiling from its contractual obligation to provide a concessional tariff after having sanctioned, agreed, and partially implemented it. The board's unilateral withdrawal of the concession after over two years was deemed arbitrary, illegal, and unsustainable in law. Facts Of The Case: The appellant, an existing industrial unit with a Low Tension (LT) power connection, underwent significant expansion by installing a large induction furnace, which necessitated a High Tension (HT) or bulk power supply. It applied for this new connection in 1998. The respondent electricity board, after inspection, sanctioned the HT connection via a memo that explicitly stipulated the appellant’s eligibility for a 25% concessional tarif...

Tag: Public Utility

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