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

11Oct

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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...

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

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...