JUDGMENT

S.B. SINHA, J.

1.Interpretation and/or application of the provisions of the Andhra Pradesh Electricity Reforms Act, 1998 (for short the 1998 Act) vis-a-vis the orders passed by the Andhra Pradesh Electricity Regulatory Commission (for short `the Commission) are involved in these appeals which arise out of the judgments and orders passed by a Division Bench of the Andhra Pradesh High Court.

2. The matter relating to generation, supply and distribution of electrical energy in the State of Andhra Pradesh used to be governed by the provisions of the Electricity (Supply) Act, 1948 (For short, the 1948 Act).

3.With a view to bring reforms in the Power Sector and to meet shortages in power supply, the State of Andhra adopted a policy decision for generation of power through MPPs of 30 MW capacity in private sector. For the said purpose it issued two G.Os. being G.O. No.116 dated 5th August, 1995 and G.O. No. 152 dated 29th November, 1995.

4.In the said Government orders, the liberalization policy of the state in respect of its industrial economy so as to enable the State Government to attract investment from other parts of the country as also from outside the country was highlighted. It intended to bring about competition in the industry. It is stated to have taken a series of measures for augmenting power including privatization. It took into consideration the fact that the power plants costing less than Rs.100 crores and which do not require Central Electricity Authoritys clearance, and in respect of which project clearance at the State level would suffice as a result thereof the period may be reduced considerably.

5. The relevant extract of G.O. No.116 dated 5th August, 1985 reads :-

"The state government have therefore felt that it would be appropriate to setup mini power plants based on residual fuels in the industrial estates to relieve the burden of the industrial load centres and tail end areas which are suffering from stress on account of transmission and distribution problem."

6. It further provided: "The Government have also felt it necessary to take up mini power plants of 30 MW capacity which could be implemented within a period of 12-18 months at suitable locations where industries are concentrated and the power plants can meet the demand of industries without any interruption."

7.The G.O. further provided that the residual fuel shall be used and that the pricing arrangement was subject to fixation of tariff by the Commission.

8. In this context, the supply of electricity generated by the MPP to the identified consumers was allowed.

9. We, may, however, notice that at a later stage the capital costs invested for the said purpose was raised to Rs.250 crores.

10. By G.O. Ms. No.152 dated 29th November, 1995 the terms and conditions of setting up of MPPs were laid down, some of which read thus :-

"3. Energy from the mini power plants can be supplied to identified consumers using either Andhra Pradesh State Electricity Boards existing distribution network of setting up a dedicated transmission after obtaining a licence under section (3) of the Indian Electricity Act, 1910. In the case of the former, Andhra Pradesh State Electricity Board may on request, lease out the distribution net work to the developer. Detailed arrangements like lease, rent etc., will be worked out on mutually acceptable terms between the Andhra Pradesh State Electricity Board and the Mini Power plant developers. Similar arrangement can also be finalised for the dedicated net works established by Mini Power Plant developers so as to confirm to statutory requirement.

6. In the event of the mini power plants generating power in excess of the requirement of their consumers, the same can be purchased by the Andhra Pradesh State Electricity Board. Such purchases by the Andhra Pradesh State Electricity Board may be upto 15% of individual Mini Power Plant capacity. The Andhra Pradesh State Electricity Board may also purchase power beyond 15% of the Mini