Back
SUPREME COURT OF INDIA
RANJAN GOGOI, PRAFULLA C. PANT, JJ.
Gujarat Urja Vikas Nigam Limited – Appellant
Versus
Tarini Infrastructure Ltd. & Ors. – Respondents
Civil Appeal Nos. 5875 of 2012 & 1973-1974 of 2014
Decided On : 05-07-2016
(B) Electricity Act, 2003 – Sections 62 and 86(1)(a) – Gujarat Electricity Regulatory Commission (multi-year tariff) Regulations, 2016 – Regulations 23 and 31 – Fixation of Tariff under PPA (Power Purchase Agreement – Scope of review by State Electricity Regulatory Commission – When tariff order itself is subject to periodic review incorporation of a particular tariff prevailing on the date of commissioning of power project cannot be understood to bind power producer for entire duration of plant life – Modification of tariff on account of air cooled condensers and denying the same on account of claimed inadequate pricing of biogas fuel is itself contradictory – Orders of Appellate Tribunal affirmed. (Para 14)
(C) Electricity Act, 2003 – Section 86(1)(b) – General Clauses Act, 1897 – Sections 14 and 21 – Fixation of Tariff under PPA (Power Purchase Agreement) – Scope of review by State Electricity Regulatory Commission – Section 86(1)(b) empowers State Commission to regulate price of sale and purchase of electricity between generating companies and distribution licensees through agreements for power produced for distribution and supply – Power of regulation is indeed of wide import – In view of Section 86(1)(b), Court must lean in favour of flexibility and not read inviolability in terms of PPA insofar as tariff stipulated therein as approved by Commission is concerned – It would be a sound principle of interpretation to confer such a power if public interest dictated by surrounding events and circumstances require review of tariff. (Paras 15 and 16)
Facts of Case:
Question that arises for determination in the present appeals is whether tariff fixed under a PPA (Power Purchase Agreement) sacrosanct and inviolable and beyond review and correction by State Electricity Regulatory Commission which is statutory authority for fixation of tariff under Electricity Act, 2003. Regulatory Commission did not consider it appropriate to confer on itself said power upon a construction of provisions of the Act and terms of PPA(s) in question. Appellate Tribunal disagreed and held that power would be available to State Regulatory Commission giving rise to instant appeals.
Findings of Court:
Generation, transmission, distribution and supply of electricity is required to be conducted on commercial principles; while consumers’ interest is to be safeguarded, recovery of cost of electricity in a reasonable manner has also to be ensured. Under Section 64(6) a tariff order continues to remain in force for such period as may be specified. In the State of Gujarat, currently, Gujarat Electricity Regulatory Commission (multi-year tariff) Regulations, 2016 govern fixation of tariff by State Commission.
Result – Appeals dismissed.
JUDGMENT :
Ranjan Gogoi, J.
1. Is the tariff fixed under a PPA (Power Purchase Agreement) sacrosanct and inviolable and beyond review and correction by the State Electricity Regulatory Commission which is the statutory authority for fixation of tariff under the Electricity Act, 2003 (hereinafter for short ‘the Act’). This is the short question that arises for determination in the present appeals. The Regulatory Commission did not consider it appropriate to confer on itself the said power upon a construction of the provisions of the Act and the terms of the PPA(s) in question. The Appellate Tribunal disagreed and held that the power would be available to the State Regulatory Commission. This is how the matter has come up before us in the present appeals filed at the instance of the distribution licensee which is common in both the cases, namely, Gujarat Urja Vikas Nigam Limited.
2. A very brief resume of the relevant facts would be appropriate and would assist a determination of the question arising identified hereinabove. The respondent No. 1 in Civil Appeal No. 5875 of 2012, namely, Tarini Infrastructure Ltd., is a power producer which has set up/installed two small hydro power projects in the State of Gujarat. In January, 2008 the respondent No. 1-power producer entered into a PPA with the appellant-distribution licensee for sale of electricity from the generating stations to the extent of the contracted quantity for a period of 35 years at Rs. 3.29 per KWH subject to escalation of 3% per annum till date of commercial operation. In March, 2010, just before commissioning of the generating station, the respondent power producer sought an increase in the tariff to Rs. 4.70 per unit on the ground that though under the Concession Agreement power was to be evacuated at the nearest sub-station at Rakholi under the jurisdiction of the Gujarat Electricity Transmission Company (GETCO) which was at a distance of 4 Kms from its switch yard, it was later realized that Rakholi was in Dadar Nagar Haveli. Consequently, the transmission line was required to be laid up to a point known as Mota Pondha which involved a total distance of 23 Kms. instead of the originally envisaged 4Kms. The additional infrastructure, admittedly, cost about Rs. 10 crores which was not envisaged in the Concession Agreement entered into between the respondent-power producer and Narmada Water Resources Department (respondent No. 2). In these circumstances, the power producer applied to the State Regulatory Commission for a re-determination of the tariff. The said request was refused by an order dated 03.09.2010, primarily, on the ground that once the tariff was determined and thereafter incorporated in the PPA there was no scope for re-determination of the same at the unilateral request of the power producer.
3. Insofar as Civil Appeal Nos. 1973-1974 of 2014 are concerned, the respondent-power producer, namely, Junagadh Power Projects Pvt. Ltd., has set up a biomass based power generation plant and had entered into a PPA with Gujarat Urja Vikas Nigam Limited (distribution licensee) on 26.11.2010. The tariff incorporated in the PPA was earlier approved by the State Regulatory Commission by tariff order dated 17.05.2010 on the basis of cost of biomass at Rs. 1600 per MT with escalation of 5% per annum for a period of 20 years of operation. The Biomass Energy Developers Association sought revision of the biomass fuel cost to Rs. 3000/- per MT and for consequential re-determination of the tariff. The said review petition was dismissed by the State Commission in November, 2010. Thereafter, the power producer, on its own, moved the State Regulatory Commission seeking modification of tariff on account of air cooled condenser and also seeking increase in the biomass fuel cost and consequential re-determination of the tariff on that basis. The State Regulatory Commission by its order dated 05.12.2010, while allowing an increase in tariff on account of air cooled condenser, rejec
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
