The Rajasthan Electricity Regulatory Commission's regulations on open access are valid, ensuring grid stability and fair competition, and do not violate statutory rights under the Electricity Act, 2003.

JUDGMENT :

VIKRAM NATH, J.

1. The present appeals challenge two separate orders passed by the High Court of Rajasthan-one by the Jodhpur Bench dated 29.08.2016 and the other by the Jaipur Bench dated 06.09.2016. The appeals arise from challenges to the validity of the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016¹ [Regulations of 2016] framed by the Rajasthan Electricity Regulatory Commission² [RERC] in the exercise of its powers under Section 42 read with Section 181 of the Electricity Act, 2003.³ [Act of 2003] The primary grievance of the writ petitioners, appellants herein, before the High Court, and now the appellants before this Court, relates to the restrictions and conditions imposed by the Regulations of 2016 on the exercise of open access for captive power plants⁴ [CPPs.] and other large consumers of electricity.

2. The brief background of the facts giving rise to the challenge before us are that the writ petitioners before the High Court are engaged in industrial production and have substantial power consumption requirements. The facts, as taken by the High Court from one of the writ petitions filed by Hindustan Zinc Limited, respondent No. 6 in Civil Appeal No. 7966 of 2019, for convenience, are that Hindustan Zinc Limited is a public limited company incorporated under the Companies Act, 1956, and is engaged in the business of mining, smelting, and production of non-ferrous metals, including lead and zinc. The company operates multiple units at Chanderia, Dariba, and Zawar, which are supported by CPPs. In addition to captive power generation, the company also has agreements with Ajmer Vidhyut Vitran Nigam Limited (respondent No. 3 in Civil Appeal No. 7964 of 2019, respondent No. 2 in Civil Appeal No. 7965 of 2019, and respondent No. 3 in Civil Appeal No. 7966 of 2019) for the supply of power to meet its contractual demand. Under these agreements, Hindustan Zinc Limited is entitled to draw electricity up to 70 MW from the distribution licensee at its Dariba Zinc Smelter Unit at any time, as per its operational requirements.

3. Prior to the introduction of the Regulations of 2016, the appellants were availing open access under the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2004⁵ [Regulations of 2004] which permitted them to draw power from both, their captive generation and open access sources, without any reduction in the contracted demand from the distribution licensee. The open access facility under the Regulations of 2004 allowed the appellants to schedule their power requirements on a day-ahead basis for each 15-minute block, with the flexibility to meet shortfalls through their contracted demand from the distribution licensee.

4. RERC issued a draft of the proposed Regulations of 2016 through a public notice dated 06.07.2015 and invited comments and suggestions. Hindustan Zinc Limited, along with other stakeholders, submitted detailed objections, highlighting that certain provisions of the draft regulations were inconsistent with the objectives of the Act of 2003 and the principle of promoting open access. The Commission notified the Regulations of 2016 on 27.01.2016.

5. The key change introduced by the Regulations of 2016 was the imposition of limitations on the simultaneous drawal of power through open access and contracted demand from the distribution licensee. Under the new regime, if a consumer opted to procure power through open access, the contracted demand from the distribution licensee would be reduced by the quantum of power scheduled through open access. Additionally, the Regulations of 2016 imposed penalties for over-drawal and under-drawal from the contracted demand.

6. The appellants before the Jodhpur Bench of the High Court challenged several specific provisions of the Regulations of 2016 on the ground that they were arbitrary, unreasonable, and contrary to the statutory scheme of the Act of 2003.