The Central Government lacks the legislative competence to frame rules regarding open access in electricity, which is exclusively regulated by the State Commission under the Electricity Act.

ORDER :

Table of Contents

(I) BRIEF FACTS:

1. Petitioners are the Companies engaged in the business of Hydro Power generation who had entered into agreements for Wheeling and Banking with the transmission and distribution licensees.

2. They are before this Court challenging the validity of the Rules framed by the Central Government in the year 2022 called the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules 2022 (“the GEOA Rules”).

3. They are also challenging the Regulations framed by the Karnataka Electricity Regulatory Commission (“KERC”) in the year 2022 called the Karnataka Regulatory Commission (Terms and Conditions for Green Energy Open access) Regulations, 2022 (“KERC Regulations, 2022”).

4. Two of the petitioners established Mini Hydel Plants pursuant to orders passed by the Government of Karnataka before the enactment of the Karnataka Electricity Regulations, 1999 (“the KER 1999”) and the Electricity Act, 2003 (“the Electricity Act” or “the Act”).

5. They had also entered into agreements with the Government of Karnataka which were stated to be valid for a period of 30 years and which contained clauses stating that they would be liable to pay wheeling and banking charges as stipulated in the Government Order and the banking would be on a water year basis (annual banking) with a grace period of one month.

(II) CHRONOLOGY OF EVENTS RELATING TO OPEN ACCESS IN RESPECT OF MINI HYDEL PLANTS:

6. In the year 1995, in two cases in this batch of petitions, the State Government had accorded permission for establishment of mini-hydel plants even before the KER Act had been enacted and the State had entered into agreements with the petitioners, containing clauses stating that the term of the contract would be for 30 years and the charges for wheeling would be as per the Government orders. The agreements also stated that the companies would be entitled to annual banking facilities with a grace period of one month.

7. Pursuant to the enactment of the Electricity Act in the year 2003, the KERC, in exercise of the powers conferred under Section 181 of the Electricity Act, framed the Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2004 (“the 2004 Regulations”). These Regulations have been amended in 2006, 2014, 2015, 2017 and 2023.

8. The 2004 Regulations provided for 20 Regulations including Regulation 11 which provided for determination of Open Access Charges i.e. the Transmission Charges, Wheeling Charges, Surcharge, Additional surcharge and other charges.

9. On 09.06.2005, KERC passed an order determining the transmission charges, wheeling charges and cross-subsidy charges under Open Access. By this order, KERC taking into consideration that the Renewable Energy projects could not compete with conventional sources of energy had decided to continue the concessional wheeling charge which had been levied earlier at 5%. KERC also decided to allow annual banking facility in respect of wind and mini-hydel projects subject to the payment of difference of charges between the time of injection and time of withdrawal of the power, with banking charges of 2%.

10. On 11.07.2008, KERC approved the Standard Wheeling