The State cannot grant financial incentives like rebates to distribution licensees for prompt payments while compelling generating companies to supply power, as this constitutes an unlawful financial advantage at the expense of the generating company's rights.

ORDER :

N.S. SANJAY GOWDA, J.

1. The petitioner herein is a company running sugar factories across the State, and also generates green power using bagasse. The excess power generated was being sold by the petitioner through the Indian Energy Exchange registered with the 4th respondent (mainly inter-State supply through open access). In this regard, clearance was obtained by the petitioner from the State Load Despatch Centre (“SLDC”) on 29.09.2023.

2. The petitioner, though initially did not generate requisite surplus power for sale, thereafter attempted to sell the same through open access, and this was denied by the 2nd respondent stating that due to imposition of the provisions of Section 11 of the ELECTRICITY ACT , 2003 (“the Act”), the petitioner’s request for NOC could not be considered.

3. While so, the State Government formulated a scheme under which it decided to supply power to power looms as below:

a. Free power – up to 10 HP and 250 units per month; and

b. At Rs.1.25/- per unit – between 10 HP and 20 HP up to 500 units per month.

4. In addition to the above, the State Government also came up with the Gruha Lakshmi Scheme which was implemented from of August, 2023.

5. While so, the State Government, in exercise of the powers conferred to it under Section 11 of the Act, proceeded to issue a direction to the generating companies to supply all the power generated to the distribution licencees, in view of an extraordinary circumstance faced by the State i.e., deficit rainfall. While issuing this direction, the State also imposed certain conditions regarding the rate at which the power was to be supplied, as an interim measure and subject to the ultimate determination of the KERC.

6. It also imposed a condition — which this petition is targeting — that the distribution licensees would have an incentive in the form of a rebate for prompt payment of the bills raised by the generating companies.

7. The petitioner, who is also a generating company, is aggrieved by this direction and has consequently filed the present petition challenging the legality of this direction. During the pendency of this petition, however, the State proceeded to withdraw the direction that it had issued and, thus, the original prayer made in the petition does not survive for consideration.

8. However, the petitioner contends that it has the right to maintain the petition, at least insofar as it relates to one of the conditions imposed in the direction, on the ground that the State did not possess the power to impose such a condition, and the licensees have, during the subsistence of this direction, availed the benefit of the condition and the same would be illegal, as a consequence of which the financial benefit that they have derived from the petitioner ought to be reimbursed.

9. In fact, the counsel appearing for the petitioner has filed a memo restricting his prayer only to the extent of the condition which granted rebate for prompt payment.

10. In my view, since a condition was imposed by which rebate was granted and since this rebate was also availed during the subsistence of the direction issued, the prayer of the petitioner insofar as it relates to the grant or rebate would survive for consideration.

11. The impugned condition, with which we are now concerned, reads as follows:

“Clause 1(d): Rebate of 2% shall be allowed on the bill amount if the payment is made wi