State Electricity Regulatory Commissions possess full autonomy to frame RPO regulations, but under Section 86(4) of the Electricity Act, they are statutorily obligated to consider the National Tariff Policy and Union Ministry directives as material factors when exercising their regulatory functions.

Per DHIRAJ SINGH THAKUR, CJ:

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The petitioner in the present Writ Petition challenges inter alia the validity and vires of Regulation 3.3 of the Andhra Pradesh Electricity Regulatory Commission Renewable Power Purchase Obligation (Compliance by purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2017 and 2022, issued by the Andhra Pradesh Electricity Regulatory Commission (for short, “the APERC”).

2. With a view to understand in the correct perspective the background in which the present controversy arises, it is necessary to give in brief the material facts:

The petitioner is engaged in the business of manufacturing and export of manganese – based Ferro Alloys which is a primary element of steel making. For this the petitioner claims to operate the Ferro Alloys Plant at Vizianagaram in Andhra Pradesh. The petitioner also claims to operate an 80 MW Captive Power Plant within the premises of the Ferro Alloy Plant. The petitioner further claims that it synchronized its Captive Power Plant on 03.02.2013 and therefore, fell within the ambit of Ministry of Power‟s directive dated 01.10.2019, reference whereto shall be made in the later paragraphs.

3. At this stage, it is also deemed apt to refer to the statutory provisions which are relevant for the decision in the instant case.

The Electricity Act, 2003 (for short, “the Act of 2003”) was enacted with a view to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and also for taking measures conducive to the development of the electricity industry, rationalisation of electricity tariff and for constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and matters connected therewith.

4. Before the promulgation of the Act of 2003, the electricity supply in India was governed by three enactments namely the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998.

5. While the Indian Electricity Act, 1910 created the basic framework for electricity supply in India, the Electricity (Supply) Act, 1948 envisaged the creation of State Electricity Boards, on whom a duty was enjoined to arrange the supply of electricity. However, the performance of SEBs is said to have deteriorated on account of various factors and in that backdrop with a view to encourage private sector participation in generation, transmission and distribution and with the objective of distancing the regulatory responsibilities from the Government to the Regulatory Commissions and with a view to harmonise and rationalise the provisions of the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998, there was a need felt for self-contained comprehensive legislation which finally assumed the shape of the Electricity Act, 2003.

6. At this stage, it would be apt to refer to some of the provisions of the Act of 2003:

While Section 2 of the Act pertains to definitions, Section 3 en