Defining Boundaries: High Court Limits State Agency Interference in Renewable Energy Certification

In a significant judgment delivered on October 9, 2025, the Himachal Pradesh High Court clarified the procedural boundaries governing the Renewable Energy Certificate (REC) mechanism. Justice Ajay Mohan Goel ruled that a State Agency’s role in the accreditation process is restricted to ministerial functions like preliminary scrutiny and does not extend to determining an applicant's final eligibility for the scheme.

The Backdrop: Chamba’s Hydro-Power Dispute

The case involved M/s Greenko Him Kailash Hydro Power Pvt. Limited, the operator of the Sahu Hydroelectric Project in District Chamba. Having entered into long-term power purchase agreements dating back to 2004, the petitioner sought to transition into the REC framework established by the Central Electricity Regulatory Commission (CERC) 2010 Regulations.

The dispute arose in 2019 when the petitioner applied for accreditation. The State Agency rejected the application, citing the project's existing long-term supply commitment as a bar to entry under the REC mechanism—a move that effectively usurped the power of the Central Agency responsible for certificate issuance.

The Arguments: Process vs. Power

Counsel for the petitioner argued that the State Agency’s mandate, as framed by the 2010 Regulations and subsequent guidelines, is strictly limited to conducting a preliminary "check-list" style scrutiny of applications. They contended that once the application forms are complete and compliant with procedural requirements, the State Agency has no legal authority to engage in an adjudicatory review of the project's substantive eligibility, which remains the prerogative of the Central Agency.

The respondent, represented by the State’s legal officers, maintained that their rejection was based on a justifiable reading of the 2010 Regulations, specifically regarding whether a project already tied into a fixed-tariff agreement could reap the benefits of an additional REC mechanism.

The Court’s Analysis: A Clear Division of Labor

Justice Ajay Mohan Goel found that the State Agency had fundamentally misunderstood its statutory function. By relying on Clause 5(1)(c) of the 2010 Regulations to reject the application, the State Agency had overstepped, as that provision explicitly concerns the qualifications assessed by the Central Agency during the registration phase.

The court emphasized that the CERC regulations create a distinct two-tier system: 1. State Level: Responsible for preliminary scrutiny—checking documents, verifying information completeness, and ensuring fees are paid within a seven-day window. 2. Central Level: The sole authority empowered to register entities and issue certificates.

Key Observations

The judgment clarifies the hierarchy of the REC process with several pointed remarks:

> "As far as the role of the State Agency is concerned, it has to process the application strictly in terms of the procedure... however, final decision as to whether or not the certificate has to be granted... is to be taken by the Central Agency and not the State Agency."

> "This extremely important aspect of the matter has been ignored by the respondent while rejecting the application."

> "The application for accreditation is to be assessed by the respondent in terms of communication dated 16.03.2018... the impugned order passed by the respondent is not sustainable in the eyes of law."

Implications for the Energy Sector

The High Court’s decision serves as a stern reminder to state regulatory bodies to adhere strictly to delegated functions. By quashing the rejection order and directing the State Agency to reconsider the application according to the prescribed procedure (Annexure R-4/B), the Court has reinforced the efficiency and intended order of the REC accreditation process. For renewable energy developers, this is a procedural victory that ensures their applications to the Central Agency are not prematurely stifled by state-level administrative overreach.

The order requires the Respondent to process the accreditation application within 30 days, upholding the administrative mandate that "checks and balances" must be applied, but they must not be allowed to mutate into roadblocks.