top of page

Electricity Regulatory Commission have powers of reviewing the tariff and incentives – SC

TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED V M/S RAIN CALCINING LIMITED & OTHERS  – CIVIL APPEAL NO.4569 OF 2003 CIVIL APPEAL NOS.7029-7062 OF 2008

The appeal was brought to the Supreme Court of India before the bench consisting of Honourable Justice Arun Mishra, Honourable Justice M.R. Shah, and Honourable Justice B.R. Gavai

There were three batches of appeals; most of the questions were common, which arose for consideration. In the first batch of appeals, the question arose for consideration concerning the levy of wheeling charges by the appellant – Transmission Corporation of Andhra Pradesh Limited (APTRANSCO). In the second batch of appeals, the question arose for consideration regarding the competence of the APTRANSCO to levy the grid support charges. The outcome of the third batch of appeals depended on the outcome of the first batch of appeals. In the third batch of appeals, the question arose for consideration as to the continuance of incentives in respect of wheeling charges granted as per Government Order issued during the year 1997-1998, had to be continued, and whether Commission had the power to review them.

It was submitted on behalf of the appellants – APTRANSCO, Commission that transmission is regulated under the Reforms Act, 1998. The decision of the High Court was contrary to the provisions contained in Sections 11 and 13 and other provisions of Reforms Act, 1998. The Commission had the power to determine the tariff. Under the Reforms Act, 1998, certain powers are a combination of adjudicatory and inquisitorial, and some are legislative. It was further submitted on behalf of APTRANSCO that cost is involved in the maintenance, operation, upgradation, and transmission of electricity through the transmission and distribution system and network, for which infrastructure has to be created. Losses take place during transmission, which has to be accounted for, and transition loss is the loss of the system and has to be borne by the respondents.

Respondents submitted that in the case of drawl of the contract before 1998, APERC could not have gone into as it did not have jurisdiction in those cases. Even otherwise, where the agreements have been amended or entered after the Reforms Act, 1998, the Commission has no power to fix the wheeling charges as that is not explicitly provided under the provisions of the Reforms Act, 1998.  It was submitted on behalf of the licensees that proviso to Section 82(1) of the Electricity Act, 2003 provides for State Commission and on the strength of the provisions mentioned above, it was submitted that actions of the State Commission, as notified under the Electricity Regulatory Commission Act, 1998 (for short, “the Central Act”), would be saved to the extent they are not inconsistent with the provisions of the Electricity Act, 2003. Since APERC is the not State Commission under the Central Act, it cannot be held to possess the jurisdiction to levy wheeling charges. It is the State Commission which has the relevant authority under the Electricity Act, 2003. Section 22(1)(b) of the Central Act, specifically provides that State Commission is required to determine the tariff payable for the use of the transmission.

Whether the order of the High Court can be upheld with respect to grid support charges?

With respect to Grid Support Charges, it had been conceded by the learned counsel for the parties that the decision in the aforesaid batch of matters as to wheeling charges has to govern grid support charges as we have upheld the order of the Commission with respect to wheeling charges, the order of the High Court has to be set aside. In the agreements also there is a power where the Board could have fixed the Grid Support Charge unilaterally, but because of Reforms Act, 1998 came to be enacted, the application was filed in the Commission. After that, the Commission had passed the order in accordance with the law. We find no fault in the same. Thus, the order of the Commission concerning the Grid Support Charges had to be upheld. The judgment and order of the High Court were liable to be set aside concerning wheeling charges as well as Grid Support Charges.

Whether incentives were to be continued to the non- conventional energy?

The question involved in the third batch of appeals was whether incentives to be continued to the non-conventional energy. The tariff orders were passed in the years 2004-05, 2005-06, and 2006-09 by the APERC in the exercise of the power conferred under Section 62 of the Electricity Act, 2003. The appeals were preferred before the APTEL under Section 111 of the Electricity Act, 2003. The main question for consideration was whether Government Orders issued on 18.11.1997 and 22.12.1998, by the Andhra Pradesh Government, extending specific incentives to the producers of electricity from non-conventional energy resources, are binding and Doctrine of Promissory Estoppel against the Government and Commission was bound to give effect to them. Thus, it was found that the order of APTEL based on the Doctrine of Promissory Estoppel for continuing the benefit of Government Orders dated 18.11.1997 and 22.12.1998, cannot be said to be in accordance with the law. The order of APTEL was liable to be set-aside, and that passed by the APERC has to be restored.

The appeals were allowed by this Court, and this Court held that the Tribunal fell in error of law in concluding that Regulatory Commission had no powers either in law or otherwise of reviewing the tariff and so-called incentives. There was no unequivocal commitment to the respondent/ purchasers/ generators/ developers to bind the State for all times to come. There was no definite, unambiguous representation, hence plea of estoppel was not attracted.

The Honourable Court observed that the Commission constituted under the Reforms Act, 1998, had the power to determine the wheeling charges. The State Commission constituted under the Reforms Act, 1998 had the power to deal with the transmission. The expression “area of transmission” is defined under Section 2(a). Grant of transmission licenses by the Commission is dealt with in Section 15. The “licensee” or “licence holder” is a person holding a licence under Section 14 to transmit or supply energy, including APTRANSCO, as defined under Section 2(e). “Transmission licence” means a licence granted under Section 15(1)(a), and “transmit” has also been defined in Section 2(p). The Commission has extensive and pervasive power to deal with the transmission. This court further observed that in the absence of regulation, the Commission has the power of fixation of the tariff. It is not dependent upon the framing of the regulation.

Thereby, judgment was passed by the Honourable Supreme Court as under,

“We find that the order of APTEL based on the Doctrine of Promissory Estoppel for continuing the benefit of Government Orders dated 18.11.1997 and 22.12.1998, cannot be said to be in accordance with the law. The order of APTEL is liable to be set-aside, and that passed by the APERC has to be restored. Resultantly, we have to allow the appeals. The judgment and order passed by the High Court relating to wheeling charges and grid support charges and that passed by the APTEL regarding continuance of incentive as per G.O. MS dated 18.11.1997 and 22.12.1998, is set aside. The appeals are allowed, and the orders passed by APERC are restored. No costs.”

Tanvi Srivatsan

Comments


Articles

bottom of page