Electricity Act, 2003 – s.86(1)(b) – Mandate of, binding – Appellant was to establish a Hydro Electric Power Project of 3 MW capacity (revised capacity of 4.90 MW) – PPA fixed the price to be paid by the HPSEB to the appellant at a fixed rate of 2.50/- per kWh – Under their supplementary PPA dtd. 10.09.2010, the appellant and HPSEB enhanced the tariff from ₹2.50/- per kWh to ₹2.95/- per kWh without the Commission’s review and approval – Appellant and the HPSEB, if were bound to approach the Commission for its approval before effecting enhancement of the tariff stipulated in the PPA dtd. 11.03.2008: Held: 1.1 Yes – Fixing of the price for the purchase of electricity is not a matter of private negotiation and agreement between a generating company and a distribution licensee – The price as well as the agreement, i.e., PPA, incorporating such price and providing for purchase of electricity at that price necessarily have to be reviewed and approved by the State Commission u/s.86(1) (b). [Para 26]
1.2 A generating company and a distribution licensee cannot, by private agreement, execute a PPA on their own or stipulate tariff therein as per their choice, for supply of electricity within a State, without seeking the review and approval of the Electricity Regulatory Commission u/s.86(1) (b). [Para 31]
1.3 The order dated 09.02.2010 passed by the Commission, without reference to the appellant’s case, required only those existing PPAs which stipulated the tariff of ₹2.87/- per kWh to be amended so as to give effect to the enhancement of tariff from ₹2.87/- per kWh to ₹2.95/- per kWh – This order had no application at all to the case of the appellant as its PPA dated 11.03.2008 did not stipulate the tariff of ₹2.87/- per kWh. [Para 26]
1.4 Thus, the appellant and the HPSEB were bound to approach the Commission to secure its approval before they could effect any enhancement of the tariff stipulated in the PPA dated 11.03.2008 – Without doing so, the appellant and the HPSEB on their own and without the Commission’s review and approval, enhanced the tariff from ₹2.50/- per kWh to ₹2.95/- per kWh under their supplementary PPA dated 10.09.2010. [Para 26]
1.5 Thus, the Commission was fully justified in ignoring the supplementary PPA dated 10.09.2010 and asserting that it could not enforce it – However, the APTEL overlooked this crucial aspect and held that, insofar as the additional 1.90 MW plant was concerned, the supplementary PPA dated 10.09.2010 can be given effect to, by applying to it the tariff of 2.95/- stipulated therein. [Para 27]
1.6 The observation of the APTEL that no adverse inference could be drawn against the appellant for not obtaining the approval of the Commission for the tariff agreed to by the parties under this supplementary PPA 10.09.2010 overlooked the binding mandate of s.86(1)(b). [Para 27]
1.7 Appellant was granted relief by the APTEL, ignoring the mandate of s.86(1)(b) but the HPSEB allowed the same to attain finality by not filing an appeal – No interference at this late stage – Plea of the appellant that it should be extended the enhanced tariff of ₹2.95/- per kWh for the entire project, including the 3 MW plant covered by the PPA dated 30.03.2000, is bereft of merit. [Paras 26, 27, 31]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.