Electricity Act, 2003 – Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016 – Whether the Rajasthan Electricity Regulatory Commission (RERC) has the jurisdiction to regulate inter-state open access under the Electricity Act, 2003: Held: 1. s.79(1)(c) of the Act of 2003, defines the regulatory authority of the CERC over inter-state transmission of electricity – However, this provision does not strip State Commissions, including RERC, of their jurisdiction over intra-state aspects of open access – s.42(2) of the Act of 2003 expressly empowers State Commissions to regulate open access within their respective states, ensuring fair and non-discriminatory access to transmission and distribution networks within the state – Further, s.42(3) of the Act of 2003 provides that whenever a consumer, with premises within the area of supply of a distribution licensee, requires supply of electricity from a generating company other than such distribution licensee, such transmission and supply shall be in accordance with the regulations made by the State Commission. [Para 45]
2. The key determinant is not the source of power but its delivery, end-user, and consumption within Rajasthan's intra-state grid – The Act of 2003 provides a framework for demarcating responsibilities between CERC and State Commissions, ensuring that intra-state aspects of electricity regulation remain within the purview of State Commissions – The claim that only CERC has the authority to regulate inter-state open access cannot be accepted in light of the legislative intent behind the Act of 2003 – Therefore, RERC retains jurisdiction over intra-state transactions even if the power originates from another state. [Para 47]
3. Further, s.2(47) of the Act of 2003 defines open access as nondiscriminatory access to transmission and distribution systems, encompassing both interstate and intra-state transactions – The respondents argue that the statute does not differentiate between them for regulatory purposes, meaning that State Commissions naturally retain authority over open access within their jurisdictions – This interpretation aligns with s.42, which explicitly grants State Commissions the power to regulate open access for consumers in their states. [Para 48]
4. s.181 of the Act of 2003 empowers State Commissions to frame regulations necessary for implementing the provisions of the Act of 2003 – By granting State Commissions the authority to introduce and regulate open access, the legislature has clearly vested regulatory oversight with RERC in Rajasthan – The omission of any reference to CERC’s jurisdiction over open access consumers in s.42 of the Act is indicative of the legislature’s intent to keep such matters under State Commissions’ oversight, ensuring that electricity consumers and distribution networks within a state remain subject to state-level regulation. [Para 49]
5. Thus, the respondents’ argument is well-founded in statutory provisions, legislative intent, and the structural framework of the Act of 2003 – RERC’s authority to regulate intra-state aspects of open access transactions, even when electricity is sourced from another state, aligns with the Act’s objectives and ensures effective regulatory oversight. [Para 50]
Electricity Act, 2003 – Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016 – Whether the imposition of penalties for variations in drawal from contracted demand amounts to an unreasonable restriction on the right to open access u/s.42 of the Act of 2003:
Held: The electricity grid operates on principles of frequency stability and demand-supply balance – Any deviation from scheduled drawal or injection can lead to grid instability, potentially affecting all consumers – The impugned regulations, therefore, serve a critical function in preventing such disruptions by enforcing discipline among generators and consumers alike – The penalties imposed are a deterrent mechanism to prevent strategic gaming of the system and to ensure that all stakeholders adhere to scheduling norms – The State Commission’s role is to balance the rights of individual market participants with the broader objective of ensuring an efficient, reliable, and stable power supply to all consumers in the State. [Para 54]
Electricity Act, 2003 – Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016 – Whether Regulation 26(7) of Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016 is ultra vires for requiring an advance notice of 24 hours a day prior, thereby preventing urgent procurement and creating an artificial barrier to open access as protected by the Act of 2003:
Held: 1. The requirement of prior notice is a reasonable procedural safeguard that aligns with the objectives of the Act of 2003, particularly those laid out in Section 42, which envisages a structured approach to open access – The 24-hour notice period ensures that both transmission and distribution licensees, as well as load despatch centres, have adequate time to adjust their schedules and prevent system disturbances – Moreover, it prevents misuse by entities that may attempt to take advantage of realtime price fluctuations, thereby engaging in speculative trading rather than genuine demand based procurement – Further, the option of purchasing power from the real-time market and day-ahead market in need of urgent procurement is always available, and is not prevented by the impugned regulations. [Para 57]
2. Furthermore, the regulation does not create an insurmountable barrier to open access but rather seeks to bring order and predictability to its implementation – The requirement is uniformly applicable to all consumers, ensuring that no undue advantage is given to any particular category – Considering the technical and regulatory imperatives involved, the 24-hour advance notice condition under Regulation 26(7) cannot be considered ultra vires, as it falls within the regulatory domain of the State Commission to establish fair, transparent, and non-disruptive mechanisms for open access. [Para 58]
Electricity Act, 2003 – Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016 – Whether Regulation 21 is arbitrary and discriminatory, thereby discouraging captive power generation by creating unreasonable distinction between captive power plants (CPPs) and state distribution companies: Held: 1. The distinction between captive power generators and state DISCOMs is not arbitrary but arises from the structural differences in their roles and obligations – While captive generators primarily generate electricity for self-consumption, distribution companies serve a wider consumer base, requiring them to adhere to broader regulatory commitments, including universal supply obligations – As such, differential treatment based on the nature of their functions is legally justified and does not amount to unfair discrimination – Moreover, Regulation 21 does not impose undue restrictions on captive generators but ensures that their operations align with grid discipline, preventing any adverse impact on the larger power ecosystem. [Para 61]
2. Additionally, the principle of non-discrimination under the Act of 2003 does not mandate identical treatment for all entities but rather requires a rational basis for any differentiation – In this case, the regulatory conditions imposed on captive generators are aimed at ensuring a level playing field and preventing misuse of open access provisions – The regulatory framework ensures that captive generators contribute fairly to system stability without imposing additional burdens on distribution licensees and other grid participants – Thus, Regulation 21 is neither arbitrary nor discriminatory but rather a necessary and proportionate measure to balance the interests of various stakeholders in the electricity sector. [Para 62]
Electricity Act, 2003 – Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016 – Whether the appellants’ right to open access is foreclosed by the Regulations of 2016: Held: 1. A careful analysis of the Regulations of 2016 indicates that they primarily aim at maintaining the reliability of the electricity grid, ensuring fair pricing, and preventing speculative misuse of open access provisions – The requirement of advance notice for short-term open access, penalties for deviations from contracted demand, and specific conditions for captive power generators are all designed to create a structured and predictable electricity market – These provisions do not prevent eligible consumers from availing open access but instead ensure that they do so within a framework that safeguards the interests of all stakeholders, including distribution licensees and other consumers – Moreover, Section 181 of the Act of 2003 empowers State Commissions to frame regulations necessary for implementing statutory provisions, thereby validating the regulatory measures introduced by RERC. [Para 64]
2. Furthermore, the Act of 2003, envisages a balance between the rights of open access consumers and the operational concerns of the power sector – The Regulations of 2016, while imposing certain conditions, do not outright deny open access but ensure that its implementation is equitable and does not jeopardize grid discipline – Open access remains available to consumers who comply with regulatory prerequisites, including scheduling obligations and financial commitments – Thus, the appellants’ assertion that their right to open access is foreclosed is misplaced – The Regulations of 2016 are consistent with the legislative intent of the Act of 2003, ensuring that open access is exercised in a manner that does not compromise system stability, fairness, or economic viability – Therefore, the regulatory framework does not foreclose open access but rather operationalizes it within reasonable constraints essential for sustaining the electricity sector. [Para 65]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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