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SC directs State Commissions to frame Regulations for determination of power tariff

A bench of cheif justice of India  directed all State Regulatory Commissions to frame Regulations under Section 181 of the Electricity Act (REUTERS)Premium
A bench of cheif justice of India directed all State Regulatory Commissions to frame Regulations under Section 181 of the Electricity Act (REUTERS)

  • A bench of Chief Justice of India Dhananjaya Y Chandrachud and justices AS Bopanna and JB Pardiwala directed all State Regulatory Commissions to frame Regulations under Section 181 of the Electricity Act

The Supreme Court has dismissed the appeal filed by the TATA Power Company Limited Transmission under Section 111 of the Act instituted by the appellant against a decision of Maharashtra Electricity Regulatory Commission (MERC) dated March 21, 2021.

A bench of Chief Justice of India Dhananjaya Y Chandrachud and justices AS Bopanna and JB Pardiwala directed all State Regulatory Commissions to frame Regulations under Section 181 of the Electricity Act on the terms and conditions for the determination of tariff within three months.

On 21 March 2021, MERC granted a transmission licence to Adani Electricity Mumbai Infra Limited (AEMIL) under Sections 14 and 15 of the Act for setting up a 1000 MW HVDC (VSC-based) link between 400 kV MSETCL Kudus and 220 kV AEML Aarey EHV Station.

The Supreme Court while deciding the issues, said, "We direct all State Regulatory Commissions to frame Regulations under Section 181 of the Act on the terms and conditions for determination of tariff within three months from the date of this judgment. While framing these guidelines on the determination of tariff, the Appropriate Commission shall be guided by the principles prescribed in Section 61, which also includes the NEP and NTP."

"Where the Appropriate Commission(s) has already framed regulations, they shall be amended to include provisions on the criteria for choosing the modalities to determine the tariff, in case they have not been already included," the court said.

The Commissions while being guided by the principles contained in Section 61 shall effectuate a balance that would create a sustainable model of electricity regulation in the States, the top court said.

"The Regulatory Commission shall curate to the specific needs of the State while framing these regulations. Further, the regulations framed must be in consonance with the objective of the Electricity Act 2003, which is to enhance the investment of private stakeholders in the electricity regulatory sector so as to create a sustainable and effective system of tariff determination that is cost-efficient so that such benefits percolate to the end consumers," the court said.

The court also ruled that Electricity Act 2003 provides the States sufficient flexibility to regulate the intra-state transmission systems, wherein the Appropriate State Commissions possess the power to determine and regulate tariffs. 

The Electricity Act 2003 seeks to distance the State Governments from the determination and regulation of tariffs, placing such power completely within the ambit of the Appropriate Commissions, it noted. Earlier the TATA Power Company Limited Transmission has challenged Maharashtra Electricity Regulatory Commission's (MERC) order before APTEL, inter alia, on the ground that the grant of the licence was not preceded by a TBCB process. TPC-T contended that the failure to adhere to a TBCB process pursuant to Section 63 was contrary to public interest and statutory mandate. APTEL dismissed the appeal. This has given rise to a statutory appeal under Section 125 of the Act.

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