Summary
The Court sustained MERC’s station-specific heat-rate norm for the appellant’s Dahanu plant against a discrimination challenge. Similar equipment specifications did not establish similar performance; historical efficiency, technical studies, achievable targets and consumer gains were legitimate considerations. Judicial review could address statutory breach or manifest arbitrariness but could not substitute the Court’s tariff assessment. The High Court was wrong, however, to treat the writ challenge as barred by the statutory appeal and to impose costs for pursuing it.
Issues
- Whether a writ challenging the validity of tariff regulations was maintainable despite an appeal concerning relaxation of operating norms.
- Whether station-specific heat-rate norms violated the National Tariff Policy or discriminated against an efficient plant.
- What review applies to an expert commission’s legislative tariff regulations.
- Whether parity in preceding and succeeding control periods compelled parity in the disputed period.
Provisions considered
- Section 61, particularly clauses (c), (d), (e) and (i), Electricity Act, 2003The commission must consider statutory guidance, including efficiency, reasonable cost recovery, consumer interests and the tariff policy, while balancing competing objectives. (¶¶ 22, 23, 24, 25, 26, 29, 30, 31)
- Regulation 44.2(d), Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011The Dahanu-specific heat-rate trajectory was upheld as grounded in performance data and relevant technical and policy considerations. (¶¶ 7, 8, 9, 26, 29, 30, 31, 32)
- Regulation 14.1, Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011The allocation of efficiency gains, read against the changed sharing ratio under the 2015 regulations, was relevant to the different control-period settings. (¶¶ 27, 28)
- Clause 5.3(f) read with clause 5.3(h)(2), National Tariff Policy, 2006Normative performance standards may reflect past performance and achievable efficiency; requiring normative rather than lower-of-actuals assessment did not mandate identical norms for all similarly designed units. (¶¶ 5, 24, 25, 26, 29)
Held
- A challenge to the validity of tariff regulations is for judicial review by the High Court, not an appeal before APTEL. The tribunal appeal sought relaxation, while the writ attacked validity; the appellant disclosed the appeal and did not pursue it further. The High Court’s maintainability objection and adverse costs were unjustified. (¶¶ 12, 13, 14, 15, 17, 18, 32)
- “Shall be guided” requires the commission to bear the statutory considerations in mind while balancing them. The tariff policy protects efficiency and investment as well as consumers, and permits norms related to past performance, technology, fuel, equipment vintage and achievable improvement. (¶¶ 22, 23, 24, 25, 26)
- Similarity of manufacturing specifications did not establish equivalence of performance. Technical studies and historical heat rates supported the Dahanu target with allowance for degradation and ageing; comparable methodology was applied to the other studied units. The plant-specific norm was not discriminatory. (¶¶ 19, 20, 26, 29)
- Efficiency gains were shared differently under the 2011 and 2015 regimes. This and the range of available policy choices prevented mechanically extending parity in preceding or succeeding periods into the disputed control period. (¶¶ 27, 28, 31)
- Judicial review permits correction of manifest unreasonableness or arbitrariness, statutory procedural failure, omission of mandatory factors or reliance on extraneous considerations. It does not permit substitution of the Court’s tariff determination for an expert commission’s considered decision. The requisite studies, consultations and policy considerations were addressed here. (¶¶ 30, 31, 32)
Result
Appeal disposed of: Regulation 44.2(d) upheld and dismissal of the writ on merits affirmed on the Supreme Court’s reasons. High Court’s finding of non-maintainability disapproved and its costs direction set aside. No order as to costs.