Summary
MERC licensed an Adani subsidiary to build a 1000 MW HVDC link from Kudus to Aarey to carry bulk power into Mumbai, with tariff under the regulated route in Section 62 of the Electricity Act, 2003. Tata Power argued that competitive bidding under Section 63 was compulsory under the National Tariff Policy 2016 and a 2019 Maharashtra resolution. APTEL and the Supreme Court rejected this. Sections 62 and 63 are alternative routes. Section 63's non-obstante clause bites only once bidding has discovered a tariff, and the choice of route is for the State Commission. The Tariff Policy is a material consideration, not a command, so with no threshold or regulations notified, MERC could choose either route. The project was an existing one, and the resolution was not a Section 108 direction. All State Commissions were told to frame tariff regulations within three months.
Issues
- Whether Section 63 (tariff by competitive bidding) is the dominant route for tariff determination under the Electricity Act, 2003.
- Whether the National Tariff Policy 2016 and the Maharashtra resolution of 04.01.2019 bound MERC to award the Kudus-Aarey HVDC project through competitive bidding.
Provisions considered
- Sections 61, 62 and 63, Electricity Act, 2003Sections 62 and 63 are alternative modes; Section 63 operates after bidding has determined a tariff, which the Commission must adopt if the process was transparent and guideline-compliant; the criteria for choosing the route are for the Commission under Section 61 or regulations under Section 181. (¶¶ 70, 71, 72, 73, 74, 75, 77)
- Sections 86(1)(a), 86(4) and 181, Electricity Act, 2003Absent regulations or guidelines, the State Commission chooses the modality under its general regulatory power, 'guided by' the Tariff Policy, which is a material consideration but not the only one (Reliance Infrastructure). (¶¶ 85, 87, 88, 94, 99, 100)
- Sections 108 and 125, Electricity Act, 2003The State resolution was not a policy direction to the Commission under Section 108; under Section 125, concurrent findings of MERC and APTEL that the project is existing cannot be reopened. (¶¶ 106.2, 111, 112)
Held
- The Act prescribes no dominant method of tariff determination; the non-obstante clause in Section 63 bars the Commission from negating a tariff already discovered by transparent bidding, and Energy Watchdog does not hold otherwise. (¶¶ 74, 76, 77, 128)
- 'Shall be guided' makes the Tariff Policy a material consideration; with MERC having notified neither the NTP 2016 threshold nor regulations on modality, it could award the project under Section 62 or Section 63. (¶¶ 94, 96, 99, 100, 128)
- Viewed holistically, the HVDC scheme, with the same proponent and pursued since 2009 despite the STU's flip-flops between HVDC and HVAC, is an existing project; the resolution binds the STU, which acted on the Empowered Committee's directions, but is not a Section 108 direction binding MERC. (¶¶ 106, 106.2.4, 112, 127)
- Noting the STU's ad hoc functioning and the absence of regulations, the Court directed all State Commissions to frame or amend regulations under Section 181 within three months, including criteria for choosing the tariff route, guided by Section 61. (¶¶ 130, 131)
Result
Civil Appeal No. 1933 of 2022 dismissed, upholding APTEL's judgment dated 18.02.2022 in Appeal No. 280 of 2021 and MERC's grant of the transmission licence; all State Electricity Regulatory Commissions directed to frame tariff regulations under Section 181 within three months.