Supreme Court approves tariff based bids for waste to energy plant in Delhi

In its judgement, the apex court approved the Municipal Corporation of Delhi's authority to issue the tariff based bid and request for proposal for setting up the Waste to Energy project at Narela Bawana, Delhi.

New Delhi: The Supreme Court has said the power of State Electricity Regulatory Commission to adopt a particular tariff can't be curtailed by interpreting a provision of the Electricity Act to hold that this can be invoked by the Discoms or power generating companies.

A bench of Justices B R Gavai and K V Vishwanathan said when the provisions of Section 63 (determination of tariff by bidding process) of the Act are read in harmony with the provisions of Section 86 (1) (b) (function of the State Commission on regulating electricity purchase and procurement) of the Act, the powers of the State Commission cannot be curtailed by interpreting that the same can be invoked only by the Discoms or the generating companies.

In its judgment on January 2, 2025, the apex court approved the Municipal Corporation of Delhi's authority to issue the tariff based bid and request for proposal for setting up the Waste to Energy project at Narela Bawana, Delhi. The court also found no infirmity in the orders by the Delhi Electricity Regulatory Commission, allowing the bid tariff for the project.

The court allowed MCD's appeal against August 31, 2023 judgment by Appellate Tribunal for Electricity at New Delhi, which has set aside the Delhi Electricity Regulatory Commission's March 6 and 7, 2023 order.

The commission had dismissed a plea by Waste to Energy Research & Technology Council, questioning the authority of the MCD and approved the bid tariff of Rs 7.38/KWh for the project. It had directed the distribution licensee to negotiate the terms of the power purchase agreement with the MCD.

Having examined the matter on MCD's appeal, the bench found the APTEL upset the DERC's orders on hyper technical ground, and also failed to consider the project in question was in the larger public interest, providing for disposal of the huge quantity of waste generated in the city of Delhi.

"The APTEL has grossly erred in treating the MCD as a total stranger. The project was on Design, Build, Finance and Operate basis. The ownership of the said project was always to be with the MCD and the operation of the facility is required to be transferred back to the MCD after 25 years," the bench said.

The court found as factually not correct the reasoning given by the APTEL, that if the application of the MCD for adoption of tariff was held to be tenable, then it would amount to permitting any stranger to apply under Section 63 of the Electricity Act.

It also said the APTEL failed to take into consideration that the MCD was establishing the said project in order to perform its statutory obligations as it is mandated under the Solid Waste Management Rules, 2016, to construct, operate and maintain solid waste processing facilities.

"The plain reading of Section 63 of the Act would reveal that the appropriate Commission has to adopt the tariff only after being satisfied that such a tariff has been determined through a transparent process of bidding in accordance with the guidelines issued by the central government," the bench said.

On applications filed by Gagan Narang, the APTEL held that since the MCD was neither a distribution licensee nor a generating company, it had no jurisdiction to file an application under Section 63 of the Act for adoption of tariff.

"Under Section 63 of the Act, the appropriate Commission is entitled to adopt the tariff if such tariff has been determined through a transparent process of bidding in accordance with the guidelines issued by the central government. It could be seen that a plain reading of Section 63 of the Act would reveal that it does not restrict invoking of the provisions of Section 63 only to Discoms or generating companies," the bench said.

The court held the APTEL could not have read the provisions of Section 63 of the Act in isolation. The provisions of Section 63 will have to be read in harmony with the provisions of Section 86 (1) (b) (functions of the state commission) of the Act, it said.

Under Section 86 (1) (b) of the Act, a duty is cast upon the State Commission to regulate electricity purchase and procurement process of distribution licensees including the price at which electricity should be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State, the bench added.