Karnataka High Court strikes down Centre and state's green energy rules

Bengaluru: The Karnataka High Court has struck down the Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules (GEOA Rules), 2022 issued by the Central government and also the Karnataka Regulatory Commission (Terms and Conditions for Green Energy Open access) Regulations, 2022.

Justice N S Sanjay Gowda also directed the KERC to frame appropriate regulations if it so desires in the matter of granting of open access to green energy generators and consumers.

The petitioner companies are into Hydro Power generation and had entered into agreements for Wheeling and Banking with the transmission and distribution licensees.

The Rules were made applicable for generation, purchase and consumption of green energy, electrical energy from renewable sources of energy and provides for renewable purchase obligations on all obligated entities as well as GEOA and prescribes a procedure for the same. The Rules also provide for the establishment of a Nodal Agency and provide that banking shall be permitted only up to a month, at charges to be fixed by the appropriate Commission, in addition to also prescribing the manner in which charges are to be levied for Open Access for GEOA Consumers.

The petitioner companies argued that the Centre does not possess the power to frame the GEOA Rules, and had no role to play under the provisions of the Electricity Act in the matter of granting open access to the generating companies and hence the Rules framed by it were invalid.

The court noted that since the electricity policy, as it stands, does not contain any specific policy directive in the manner of granting open access, the Central government cannot get over this anomaly by falling upon the residuary power to frame rules and create a set of rules to regulate the open access to green energy generators and consumers. The court further issued directions to the KERC to examine the possibility of providing the annual banking facility as sought by the generating companies.

“The KERC could ensure that the generators do not take advantage of the annual banking facility, by holding that the generators would be entitled to energy charges as was prevailing on the date of injection into the grid and not the charges that are prevailing on the date they seek to withdraw the energy from the grid. This would ensure that the green energy generators do not hedge their profits by taking advantage of the annual banking facility and entitle themselves to a higher energy charge during periods when the demand for electricity is high and, consequently, higher electricity prices would be prevailing in the market,” the court said.