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Supreme Court dismisses Tata Power's plea on award of Rs 7,000 Cr transmission contract to Adani

The bench also asked the state regulatory commissions to frame regulations for determination of tariff within three months
Last Updated 23 November 2022, 15:49 IST

The Supreme Court on Wednesday directed the state's power regulatory commissions to frame regulations for the determination of tariffs within three months to effectuate a balance for creating a sustainable model of electricity regulation in the states.

The top court dismissed an appeal filed by Tata Power Company Ltd against the Maharashtra power regulator’s decision to award a Rs 7,000-crore transmission contract on a nomination basis to Adani Electricity in March last year.

A bench of Chief Justice D Y Chandrachud, A S Bopanna and J B Pardiwala also declared that the Electricity Act 2003 provided the States sufficient flexibility to regulate the intra-state transmission systems, allowing the State Commissions the power to determine and regulate tariffs, insulating the state governments from the process.

The bench also asked the state regulatory commissions to frame regulations under Section 181 of the Act for the determination of tariffs within three months. The Commissions having already framed tariff regulations are supposed to amend them to include provisions on the criteria for choosing the modalities to determine the tariff, it added.

The top court said that the Commissions shall “effectuate a balance that would create a sustainable model of electricity regulation in the states” which must be in consonance with the objective of the Electricity Act.

"This is to enhance the investment of private stakeholders 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 bench said.

Tata Power questioned the Maharashtra Electricity Regulatory Commission's (MERC) decision on how the transmission license for such a large infrastructure project to build a 1,000-mw high-voltage direct current (HVDC) link between 400 KV Kudus and 220 KV Aarey EHV station could be awarded without following the process of Tariff Based Competitive Bidding (TBCB) route and by “excluding other developers.”

In its decision, the court, however, upheld Aptel’s (Appellate Tribunal for Electricity) February 18 order that ruled that MERC’s decision to choose RTM (regulate tariff mode) route under Section 62 of the Electricity Act 2003 to award the transmission contract cannot be termed as "incorrect, perverse or inappropriate."

The court also said the 2003 Act or the policy framework, particularly National Tariff Policy 2016, along with the Maharashtra government’s resolution (GR) of January 4, 2019, did not make it binding upon MERC to allot the HVDC project only through the TBCB route.

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(Published 23 November 2022, 15:49 IST)

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