NEW DELHI: The Supreme Court has ruled that electricity regulators have exclusive jurisdiction to fix tariffs, but they must exercise these powers in line with government policies.
In a case over wind power incentives, a bench of Justices PS Narasimha and Atul S Chandurkar held that the Andhra Pradesh Electricity Regulatory Commission (APERC) was wrong to use a central subsidy meant to promote renewable energy investments to lower tariffs.
State electricity regulatory commissions (SERCs) must ensure such incentives are passed on to generators as intended even as tariff determination remains their “exclusive province,” it said, upholding a decision by the Appellate Tribunal for Electricity (Aptel).
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In this case, Southern Power Distribution Company of Andhra Pradesh vs Green Infra Wind Solutions, the Centre in 2009 had come up a generation-based incentive scheme that granted wind power generators an incentive of ? 0.50 per unit of electricity fed into the grid for 4-10 years, with a cap of ?6.20 million per megawatt. The grant of the incentive was intended to attract larger investment in the wind energy sector and increase the quantum of grid-interactive renewable power. Therefore, the incentive was complementary to the tariff approved by the regulatory commissions.
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APERC factored in this incentive while determining the tariff, following an appeal by the discom. Aptel, however, took a contrary view, ruling that the commission had no such power. The SC has held that the “tariff determination is the exclusive province of the regulatory commissions.”
“However, this regulatory power must be exercised as a collaborative enterprise. It must not be exercised in a manner that ignores the purpose and object of a policy or grant by other stakeholders,” the judgment stated. It said the electricity sector functions through the coordinated action of the Centre, state governments and independent regulatory commissions and “the powers of these duty bearers must be read harmoniously so that each operates within their sphere without rendering the other irrelevant.”
