SC upholds Himachal govt’s right to 18% free power from JSW
Holding that regulations cannot override freely negotiated contracts, the Supreme Court had said that JSW Hydro Energy Ltd must supply 18 per cent free electricity to the State of Himachal Pradesh as per the 1999 agreement, despite the Central Electricity Regulatory Commission (CERC) regulations capping free power at 13 per cent for tariff determination.
“We hold that CERC Regulations, 2019, do not prohibit respondent no. 1 (JSW Hydro Energy Ltd) from supplying free power beyond 13 per cent to the appellant-State of Himachal Pradesh, and not stand overridden by the operation of these regulations,” a Bench of Justice PS Narasimha and Justice Joymalya Bagchi said in its July 16 verdict.
Allowing an appeal filed by the State of Himachal Pradesh against the May 28, 2024 order of the Himachal Pradesh High Court, the Bench held that CERC tariff regulations did not override contractual obligations between a state and a generating company to supply free power beyond the regulatory cap of 13 per cent.
Writing the judgment for the Bench, Justice Narasimha faulted the high court for having entered into the domain of interpreting CERC regulations on tariff determination, saying the same fell within the exclusive domain of the CERC.
“The Electricity Act itself provides the appellate mechanisms by establishing a specialised and permanent tribunal, namely the APTEL, and an appeal before this court, against the CERC’s orders. In view of the existence of a statutory regulatory forum, the high court should not have entertained the writ petition by interpreting the CERC Regulations, 2019,” it noted.
JSW Hydro Energy Limited had moved the high court seeking modification of its implementation agreement with the Himachal Pradesh Government to limit its free power supply obligation to 13 per cent, as per CERC tariff regulations of 2019 even as the company was contractually bound to supply 18 per cent of net electricity generated to the state free of cost from 2023 to 2051.
Allowing the company’s petition, the high court had directed the state to align the contract with CERC norms.
On an appeal filed by the State of Himachal Pradesh, the top court concluded that the high court exceeded its jurisdiction by entertaining the petition as it fell within the jurisdiction of the CERC – a specialised regulator.
“The free power supply is a part of the consideration…for undertaking its commercial activity of power generation,” the top court said. It also rejected the company’s contention that the State was a “deemed licensee” under the Electricity Act, thereby falling within the scope of CERC’s regulatory jurisdiction.
Himachal Tribune