Case Note & Summary
The present appeal arises from a judgment of the Appellate Tribunal for Electricity (APTEL) dated 3rd November 2020, which dismissed the appeal filed by Haryana Utilities (Uttar Haryana Bijli Vitran Nigam Ltd. and Dakshin Haryana Bijli Vitran Nigam Ltd.) and upheld the order of the Central Electricity Regulatory Commission (CERC) dated 31st May 2018 in Petition No. 97/MP/2017. The Haryana Utilities, distribution licensees in Haryana, had entered into Power Purchase Agreements (PPAs) on 7th August 2008 with Adani Power Mundra Limited (AP(M)L) for procurement of 1424 MW capacity from generating units at Mundra, Gujarat, pursuant to a competitive bidding process under Section 63 of the Electricity Act, 2003. AP(M)L filed Petition No. 155/MP/2012 before CERC seeking increase in tariff on grounds including change in Indonesian coal pricing regulations (benchmark price for coal export) and force majeure under Articles 12 and 13 of the PPAs. CERC passed orders on 2nd April 2013 and 21st February 2014 granting compensatory tariff, which were challenged before APTEL in a batch of appeals led by Appeal No. 100 of 2013. APTEL's order dated 7th April 2016 was further challenged in the Supreme Court in Energy Watchdog v. Central Electricity Regulatory Commission and others. Subsequently, CERC passed the impugned order dated 31st May 2018 in Petition No. 97/MP/2017, which was upheld by APTEL on 3rd November 2020. The Haryana Utilities appealed to the Supreme Court. The legal issues centered on whether CERC had the power to grant compensatory tariff under Section 63 of the Electricity Act, 2003, and whether the Indonesian regulations constituted a change in law or force majeure event. The Haryana Utilities argued that the tariff was fixed through competitive bidding and could not be altered, while AP(M)L contended that the change in Indonesian law was unforeseen and entitled them to relief. The Supreme Court, after considering the submissions, dismissed the appeal, holding that CERC and APTEL had correctly applied the law and that the compensatory tariff was justified due to the change in law and force majeure events. The Court affirmed the concurrent findings and dismissed the appeal with no order as to costs.
Headnote
A) Electricity Law - Compensatory Tariff - Change in Law - Section 63 Electricity Act, 2003 - The issue pertained to whether CERC could grant compensatory tariff under Section 63 of the Electricity Act, 2003, read with Standard Bidding Guidelines, due to change in Indonesian coal pricing regulations. The Supreme Court held that CERC has the power to grant compensatory tariff to mitigate the impact of change in law events, as such events are covered under Article 13 of the PPAs. (Paras 1-7) B) Electricity Law - Force Majeure - Article 12 of PPA - The issue was whether the Indonesian coal pricing regulations constituted a force majeure event under Article 12 of the PPAs. The Court held that the change in Indonesian law was a force majeure event, and CERC was justified in granting relief. (Paras 5-7) C) Electricity Law - Appellate Jurisdiction - APTEL - The appeal challenged the APTEL order dated 3rd November 2020, which upheld CERC's order dated 31st May 2018. The Supreme Court dismissed the appeal, affirming the concurrent findings of CERC and APTEL. (Paras 1-2)
Issue of Consideration
Whether the Appellate Tribunal for Electricity (APTEL) was correct in upholding the Central Electricity Regulatory Commission's (CERC) order granting compensatory tariff to Adani Power Mundra Limited due to change in Indonesian coal pricing regulations and force majeure events under the Power Purchase Agreements.
Final Decision
The Supreme Court dismissed the appeal, affirming the orders of CERC and APTEL, and held that the compensatory tariff was justified due to change in law and force majeure events.
Law Points
- Compensatory tariff
- Change in law
- Force majeure
- Section 63 Electricity Act
- 2003
- Standard Bidding Guidelines
- Power Purchase Agreement
- Appellate Tribunal for Electricity
- Central Electricity Regulatory Commission
