Regulatory tariff power and no estoppel from reviewable energy contracts, with duress allegations rejected for lack of proof.

The Electricity Act, 2003 and the Andhra Pradesh Electricity Reform Act, 1998 were read as conferring wide regulatory power on the Commission to determine tariff, fix the purchase price for power generated by non-conventional energy developers, and regulate procurement and third-party sales in the public interest. The Court held that policy guidelines and contractual arrangements did not oust that jurisdiction. It also found no clear, unequivocal promise capable of attracting promissory estoppel or legitimate expectation, because the arrangements were reviewable and contemplated price revision. Allegations that the power purchase agreements were executed under duress failed for want of evidence; the agreements remained valid and capable of regulatory review.

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Issues: (i) Whether the State Electricity Regulatory Commission had jurisdiction to determine tariff including the purchase price for electricity generated by non-conventional energy developers and to regulate sale of such power, including exclusion of third-party sales; (ii) Whether the doctrines of promissory estoppel and legitimate expectation prevented revision of incentives, tariff and purchase arrangements; (iii) Whether the Power Purchase Agreements were vitiated by duress and therefore could not support regulatory review.

Issue (i): Whether the State Electricity Regulatory Commission had jurisdiction to determine tariff including the purchase price for electricity generated by non-conventional energy developers and to regulate sale of such power, including exclusion of third-party sales

Analysis: The statutory scheme under the Electricity Act, 2003 and the Andhra Pradesh Electricity Reform Act, 1998 vested wide regulatory powers in the Commission to determine tariff, regulate procurement and issue directions consistent with the Act. The purchase price for power generated by private developers formed part of the tariff domain. The Court held that the Commission, in the facts of the case, could revise the tariff and the purchase price. The earlier policy framework and contractual arrangements did not oust that jurisdiction. The question of permitting third-party sales was also held to be capable of reconsideration by the Commission in accordance with law and public interest.

Conclusion: The issue was decided in favour of the appellants. The Commission had jurisdiction to determine tariff, including purchase price, and the Tribunal was wrong in holding otherwise.

Issue (ii): Whether the doctrines of promissory estoppel and legitimate expectation prevented revision of incentives, tariff and purchase arrangements

Analysis: The Court found no clear and unambiguous promise that could bind the State or the Commission indefinitely. The governmental guidelines and orders were treated as policy instruments subject to review, and the later PPAs themselves contemplated revision of price and review after specified periods. Since the arrangements were contractual and expressly reviewable, the doctrines of promissory estoppel and legitimate expectation could not be used to freeze the tariff or prevent regulatory reconsideration.

Conclusion: The issue was decided against the respondents. Neither promissory estoppel nor legitimate expectation barred revision of tariff or related incentives.

Issue (iii): Whether the Power Purchase Agreements were vitiated by duress and therefore could not support regulatory review

Analysis: The Court found no factual foundation or evidence to establish coercion or duress in the execution of the PPAs. The agreements had been executed knowingly, acted upon for a substantial period, and contained clauses recognising review by the competent authority. In the absence of pleadings and proof, the finding of duress recorded by the Tribunal could not stand.

Conclusion: The issue was decided against the respondents. The PPAs were not shown to be vitiated by duress.

Final Conclusion: The Tribunal's order was set aside, the Commission's jurisdiction was affirmed, and the matters were remitted for fresh determination of tariff and allied questions in accordance with law, while the concluded issues on estoppel and duress were left undisturbed.

Ratio Decidendi: Where the statute confers regulatory power to determine tariff and regulate procurement of electricity, the Commission may determine the purchase price of power from generating companies, and policy guidelines or contractual arrangements subject to review do not create an immutable promise enforceable by promissory estoppel or legitimate expectation absent a clear and unequivocal commitment.

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