Ultra vires delegated rule-making under electricity law invalidated central open-access rules and dependent state regulations

Delegated legislation under the Electricity Act, 2003 cannot alter the statutory allocation of open-access and renewable-energy regulatory powers between the Central Government and the State Commission. The Karnataka High Court held that the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 exceeded the rule-making power under Section 176 because they sought to impose a binding supervisory framework on matters reserved to the regulator. Regulations and charge-fixing orders made only to conform to those Rules were therefore invalid. The Court also noted that annual electricity banking is not a vested statutory right and depends on the prevailing contractual and regulatory regime, subject to fresh regulation by the State Commission.

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Issues: (i) Whether the Central Government had competence under the Electricity Act, 2003 to frame the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 and thereby require State Commissions to align their regulations; (ii) Whether the Karnataka Electricity Regulatory Commission regulations framed pursuant to those Rules, and the consequential orders fixing open access charges, could survive; (iii) Whether the petitioners had a subsisting right to annual banking of electricity, or only such banking as could be granted under the prevailing contractual and regulatory regime.

Issue (i): Whether the Central Government had competence under the Electricity Act, 2003 to frame the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 and thereby require State Commissions to align their regulations?

Analysis: The statutory scheme assigns open access, wheeling charges, surcharge, intra-State transmission facilitation, and renewable-energy promotion within the State primarily to the State Commission. The rule-making power under Section 176 is ancillary and cannot be used to enlarge executive control or to displace the regulatory function specifically entrusted to the Commission. A delegated rule cannot amend the substantive allocation of power under Section 42(2) and related provisions, nor can it convert policy guidance into a binding supervisory regime over the regulator.

Conclusion: The Central Government lacked competence to frame the impugned GEOA Rules, 2022 in the manner adopted, and those Rules were struck down.

Issue (ii): Whether the Karnataka Electricity Regulatory Commission regulations framed pursuant to those Rules, and the consequential orders fixing open access charges, could survive?

Analysis: The Karnataka regulations were framed as a direct consequence of the impugned Central Rules and were not shown to be an independent exercise of regulatory judgment. Once the parent Rules were held beyond competence, the regulations made only to conform to them could not stand. The consequential charge-fixing orders, being founded on the invalid regulatory framework, also could not be sustained.

Conclusion: The Karnataka regulations and the consequential orders fixing open access charges were invalidated.

Issue (iii): Whether the petitioners had a subsisting right to annual banking of electricity, or only such banking as could be granted under the prevailing contractual and regulatory regime?

Analysis: The statute does not confer an inherent right to banking. Banking had been extended as a regulatory and contractual arrangement under earlier orders and agreements. Those agreements had a fixed tenure and had expired, and the earlier contractual arrangements could not be resurrected to defeat the later statutory regime. However, in the interregnum pending fresh regulation by the State Commission, the petitioners were entitled to continue only to the extent permitted by the Court's interim and final directions.

Conclusion: The petitioners were not found to have a vested statutory right to annual banking; only interim/mutual arrangements could operate pending fresh regulations.

Final Conclusion: The writ petitions succeeded in substance by invalidating the impugned central and state open-access framework, while leaving it open to the State Commission to frame fresh regulations consistent with the Electricity Act, 2003 and the National Electricity Policy and Tariff Policy.

Ratio Decidendi: Delegated legislation cannot be used to alter the statutory allocation of regulatory power or to impose obligations that the parent Act reserves to the regulator alone; any rule or regulation that transgresses that boundary is ultra vires.

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