Tariff cap on free power applies only to billing; contractual obligation to supply higher free power remains intact.
Note 3 of Regulation 55 of the CERC Tariff Regulations, 2019 operates only for tariff computation and billing: free energy to the home State is taken as 13% or actuals, whichever is less, for fixing saleable capacity and recoverable pass-through, but it does not prohibit actual contractual supply of free power above 13% or extinguish a prior Implementation Agreement. The regulatory cap limits tariff recovery alone, while the contractual free power obligation remains intact. The Electricity Act framework also places interpretation of tariff regulations and related contractual consequences within the specialised regulatory regime, so a writ petition seeking realignment of the Implementation Agreement on that basis was not maintainable before the High Court.
Issues: (i) Whether Note 3 of Regulation 55 of the CERC (Terms and Conditions of Tariff) Regulations, 2019 bars the generating company from supplying free power to the State beyond 13% and overrides the free power obligation under the Implementation Agreement; (ii) Whether the writ petition seeking alignment of the Implementation Agreement with the Regulations and the CERC order dated 17.03.2022 was maintainable before the High Court.
Issue (i): Whether Note 3 of Regulation 55 of the CERC (Terms and Conditions of Tariff) Regulations, 2019 bars the generating company from supplying free power to the State beyond 13% and overrides the free power obligation under the Implementation Agreement.
Analysis: Note 3 of Regulation 55, read with Regulation 44 and the tariff framework under the Electricity Act, 2003, operates for tariff computation and billing. It requires free energy for the home State to be taken as 13% or actual, whichever is less, for determining saleable capacity and the pass-through recoverable from beneficiaries. The regulation does not prohibit the actual contractual supply of free power above 13% and does not nullify a pre-existing contractual undertaking to supply a higher quantum. The generating company's contractual obligation under the Implementation Agreement therefore remains intact, while the regulatory cap limits only the tariff pass-through.
Conclusion: The Regulation does not bar supply beyond 13% and the Implementation Agreement is not overridden.
Issue (ii): Whether the writ petition seeking alignment of the Implementation Agreement with the Regulations and the CERC order dated 17.03.2022 was maintainable before the High Court.
Analysis: The Electricity Act, 2003 constitutes a complete regulatory code entrusting tariff determination, regulation-making, and interpretation of tariff regulations to the specialized regulator, with statutory appellate remedies available. The dispute involved interpretation of tariff regulations and their effect on contractual arrangements, which lay within the CERC's domain. The CERC's order dated 17.03.2022 only held that the PPA and PSAs were overridden to the extent inconsistent with the Regulations for tariff purposes and did not decide the Implementation Agreement as modified or extinguished. In these circumstances, the High Court ought not to have exercised writ jurisdiction to realign the contractual documents on the basis of the tariff regulations or the CERC order.
Conclusion: The writ petition was not maintainable.
Final Conclusion: The regulatory cap under Note 3 of Regulation 55 affects tariff computation alone, not the parties' contractual free power obligation, and the High Court could not rewrite the Implementation Agreement in writ proceedings.
Ratio Decidendi: A tariff regulation that caps free energy for tariff purposes does not, by itself, extinguish or amend a pre-existing contractual obligation to supply a higher quantum of free power, and disputes on the interpretation and effect of such tariff regulations must ordinarily be pursued before the specialized regulatory forum and statutory appellate mechanism.
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