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2017 (10) TMI 1533

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....nd 64 of the Act are of particular relevance. :- "61. Tariff regulations.-The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:- (a) the principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; (b) the generation, transmission, distribution and supply of electricity are conducted on commercial principles; (c) the factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments; (d) safeguarding of consumers' interest and at the same time, recovery of the cost of electricity in a reasonable manner; (e) the principles rewarding efficiency in performance; (f) multi-year tariff principles; (g) that the tariff progressively reflects the cost of supply of electricity and also reduces cross-subsidies in the manner specified by the Appropriate Commission; (h) the promotion of co-generation and generation of electricity from renewable sources of energy; (i) the Nati....

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....ply with such procedure as may be specified for calculating the expected revenues from the tariff and charges which he or it is permitted to recover. (6) If any licensee or a generating company recoversa price or charge exceeding the tariff determined under this section, the excess amount shall be recoverable by the person who has paid such price or charge along with interest equivalent to the bank rate without prejudice to any other liability incurred by the licensee. xxx xxx xxx 64. Procedure for tariff order.- (1) An application for determination of tariff under section 62 shall be made by a generating company or licensee in such manner and accompanied by such fee, as may be determined by regulations. (2) Every applicant shall publish the application, in such abridged form and manner, as may be specified by the Appropriate Commission. (3) The Appropriate Commission shall, within onehundred and twenty days from receipt of an application under sub-section (1) and after considering all suggestions and objections received from the public,- (a) issue a tariff order accepting the application with such modifications or such conditions as may be specified in that order; (....

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....mpanies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State; (c) facilitate intra-State transmission and wheeling of electricity; (d) issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders with respect to their operations within the State; (e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee; (f) adjudicate upon the disputes between the licensees and generating companies and to refer any dispute for arbitration; (g) levy fee for the purposes of this Act; (h) specify State Grid Code consistent with the Grid Code specified under clause (h) of sub-section (1) of section 79; (i) specify or enforce standards with respect to quality, continuity and reliability of service by licensees; (j) fix the trading margin in the intra-State trading of electricity, if c....

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....s. To the extent relevant, the Section reads as follows: "181. Powers of State Commissions to make regulations.- (1) The State Commissions may, by notification, make regulations consistent with this Act and the rules generally to carry out the provisions of this Act. (2) In particular and without prejudice to the generality of the power contained in subsection (1), such regulations may provide for all or any of the following matters, namely:- xxx xxx xxx (zl) rules of procedure for transaction of business under sub-section (1) of section 92;" xxx xxx xxx (zp) any other matter which is to be, or may be, specified." (Emphasis Supplied) 9. As per Notification No. 2 of 2004 published on 25.08.2004, the Gujarat Electricity Regulatory Commission has notified the Gujarat Electricity Regulatory Commission (Conduct of Business) Regulations. Regulations 80 to 82 provide for saving of inherent power of the Commission, which read as follows: "80. Nothing in these Regulations shall be deemed to limit or otherwise affect the inherent power of the Commission to make such orders as may be necessary for ends of justice or to prevent the abuse of the process of the Commission. 81. ....

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...."ARTICLE 8 FORCE MAJEURE 8.1 Force Majeure Events (a) Neither Party shall be responsible or liable for or deemed in breach hereof because of any delay or failure in the performance of its obligations hereunder (except for obligations to pay money due prior to occurrence of Force Majeure events under this Agreement) or failure to meet milestone dates due to any event or circumstance (a "Force Majeure Event") beyond the reasonable control of the Party experiencing such delay or failure, including the occurrence of any the following: (i) acts of God; (ii) typhoons, floods, lightening, cyclone, hurricane,drought, famine, epidemic, plague or other natural calamities; (iii) acts of war (whether declared or undeclared),invasion or civil unrest; (iv) any requirement, actions or omission to actpursuant to any judgment or order of any court or judicial authority in India (provided such requirement, or action or omission to act is not due to the breach by the Power Producer or GUVNL of any Law or any of their respective obligations under this Agreement); (v) inability despite complying with all legal requirements to obtain, renew or maintain required licenses or Legal Approvals; ....

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....Agreement (hereinafter referred to as "the SPPA") was entered into by the parties on 10.05.2011. Clauses 2.3 and 2.4 of the SPPA read as follows :- "2.3. Since M/s. SSCPCIPL have changed the location of the Solar Power Project after lapse of significant time, non-availability of Transmission system shall not be considered as a ground for non-levy of Liquidated Damages. M/s. SSCPCIPL shall pay Liquidated Damages even in case of non-availability of transmission system for evacuation of power by Schedule Commercial Operation Date. 2.4. All other terms and conditions including tariff of Power Purchase Agreement dated 30 th April 2010 between GUVNL and M/s. SSCPCIPL shall remain unchanged shall apply mutatis mutandis." (Emphasis Supplied) 15. It is also necessary to understand how this matter reached this Court. Close to the scheduled commercial operation date, Respondent No. 1 requested the Commission for an extension of the control period. The petition to the relevant extent reads as follows. "12. While the Petitioner is making best efforts to overcome the delays as much as possible, it would not be feasible to complete the project within the time stipulated. The Petitioner ha....

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....ked for one month and some others have asked as long as six months. The petitioners have not been able to show that there has been a problem which is industry-wide and spread over the whole State or a major part of the State, necessitating an extension of the control period. On the other hand, a number of projects have been commissioned or are likely to be commissioned within the control period indicating that the issues raised by the petitioners are not industry- wide. If some developers could not complete the projects, it is not adequate justification why the tariff order should be modified for extending the control period to give relief to some project developers. This becomes more anomalous especially when a discussion paper has already been issued, and public hearing has already been completed for issue of the tariff order for the next control period. Further, the issues which have been raised can, if they so desire be addressed by the parties concerned only within the framework and the terms and conditions of Power Purchase Agreement. If they invoke Force Majeure conditions, it is for them to establish the existence of such conditions, following the procedure prescribed in th....

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....le ramifications across the State in respect of the renewable sources of energy there cannot be extension of control period by general order is, to say the least, not a legal approach and such an approach would defeat the very spirit of the law. The GUVNL and the Govt. of Gujarat accepted the proposition that inherent power can be exercised to a genuine problem. In paragraph 10.7 of the order impugned, the Commission has observed "Even if we do not take into cognizance the above cited decisions of the TNERC, the provisions of Regulation 80 of the Commission's Regulations, Section 151 of the Civil Procedure Code and related decisions of the Hon'ble Supreme Court make it abundantly clear that the Commission has inherent power to issue any order, to meet the end of justice, if it is not inconsistent with the relevant provisions of the Regulations/Act. This power is not limited to only procedural matters." This observation makes it clear that Commission was dealing with the petitions by virtue of the power expressly given to the Commission by their own Regulations to exercise inherent power. The petitions of the two appellants were not the ones under section 86 (1) (b) of the Elect....

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....rdless of whether wide scale ramifications across the State happen or do not happen went beyond the control of a developer then exercise of the inherent power which the Commission does have in their statute may be exercised but each case has to be decided on its own merit. The existence of force-majeure condition definitely comes within the framework of the Power Purchase Agreement but exercise of inherent power is always case-specific and it cannot be equated with force-majeure. Again extension of control period cannot by any stretch of imagination would amount to amendment of the Tariff Order. Amendment of the Tariff Order by virtue of section 62 (4) of the Electricity Act, 2003 was not prayed for. Since in every venture there is allocation of risk, it cannot be said that even if a certain developer experiences hurdles beyond his control, he has to abide by such hurdles. When fact in each case is hotly contested by a counter fact or denial, justice demands that each fact has to be separately dealt with and decided. It is the Commission which is alone competent to scrutinise the merits and demerits of each fact in each of the two Appeals. It is the Commission that has the infrastr....

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....ctivities of the Solar Power Project and completed the same which was recognized by the Chief Electrical Inspector in its letter dated 17.2.2012 and 13.03.2012 stating that the 8.64 MW Solar Power PV Project of the petitioner was ready on 1.02.2012 and 1.48 MW Solar PV Power Project of the petitioner was ready for energisation on 21.02.2012. Therefore, it is a clear case in which the petitioner was unable to commission the above capacity of the power plant due to reasons beyond its control. The prayer of the petitioner to extend the control period of order No.2 of 2010 dated 29.1.2010 upto 30 th April, 2012 is valid and the same is allowed to provide the justice to the petitioner whose project was delayed. xxx xxx xxx 11.28. We observe that the Article 8 of the PPA sets out the force majeure conditions which may restrain the project developer from completing the project in time and consequences of such delay. On the other hand, the order dated 29.01.2010 determines the generic tariff payable to the solar projects commissioned during the control period of order. In the present case, the petitioner has not raised any dispute and only seeks extension of the control period. As such,....

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....2003 or under the Conduct of Business Regulations, 2004 to pass such order as the State Commission may deem fit and appropriate in the interest of justice and discharge its functions under the Electricity Act, 2003. The Conduct of Business Regulations, 2004 provide inherent powers to the State Commission to pass any order it deem fit and proper to meet the ends of justice or to prevent abuse of the process of the court. The State Commission has liberty to exercise its inherent powers if the exercise of inherent power is not in any way in conflict with what has been expressly provided in the Civil Procedure Code or against the intentions of the legislature which means that the inherent power is not to be exercised in a manner which will be contrary to or different from the procedure expressly provided in the Code. 10.12 Regulation 85 of the Conduct of Business Regulations, 2004 dealing with Extension or abridgement of time prescribed fairly provide that subject to the provisions of the Acts, the time prescribed by these Regulations or by order of the Commission for doing any act may be extended (whether it has already expired or not) or abridged for sufficient reason by order of t....

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....espondent 2 and the Appellate Tribunal failed to notice and the first respondent conveniently ignored one crucial condition of the PPA contained in the last sentence of Para 5.2 of the PPA: "In case, commissioning of solar power project is delayed beyond 31-12-2011, GUVNL shall pay the tariff as determined by the Hon'ble GERC for solar projects effective on the date of commissioning of solar power project or abovementioned tariff, whichever is lower." The said stipulation clearly envisaged a situation where notwithstanding the contract between the parties (the PPA), there is a possibility of the first respondent not being able to commence the generation of electricity within the "control period" stipulated in the First Tariff Order. It also visualised that for the subsequent control period, the tariffs payable to a Projects/power producers (similarly situated as the first respondent) could be different. In recognition of the said two factors, the PPA clearly stipulated that in such a situation, the first respondent would be entitled only for lower of the two tariffs. Unfortunately, the said stipulation is totally overlooked by the second respondent and the Appellate Tribunal. T....

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....of this Court expressed in paras 36 and 64 of A.P. TRANSCO v. Sai Renewable Power (P) Ltd. This, of course, is subject to determination of price of power in open access (Section 42) or in the case of open bidding (Section 63). In the present case, admittedly, the tariff incorporated in PPA between the generating company and the distribution licensee is the tariff fixed by the State Regulatory Commission in exercise of its statutory powers. In such a situation it is not possible to hold that the tariff agreed by and between the parties, though finds mention in a contractual context, is the result of an act of volition of the parties which can, in no case, be altered except by mutual consent. Rather, it is a determination made in the exercise of statutory powers which got incorporated in a mutual agreement between the two parties involved. xxx xxx xxx 16. When the tariff order itself is subject to periodic review it is difficult to see how incorporation of a particular tariff prevailing on the date of commissioning of the power project can be understood to bind the power producer for the entire duration of the plant life (20 years) as has been envisaged by Clause 4.6 of PPA in the....

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....n while exercising its functions and powers. Under Section 92, the proceedings of the Commission are to be governed by what is specified in the appropriate Regulation with regard to the transaction of business at its meetings. It is that Regulation which is referred to under Section 181 (zl) "rules of procedure for transaction of business under sub-section (1) of Section 92". Under Section 181(zp) other matters also can be specified. Section 2(62) defines "specified" as "specified by regulations made by the Appropriate Commission or the Authority, as the case may be, under this Act". 31. Section 94 provides that the Appropriate Commission shall be vested with certain powers as are vested in a civil court, only in six specified areas. Under Section 94(1)(g), the Commission has the powers of a civil court in respect of "any other matter which may be prescribed". Under Section 2(52) "prescribed means prescribed by rules made by the Appropriate Government under this Act". 32. Regulations 80 to 82 are instances of such powers specified by the Commission. Regulation 80 has provided for the inherent power of the Commission to the extent of making such orders as may be necessary for the ....

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.... any matter which is otherwise specifically provided under the Act. The exercise of power which has the effect of amending the PPA by varying the tariff can only be done as per statutory provisions and not under the inherent power referred to in Regulations 80 to 82. In other words there cannot be any exercise of inherent power by the Commission on an issue which is otherwise dealt with or provided for in the Act or Rules. 35. This Court should be specially careful in dealing with matters of exercise of inherent powers when the interest of consumers is at stake. The interest of consumers, as an objective, can be clearly ascertained from the Act. The Preamble of the Act mentions "protecting interest of consumers" and Section 61(d) requires that the interests of the consumers are to be safeguarded when the Appropriate Commission specifies the terms and conditions for determination of tariff. Under Section 64 read with Section 62, determination of tariff is to be made only after considering all suggestions and objections received from the public. Hence, the generic tariff once determined under the statute with notice to the public can be amended only by following the same procedure. ....

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.... the Civil Procedure Code i.e. only on substantial question of law. In the present case, the following substantial questions of law arise for determination:- * Whether the State Commission has inherent powers to extend the control period of Tariff Order dated 29.01.2010 beyond the control period thereby adversely affecting the sanctity of PPA which was entered into by the parties by consensus-ad-idem? * Whether the State Commission can invoke Regulations 80-82 of Conduct of Business Regulations-inherent powers of the Commission to grant substantive relief to the generating company like respondent No.1 and thereby alter the terms of the contract arrived at between the parties consensus-ad-idem? 3. Brief facts are that the appellant and parent company of respondent No.1 executed Power Purchase Agreement (PPA) on 30.04.2010 for sale and purchase of electricity from 20 MW Solar PV Power project to be established by the parent company of the first respondent. In the initial stage itself, there was a delay from 30.04.2010 to 27.10.2010 firstly on account of transfer of Solar Power project in the name of parent company to a Special Purpose Vehicle (SPV) i.e. respondent No.1 and an am....

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....s, respondent No.1 acknowledged that GETCO would require time to establish the evacuation facilities with reference to the new location i.e. District Kutchh. STATUTORY POWER OF THE STATE ELECTRICITY REGULATORY COMMISSION TO DETERMINE THE TARIFF 5. The State Electricity Regulatory Commission is a body corporate constituted in terms of Section 82 of the Act, vested with certain important functions and powers specified under Sections 86 and 94 of the Act respectively. The body functions to achieve the purpose of the Electricity Act, 2003 viz. '...taking measures conducive to development of electricity industry, promoting competition therein, protecting interests of consumers and supply of electricity to all areas, rationalization of electricity tariff...'. 6. Determination of tariff is one of the important functions of the Commission, apart from other important functions specified in the Act. Under Section 61, the Appropriate Commission is obligated to specify the terms and conditions for determination of tariff, and in doing so, it shall be guided by the factors enumerated therein in clauses (a) to (i). In terms of Section 62 of the Act, the Appropriate Commission is authorized to....

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....views on the said draft. After considering the said views of the stakeholders, in exercise of the powers conferred under Sections 61(h), 62(1)(a) and 86(1)(e) of Electricity Act, 2003 and considering National Tariff Policy and the power procurement from New and Renewable Source of Energy Regulation 2008, Tariff Order 2012 for solar power and others was issued. As per Tariff Order 2012, the rates fixed for Solar PV projects are as under:- Period 29 Jan.'12 to31 Mar.'13 1 Apr.'13 to 31 Mar.'14 1 Apr.'14 to 31 Mar.'15 For megawatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 Rs. 9.28 per kWh Rs. 8.63 per kWh Rs. 8.03 per kWh years For first 12 years Rs. 9.98 per kWh Rs. 9.13 per kWh Rs. 8.35 per kWh For subsequent 13 years Rs. 7.00 per kWh Rs. 7.00 per kWh Rs. 7.00 per kWh For kilowatt-scale photovoltaic projects availing accelerated depreciation Levelized Tariff for 25 years Rs. 11.14 per kWh Rs. 10.36 per kWh Rs. 9.63 per kWh The above tariffs as per Tariff Order 2012 is to be in force from 29.01.2012 to 31.03.2015. The above said tariff is fixed by the Commission, on the basis of well founded parameters, such as, capi....

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....pellate Tribunal further held that the control period of the Tariff Order was fixed by the State Commission itself and hence, the State Commission has inherent powers to extend the control period of the Tariff Order. 11. Main contention urged by the first respondent is that the question of law arising - whether the State Commission has the inherent power or authority to extend the control period as fixed by it in its generic Tariff Order dated 29.01.2010 arose in the first round of litigation between the parties and in the earlier round of litigation, the State Commission held that the Commission had no power to extend the control period in a specific case and the power was only to extend the control period generally. It was contended that in the appeal filed by respondent No.1, the Appellate Tribunal for Electricity vide its judgment dated 02.01.2013 set aside the judgment of the Commission holding that the Commission has the inherent power to extend the control period in individual cases. It was, therefore, urged by the first respondent that the question of law that the Commission has inherent power to extend the control period has thus become final between the parties and the s....

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....efinition, its limits should be carefully guarded. Inherent powers preserved under Regulation 80 (which is akin to Section 151 of the Code) are with respect to the procedure to be followed by the Commission in deciding the cause before it. The inherent powers under Section 151 CPC are procedural in nature and cannot affect the substantive right of the parties. The inherent powers are not substantive provision that confers the right upon the party to get any substantive relief. These inherent powers are not over substantive rights which a litigant possesses. 16. The inherent power is not a provision of law to grant any substantive relief. But it is only a procedural provision to make orders to secure the ends of justice and to prevent abuse of process of the Court. It cannot be used to create or recognize substantive rights of the parties. In Vinod Seth v. Devinder Bajaj and Another (2010) 8 SCC 1, it was held as under:-  "28. As the provisions of the Code are not exhaustive, Section 151 is intended to apply where the Code does not cover any particular procedural aspect, and interests of justice require the exercise of power to cover a particular situation. Section 151 is n....

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....ever is not intended to create a new procedure or any new right or obligation." Same view was reiterated in Ram Prakash Agarwal and Another v. Gopi Krishan (dead through LRs.) and Others (2013) 11 SCC 296. 17. In the case at hand, rights and obligations of the parties flow from the terms and conditions of the Power Purchase Agreement (PPA). PPA is a contract entered between the GUVNL and the first respondent with clear understanding of the terms of the contract. A contract, being a creation of both the parties, is to be interpreted by having due regard to the actual terms settled between the parties. As per the terms and conditions of the PPA, to have the benefit of the tariff rate at Rs. 15/- per unit for twelve years, the first respondent should commission the Solar PV Power project before 31.12.2011. It is a complex fiscal decision consciously taken by the parties. In the contract involving rights of GUVNL and ultimately the rights of the consumers to whom the electricity is supplied, Commission cannot invoke its inherent jurisdiction to substantially alter the terms of the contract between the parties so as to prejudice the interest of GUVNL and ultimately the consumers. 18.....

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....nd the Commission cannot substitute its views by invoking inherent powers of the State Commission. Since we are giving liberty to the first respondent to approach the Commission, we are not expressing our views on the above contention. The appellant is at liberty to raise all these contentions before the Commission and this contention is left open. 20. Yet another contention raised by the appellant is that the project of respondent No.1 was commissioned/ready for commissioning only after the cut-off date and the power project was ready for commissioning only after 17.02.2012 and 13.03.2012 when the Certificate of Chief Electrical Inspector was granted. It is, therefore, contended by the appellant that the certificate of Chief Electrical Inspector is a statutory requirement and without the approval of the Chief Electrical Inspector, respondent No.1 could not have energized the electrical installations. This contention is also left open. 21. As pointed out earlier, the State Commission has determined tariff for solar power producers vide order dated 29.01.2010 and tariff for next control period vide order dated 27.01.2012. The order dated 29.01.2010 is applicable for projects commi....

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....ixed under a PPA (Power Purchase Agreement) is sacrosanct and inviolable and beyond review and correction by the State Electricity Regulatory Commission. In that case, respondent No.1 thereon-power producer had entered into a PPA with the appellant therein-distribution licensee for sale of electricity from the generating stations to the extent of the contracted quantity for a period of 35 years at Rs. 3.29 per KWH subject to escalation of 3% per annum till date of commercial operation. However, later the power producer found that the place from where the power was to be evacuated was at a distance of 23 kms. as opposed to a distance of 4 kms, envisaged in the concession agreement entered into between the Respondent-power producer and Narmada Water Resources Department (Respondent No.2 therein). On this ground respondent had sought revision of tariff by State Electricity Commission. This Court held that Section 86(1)(b) of Act empowers State Commission to regulate price of sale and purchase of electricity between generating companies and distribution licensees through agreements for power, produced for distribution and supply and that the state commission has power to re-determine t....

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....onsideration the factors in Section 61(1)(a) to (i), the State Commission determined the tariff rate for various categories including Solar Power PV project and the same is applied uniformly throughout the State. When the said tariff rate as determined by the Tariff Order (2010) is incorporated in the PPA between the parties, it is a matter of contract between the parties. In my view, respondent No.1 is bound by the terms and conditions of PPA entered into between respondent No.1 and the appellant by mutual consent and that the State Commission was not right in exercising its inherent jurisdiction by extending the first control period beyond its due date and thereby substituting its view in the PPA, which is essentially a matter of contract between the parties. 26. Section 94 of the Electricity Act deals with the powers of the Commission as far as the conduct of the proceedings. Under Section 94(1)(f), the Commission has the power to review its own decision. The power of review under Section 94 (1)(f) is akin to that under Order XLVII Rule 1 CPC. At the instance of affected parties or the generating companies or the Commission on its own motion may review its own decision only if....

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.... incurred total cost of Rs. 200 crores i.e. Rs. 10.00 crores per MW which is relatable to the Tariff Order dated 27.01.2012 and not the previous Tariff Order dated 29.01.2010 and having incurred capital expenditure of Rs. 200 crores, the first respondent cannot claim higher tariff rate as per the Tariff Order 2010 based on capital cost of Rs. 330 crores and if the contention of respondent No.1 is to be accepted, it would only enable respondent No.1 to make undue gains at the cost of the consumers in the State. It was urged that extension of control period of the Tariff Order (2010) qua the first respondent would cause huge loss to GUVNL and loss to GUVNL means that this loss is to be passed on to the consumers in the form of increased tariff and therefore it was contended that the Commission ought to have taken note of all the stakeholders namely the appellant and the consumers and not merely the claim of respondent No. 1. Since liberty is granted to the first respondent to approach the Commission, we are not inclined to go into the merits of this contention urged by GUVNL. Liberty is granted to GUVNL to urge the above contentions before the Commission and the Commission to conside....