TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 326
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.... its proceedings till the matter was finally decided and disposed of by this Court. This order was passed in view of the fact that, pursuant to the APTEL's common judgment under appeal, the GERC began hearings for determination of tariff on the petitions filed by each of the four respondent companies. Thereafter, by order dated 03.02.2023, this Court permitted the GERC to proceed with the tariff determination hearings subject to the condition that no final order should be passed without the leave of this Court. We are informed that the hearings before the GERC have concluded but the final orders have not been pronounced owing to the aforestated order. 3. The short issue for consideration is whether the four respondent companies were entitled to approach the GERC for determination of the tariff for procurement of power by GUVNL from their wind energy projects. The GERC answered this issue in their favour and the same stood confirmed by the APTEL. Hence, these statutory appeals. 4. By Order No. 1 of 2010 dated 30.01.2010, passed in exercise of the powers conferred by Sections 61(h), 62(1)(a) and 86(1)(e) of the Electricity Act, 2003 (for brevity, 'the Act of 2003'), the GERC determ....
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....effect, the GERC made it clear that those wind energy projects which did not avail the benefit of accelerated depreciation under the Income-Tax Act, 1961 (for brevity, 'the Act of 1961'), were entitled to approach it on a case-to-case basis for determination of tariff for the power supplied by them to distribution licensees. As regards those wind energy projects which did avail accelerated depreciation, the GERC took into consideration various factors and determined the levelized tariff for wind energy generation at Rs.3.56 per kWh (Kilowatt-hour), a much higher tariff than that suggested by GUVNL. The GERC also made it clear that the said tariff took into account the benefit of accelerated depreciation under the Act of 1961 and the Rules made thereunder and again reiterated that for a project which did not get such benefit, the GERC would, on a petition filed in that respect, determine a separate tariff taking into account all the relevant facts. The GERC further clarified that the tariff determined at Rs.3.56 (constant) was applicable for the entire project life of 25 years, i.e., from the 1st year to the 25th year, in the case of wind energy projects which availed accelerated de....
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....ed, the rate of accelerated depreciation effective from Assessment Year 2006-2007 would be 80%. Wind mills and specially designed devices which run on wind mills are classified as 'Renewable energy devices' thereunder. Thus, if a wind energy project which began power generation after 01.04.1997 wishes to avail acceleration depreciation of 80%, as aforestated, it is required to exercise such option before the due date for furnishing its return of income for the Assessment Year relevant to the previous year in which it began generation of power. 8. In so far as tariff determination is concerned, Section 61 of the Act of 2003 vests the Appropriate Commission, i.e., the Central Electricity Regulatory Commission or the State Electricity Regulatory Commission, with the power to specify the terms and conditions for determination of tariff, guided by the factors enumerated therein under Clauses (a) to (i). Safeguarding of consumers' interest is one such factor but promotion of co-generation and generation of electricity from renewable sources of energy is also a factor. Section 62 of the Act of 2003 deals with determination of tariff. It states that the Appropriate Commission shall determ....
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.... The tariff under the Second Tariff Order for projects availing accelerated depreciation was less favourable to them and the tariff payable to power producers which did not avail such benefit was more favourable. 10. EMCO Ltd., thereupon, approached the GERC claiming entitlement to determination of tariff under the Second Tariff Order on the ground that it had not availed accelerated depreciation. The GERC held in its favour and the APTEL confirmed the same, holding that the Second Tariff Order applied as EMCO Ltd.'s project was commissioned only on 02.03.2012. Further, as it had not availed accelerated depreciation, the APTEL held that the tariff determined without accelerated depreciation should be applied to it. GUVNL, thereupon, approached this Court. The case of EMCO Ltd. was that, though it had entered into a PPA during the control period specified in the First Tariff Order, it was not bound by the tariff mentioned therein and was entitled to seek fixation of tariff by the GERC under the Second Tariff Order. Per contra, GUVNL contended that the First Tariff Order was applicable only to those projects which availed the benefit of accelerated depreciation and if EMCO Ltd. did ....
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....d not to relieve the power producer of the contractual obligations incurred under the PPA. Significantly, no finding was recorded as to whether EMCO Ltd. had given a commitment to GUVNL about availing accelerated depreciation. It was also noted that the PPA contained a condition that, in case commissioning of the project was delayed beyond 31.12.2011, GUVNL would pay the tariff determined by GERC for solar energy projects effective on the date of commissioning of such project or the tariff mentioned in the PPA, whichever was lower. This stipulation, per this Court, envisaged a situation where EMCO Ltd. was not able to commence generation of electricity within the control period stipulated in the First Tariff Order and dealt with that contingency. It was, therefore, held that EMCO Ltd. could not seek tariff fixation under the Second Tariff Order. 13. Certain observations in the above decision, taken in isolation, undoubtedly support the GUVNL presently but the law laid down in the said decision would have to be understood in the factual context thereof, involving two tariff orders and a specific condition in the PPA. This aspect was pointed out by this Court in Gujarat Urja Vikas N....
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....avour of flexibility and not read inviolability into the terms of a PPA in so far as the tariff stipulated therein is concerned. It was further held that it would be a sound principle of interpretation to confer such power if public interest, dictated by surrounding events and circumstances, required review of the tariff. Dealing with the earlier judgment in EMCO Limited (supra), this Court observed that the power producer in that case did not seek determination of a separate tariff under the First Tariff Order, as it ought to have done, but sought tariff fixation under the Second Tariff Order, which was wholly inapplicable to it, given the terms of the First Tariff Order and the PPA. The decision in EMCO Limited (supra) was, therefore, distinguished on facts. 15. We may now note certain facts which are of particular relevance to this adjudication. GUVNL entered into individual Power Purchase Agreements (PPAs) with the four respondent companies. These PPAs were entered into by them between June, 2010, and March, 2012, i.e., during the 3-year control period specified in Order No.1 of 2010 dated 30.01.2010 issued by the GERC and the four respondent companies also commissioned their ....
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....y objectives of the State. In that context, it would be relevant to note the objectives underlying the Act of 2003 in relation to nonconventional and renewable energy sources, such as wind power, solar power, etc. Part II of the Act of 2003 is titled 'National Electricity Policy and Plan'. Section 3 therein provides that the Central Government shall, from time to time, prepare the National Electricity Policy and tariff policy, in consultation with the State Governments and the Authority for development of the power system based on optimal utilization of resources such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy. 18. A separate Ministry of New and Renewable Energy was setup by the Government of India as the nodal Ministry for all matters relating to new and renewable energy. The broad aim of this Ministry is to develop and deploy new and renewable energy to supplement the energy requirements of the country. Energy self-sufficiency was identified as the major driver for developing and promoting new and renewable energy generation in the country in the wake of the two oil shocks of 1970s; the sudden increase in the price of oil; the un....
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....between GUVNL and the four respondent companies specifically referred to the approvals given by the Gujarat Energy Development Agency (GEDA) for setting up of their wind energy projects. One such approval letter dated 01.08.2011 issued by GEDA in favour of Green Infra Corporate Wind Private Limited was placed before us. Perusal thereof reflects that permission was granted to the said company to setup two WTGs subject to the terms and conditions specified in the Government of Gujarat's Wind Policy, GERC orders pertaining to wind power and the conditions stipulated in the said letter. One of the conditions stipulated therein was that the company should enter into an Agreement with the GUVNL/DISCOM for selling or wheeling of the electricity generated from the Wind Farm. Though GUVNL was not the only distribution licensee in the State of Gujarat at that point of time, we cannot lose sight of the fact that, being a State-instrumentality, it was and is a major distributor of electricity across the State of Gujarat. 21. Further, it is manifest and demonstrable from the statutory scheme obtaining under the Act of 2003 that the price at which power is to be procured by a distribution licen....
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....nts from the four respondent companies that they would only avail accelerated depreciation and would not choose to opt for the regular depreciation rate when the time came. Without securing such commitments from them, merely because these companies signed the PPAs with a fixed tariff which was applicable only to those projects that availed accelerated depreciation, GUVNL cannot take advantage of its dominant position and its PPAs so as to bind them to the price mentioned therein for the entire life of their projects. As pointed out earlier, GUVNL is bound to promote and give effect to the Government's policy of encouraging generation of power from renewable energy sources. When the Government promulgated a policy in that regard, offering various incentives to wind energy projects, GUVNL cannot act contrary thereto by fixing a tariff for purchase of power from such wind energy projects, which, on the face of it, is contrary to the mandate of Order No.1 of 2010 dated 30.01.2010 issued by the GERC. The said order put it beyond the pale of doubt that the tariff of Rs.3.56 per kWh was applicable only to those wind energy projects that availed the benefit of accelerated depreciation. GUV....