TaxTMI 
TaxTMI 
2024 (12) TMI 1772
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny, M/S Soham Renewable Energy India Pvt Ltd., M/S Savitha Oil Technologies Limited A Company, Ramgad Minerals And Mining Limited, Mspl Limited, M/S Sri Kumaraswamy Minera Exports Pvt Ltd, M/S Sumukh Renewable Solutions, Mansukhmal Investment Private Limited, Radiance Ka Sunrise Three Private Limited, Juniper Networks India Limited, Ramgad Minerals And Mining Limited, Ghodawat Energy Private Limited, Ghodawat Realty Private Limited, Sanjay D. Ghodawat Huf A Hindu Undivided Family, Savita Oil Technologies Limited, Mansukhmal Investments Private Limited Versus Union Of India, Government Of India Ministry Of Power, Union Of India Ministry Of Power, Union Of India Ministry Of Power And New And Renewable Energy, New Delhi And State Of Karnataka Department Of Energy, State Load Dispatch Center, Karnataka Power Transmission Corporation Limited (Kptcl), Karnataka Electricial Regulatory Commission (Kerc), Bangalore Electricity Supply Company Limited (Bescom), State Of Karnaka Department Of Energy, State Load Dispatch Centre Karnataka, Kanrataka Electricity Regulatory Commission, State Load Dispatch Centre Karnataka, Karntaka Electricity Regulatory Commission, State Load Disptach Centre - Ka....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ough Green Energy Open Access) Rules 2022, ("the GEOA Rules"). 3. They are also challenging the Regulations framed by the Karnataka Electricity Regulatory Commission ("KERC") in the year 2022 called the Karnataka Regulatory Commission (Terms and Conditions for Green Energy Open access) Regulations, 2022 ("KERC Regulations, 2022"). 4. Two of the petitioners established Mini Hydel Plants pursuant to orders passed by the Government of Karnataka before the enactment of the Karnataka Electricity Regulations, 1999 ("the KER, 1999") and the Electricity Act, 2003 ("the Electricity Act" or "the Act"). 5. They had also entered into agreements with the Government of Karnataka which were stated to be valid for a period of 30 years and which contained clauses stating that they would be liable to pay wheeling and banking charges as stipulated in the Government Order and the banking would be on a water year basis (annual banking) with a grace period of one month. II. CHRONOLOGY OF EVENTS RELATING TO OPEN ACCESS IN RESPECT OF MINI HYDEL PLANTS: 6. In the year 1995, in two cases in this batch of petitions, the State Government had accorded permission for establishment of mini-hydel p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in subsistence, the terms of those agreements would apply till their expiry and the order would become applicable only after the expiry of those agreements. 12. On 10.07.2013 - the validity of this order was extended by a period of three months, on 10.10.2013 - it was extended till 31.03.2014, and on 24.04.2014 - it was extended till 30.06.2014 or until a revised order was passed. 13. It may be pertinent to state here that the petitioner in Writ Petition No.3729 of 2023 and the petitioner in Writ Petition No.11235 of 2024 entered into a Wheeling and Banking Agreement with KPTCL and the concerned Electricity Supply Companies ("the ESCOMS") on 04.01.2014 and 28.06.2014, respectively. These agreements were valid for a period of 10 years and had provided for an annual banking facility. 14. On 04.07.2014, KERC, in exercise of the powers conferred under Clause 11 of the 2004 Regulations, passed an order to the effect that wheeling charges would be 5% of the injected energy for wind, mini-hydel, bagasse-based cogeneration plants and bio-mass based projects, and held that the banking charges of 2% of the injected energy would be applicable only to wind and mini-hydel projects. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ixed by the appropriate Commission, in addition to also prescribing the manner in which charges are to be levied for Open Access for GEOA Consumers. 21. These Rules also provide for Rule 12 which prescribes a model regulation on methodology for calculation of open access charges and for also banking charges to be framed by the Forum of Regulators, with a rider that the methodology should not be onerous and should meet the prudent cost of the distribution licensee so as to fulfil the objective of promoting the procurement of green energy by the GEOA consumers. 22. Rule 5 of the Rules states that in order to provide GEOA to consumers of Green Energy, the Appropriate Commission may, if necessary, amend the relevant Regulations made by it and such Regulations are required to be consistent with the impugned GEOA Rules. 23. It is these Rules which are under challenge in this batch of writ petitions (except in Writ Petition No.23729 of 2023), principally, on the ground that the Central Government did not have the legislative competence to frame the Rules and did not have the power under the provisions of the Act to issue a directive to the Regulatory Commissions and thereby act a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch had statutorily been reserved exclusively to the Appropriate Commission and it had made the Commission secondary and subservient to it, and that this was fundamentally violative of the statutory framework and the basic objective of the Act - which was to distance the Government from the functioning of the electricity sector. v. The provisions of the Act specifically entrust the function of regulating the generation, transmission and supply of electricity to a regulator i.e., the appropriate Commissions, and it, in fact, excludes the Central or State Government from playing any role in the regulation of the electricity sector and the Central Government by framing the impugned Rules was basically destroying the entire statutory framework and it was thus liable to be struck down. vi. The Central Government has not been entrusted with any statutory function under the Act in relation to the transmission of electricity by generating companies and it cannot therefore frame Rules on the premise that it was doing so for carrying out the provisions of the Act. 29. It was highlighted that: i. Section 42(2) of the Electricity Act conferred on the Appropriate Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....EL 51 - banking of electricity; iv. Maharashtra State Electricity Distribution Company Limited v. JSW Steel Limited & Ors., (2022) 2 SCC 742 - additional surcharge & cross-subsidy; v. SESA Sterlite Limited v. Orissa Electricity Regulatory Commission & Ors., (2014) (8) SCC 444 - additional surcharge & cross-subsidy; vi. Sri. Dhanraj v. Gulbarga University & Anr., ILR 1999 Kar 3880 - Central rules to prevail over State rules. IV. SUBMISSIONS OF THE RESPONDENTS: 33. Sri. Aravind Kamath, learned Additional Solicitor General appearing for the Central Government, sought to repel the arguments of the generating companies and contended as follows: i. The Central Government had framed the impugned GEOA Rules by virtue of Entry No.14 of the Union List and Entry 38 of the Concurrent List, in view of the fact that it had signed a treaty at an international convention to that effect and, therefore, it could not be contended that the Central Government had no legislative competence. ii. The Central Government was obligated to carry out the provisions of the Electricity Act and since it was one of the objectives of the Electricity Act to promote ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es would prevail over the Regulations framed by the appropriate Commission as - firstly, the Commissions were not superior to the Government; and secondly, the power to frame Regulations, by itself, stated that the Regulations framed by the Commission should be in conformity with the provisions of the Electricity Act and also the Rules framed thereunder. He therefore submitted that the Central Government GEOA Rules would have to be the guiding factor in carrying out the provisions of the Electricity Act and they had an overriding effect on the Regulations; viii. He submitted that since the Central Government GEOA Rules framed under the Act stood on a higher footing, the Commission was required to abide by the Rules and it did not have an absolute dominion to frame regulations, even if the substantive provisions cast a responsibility on carrying out certain functions under the Electricity Act; ix. He submitted that the Central Government GEOA Rules essentially brought about a certainty in the manner of granting open access to green energy producers and the same should therefore be welcomed, and there was no justification to strike them down. 35. Sri. Chinnappa r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed by the KERC fixing the charges for open access in exercise of its powers under said KERC Regulations can be sustained. VI. BASIC PRINCIPLES TO DETERMINE THE VALIDITY OF A DELEGATED/SUBORDINATE LEGISLATION: 38. In order to appreciate the contentions advanced by the Learned Counsel, the architecture of the Electricity Act and the contours of the applicability and effect of the provisions of the Act would have to be analysed. 39. In a recent judgment of the Hon'ble Supreme Court rendered in Naresh Chandra Agrawal [Naresh Chandra Agrawal v. The Institute of Chartered Accountants of India & Ors., (2024) 2 SCR 194.] the Apex Court, after considering earlier decisions on the point, has laid down the law regarding a challenge made to a subordinate legislation in the following terms: "21. In State of Tamil Nadu and Anr. vs. P. Krishnamurthy and Ors. (2006) 4 SCC 517, this Court recollected the following principles while adjudging the validity of subordinate legislation, including regulations: There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion has been categorised as the 'generality versus enumeration' principle in some precedents of this Court. This delicate balance between specificity and generality in legal delegation is crucial for effective governance and adaptability to evolving legal landscapes. xxxx 32. From reference to the precedents discussed above and taking an overall view of the instant matter, we proceed to distil and summarise the following legal principles that may be relevant in adjudicating cases where subordinate legislation are challenged on the ground of being 'ultra vires' the parent Act: (a) The doctrine of ultra vires envisages that a Rule making body must function within the purview of the Rule making authority, conferred on it by the parent Act. As the body making Rules or Regulations has no inherent power of its own to make rules, but derives such power only from the statute, it must necessarily function within the purview of the statute. Delegated legislation should not travel beyond the purview of the parent Act. (b) Ultra vires may arise in several ways; there may be simple excess of power over what is conferred by the parent Act; delegated legislatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctly ancillary. It will authorize the provision of subsidiary means of carrying into effect what is enacted in the statute itself and will cover what is incidental to the execution of its specific provision. In that sense, the general power cannot be so exercised as to bring into existence substantive rights or obligations or disabilities not contemplated by the provisions of the Act itself. (h) If the rule making power is not expressed in such a usual general form but are specifically enumerated, then it shall have to be seen if the rules made are protected by the limits prescribed by the parent Act." 40. A reading of said judgment would indicate that the rulemaking body would have to function within the limits of the power granted to it under the statute and the rulemaking authority, by itself, has no inherent power of its own to frame rules and only derives its power under the statute, and it would therefore have to necessarily function within the parameters laid down in the statute. 41. Thus, in order to ascertain whether the prayers made in the writ petitions - relating to the challenge made to the Rules framed by the Central Government in exercise of powers und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by problems that impede its capacity to respond to the rapidly growing demand for energy brought about by economic liberalisation. Despite the stated desire for reform and the initial measures that have been implemented, serious problems persist. As the problems of the Power Sector deepen, reform becomes increasingly difficult underscoring the need to act decisively and without delay. It is essential that the Government exit implement significant reforms by focusing on the fundamental issues facing the power sector, namely the lack of rational retail tariffs, the high level of cross-subsidies, poor planning and operation, inadequate capacity, the neglect of the consumer, the limited involvement of private sector skills and resources and the absence of an independent regulatory authority, Considering the paramount importance of restructure power sector, Government of India organised two Conferences of Chie Ministers to discuss the whole gamut of issues in the power sector and the outcome of these meetings was the adoption of the Common Minimum National Action Plan for Power (CMNPP). 2. The CMNPP recognised that the gap between demand and supply of power is widening and ackn....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... KER Act") was enacted under which initially, the KPTCL was tasked with both transmission and distribution functions but subsequently, the KPTCL was restricted to only performing transmission duties, and the distribution and supply portion was unbundled and was entrusted to ESCOMs, which were incorporated companies. 51. The KER Act also provided for establishment of a Regulatory Commission which was tasked with discharging the regulatory function of distribution, supply, utilisation of electricity, quality of services, tariff, and charges payable. Thus, in the year 1999, virtually, all aspects relating to the electricity were to be administered by the Regulatory Commission. 52. It may be pertinent to state here that though the State Government had the power to issue Policy Directives to the Commission, this power was, however, subjected to the condition that these Directives would be consistent with the objectives sought to be achieved under the KER Act. Thus, the power of the State Government to control the functioning of the Regulators was minimised and subjected to the condition that the power to issue directions should not adversely affect the functions and powers of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to electricity to all areas including villages and hamlets through rural electrification infrastructure and electrification of households. 61. A reading of the provisions of Part-II would therefore leave no room for doubt that the role of the Central Government is fundamentally only to formulate a policy which would guide the authority to frame a plan. 62. At this stage, it would be useful to refer to the Policy and Plan formed under Section 3 of the Electricity Act, insofar as it relates to the aspect of granting open access. 63. The Central Government has, in fact, formulated a National Electrical Policy in 2005 and the Authority has also prepared four National Electricity Plans from 2007 i.e., in 2007, 2013, 2015 and 2018. 64. In the Electricity Policy of the year 2005, the Central Government has stated as follows with regard to open access and the role of the Commissions: "5.3.3 Open access in transmission has been introduced to promote competition amongst the generating companies who can now sell to different distribution licensees across the country. This should lead to availability of cheaper power. The Act mandates non-discriminatory open access in tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sumers who require a supply of electricity where the maximum power to be made available at any time exceeds one mega watt. Section 49 of the Act provides that such consumers who have been allowed open access under section 42 may enter into agreement with any person for supply of electricity on such terms and conditions, including tariff, as may be agreed upon by them. While making regulations for open access in distribution, the SERCs will also determine wheeling charges and cross-subsidy surcharge as required under section 42 of the Act. 5.12 COGENERATION AND NON-CONVENTIONAL ENERGY SOURCES 5.12.1 Non-conventional sources of energy being the most environment friendly there is an urgent need to promote generation of electricity based on such sources of energy. For this purpose, efforts need to be made to reduce the capital cost of projects based on nonconventional and renewable sources of energy. Cost of energy can also be reduced by promoting competition within such projects. At the same time, adequate promotional measures would also have to be taken for development of technologies and a sustained growth of these sources. 5.12.2 The Electricity Act 2003 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on, which alone can enable the creation of requisite generation capacity. The Regulatory Commissions have the responsibility of ensuring that the regulatory processes facilitate the attainment of this objective. They also have a developmental role whose fulfilment would need a less formal and a consultative process. The Electricity Act, 2003 also provides for mechanisms like "Coordination forum" and "Advisory Committees" to facilitate consultative process. The Act also requires the Regulatory Commissions to ensure transparency in exercise of their powers and in discharge of their functions. This in no way means that the Regulatory Commissions should follow formal judicial approach. In fact, quick disposal of matters would require an approach involving consultations with stakeholders. 6.2 Under the Act, the Regulatory Commissions are required to perform wide-ranging responsibilities. The appropriate Governments need to take steps to attract regulatory personnel with required background. The Govt. of India would promote the institutional capability to provide training to raise regulatory capacity in terms of the required expertise and skill sets. The appropriate Gov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cated transmission lines connected therewith, in accordance with the provisions of the Electricity Act and the rules / regulations made under Section 10. 74. The Appropriate Government was given the power under Section 11 to specify that a generating company would have to operate and maintain any generating station in accordance with its directions in extraordinary circumstances. 75. Thus, the 2003 Act, basically, unshackled the electricity industry and permitted any person to start a generating station without requiring a licence. 76. Part IV of the Act dealt with licensing and it stipulated that no person could transmit, distribute or undertake trading of electricity unless the Appropriate Commission granted him a licence to transmit electricity as a transmission licensee; or to distribute electricity as a distribution licensee; or to undertake trading in electricity as an electricity trader. The Commission was also empowered to give exemption by issuance of a notification the requirement of obtaining a licence in respect of the local authority, Panchayat Institution, etc. 77. The provision also stated that the persons engaged in the business of transmission and suppl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... territorial jurisdiction for the purposes of exercising powers and discharging the functions enumerated under the provisions of this Part. 83. The Regional Load Despatch Centre has been entrusted with the function of being responsible for the optimum scheduling and despatch of electricity within the region in accordance with the contracts entered into with the licensees or the generating companies operating in the region, to monitor grid operations, and to keep accounts of quantity of electricity transmitted through the regional grid. 84. It is also required to exercise supervision and control over the inter-State transmission system and also be responsible for carrying out real time operations for grid control and despatch of electricity within the region. The Regional Load Despatch Centre is conferred with the power to give such directions to ensure stability of grid operations and for achieving the maximum economy and efficiency. 85. Thus, in respect of inter-State systems, the Central Government has been entrusted with the task of establishing a National Load Despatch Centre and Regional Load Despatch Centre. However, in respect of the intra-State transmission, the St....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ates that it would be one of the duties of transmission system licensees to provide non-discriminatory open access to its transmission system for use by - (i) any licensee or generating company or (ii) any open access consumer subject to payment of the transmission charges and surcharge thereon. 93. Part VI of the Act provides for distribution of electricity. Section 42 of the Electricity Act reads as follows: "Section 42. (Duties of distribution licensee and open access): --- (1) It shall be the duty of a distribution licensee to develop and maintain an efficient, coordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in this Act. (2) The State Commission shall introduce open access in such phases and subject to such conditions, (including the cross subsidies, and other operational constraints) as may be specified within one year of the appointed date by it and in specifying the extent of open access in successive phases and in determining the charges for wheeling, it shall have due regard to all relevant factors including such cross subsidies, and other opera....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (6) Any consumer, who is aggrieved by non-redressal of his grievances under sub-section (5), may make a representation for the redressal of his grievance to an authority to be known as Ombudsman to be appointed or designated by the State Commission. (7) The Ombudsman shall settle the grievance of the consumer within such time and in such manner as may be specified by the State Commission. (8) The provisions of sub-sections (5), (6) and (7) shall be without prejudice to right which the consumer may have apart from the rights conferred upon him by those sub-sections." 94. As could be seen from sub-section (1) of Section 42 of the Electricity Act, it would be the duty of the distribution licensee to develop and maintain an efficient, co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions of the Electricity Act. 95. Sub-section (2) of Section 42 of the Electricity Act - with which we are mainly concerned with in this batch of writ petitions - makes it obligatory for the State Commission to introduce open access in such phases and, subject to such conditions as may be specified, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rly indicate that no other entity apart from the State Commission can even attempt to get involved in the matters of distribution and, more importantly, providing open access. 103. Section 49 of Part VI states that whenever the Appropriate Commission has allowed open access to certain consumers under Section 42, such consumers could enter into an agreement with any person for supply or purchase of electricity on such terms and conditions, including tariff, as may be agreed upon by them. 104. Thus, whenever open access is provided by the Commission, the consumer who has been allowed open access can enter into an independent contract for supply or for purchase of electricity on such terms and conditions as may be agreed upon mutually. The charges for transmission (including surcharge) and the charges for wheeling will, however, have to be determined only by the State Commission. 105. In other words, even if the open access consumer decides to purchase or supply electricity, such consumer will have to necessarily pay the charges for transmission and for wheeling, including the payment of surcharge as may be specified by the Commission, notwithstanding the fact that he can ent....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the public and issue a tariff order accepting the application with such modifications or conditions. It is also empowered to reject the application for determination of the tariff. 112. The Commission is required to send a copy of the tariff order to the Government, the concerned agencies, and to other persons concerned. The tariff order which is accepted and passed by the State Commission would continue to be in force for such period as may be specified in the order, and this order is also capable of being amended or revoked. 113. As could be noticed from Section 64 of the Electricity Act, the appropriate Commission is not required to consult the State Government or secure its concurrence for passing a tariff order, but it is required to communicate the order that it has passed to the State Government. 114. Section 65 of the Act under Part VII states that in the event of the State Government requiring grant of any subsidy to any consumer or class of consumers in the tariff determined by the State Commission, the State Government shall pay the subsidy amount in advance and in such manner as may be specified, to compensate the person affected by the grant of subsidy as a c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rating companies owned or controlled by the Central Government and also to regulate the tariff of generating companies other than those owned or controlled by the Central Government as specified in clause (a) of Section 79 of the Electricity Act, if such generating companies enter into or have a composite scheme for generation and sale of electricity in more than one State as provided in clause (d) of Section 79. It has also given the function to regulate the inter-State transmission of electricity and to determine tariff for inter-State transmission of electricity as per clauses (c) and (d) of Section 79 of the Electricity Act. 121. In short, the Central Commission is required to regulate the tariff for Central Government companies or for Companies which have a scheme for generation and sale of electricity in more than one State and, ultimately, to regulate inter-state transmissions. 122. The proviso to S. 82 states that the State Electricity Regulatory Commission established under the Electricity Regulatory Commissions Act, 1998 would be the State Commission under the 2003 Act. Thus, the Regulatory Commission which were already established under the earlier laws have been c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of competition, efficiency and economy in activities of the electricity industry; (ii) promotion of investment in electricity industry; (iii) reorganization and restructuring of electricity industry in the State; (iv) matters concerning generation, transmission, distribution and trading of electricity or any other matter referred to the State Commission by that Government. (3) The State Commission shall ensure transparency while exercising its powers and discharging its functions. (4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3." 124. As could be seen from above, the State Commission is entrusted with the function of determining the tariff for generation, supply, transmission and wheeling of electricity. The proviso to Section 86 makes it clear that where open access has been permitted to a category of consumers under Section 42, the State Commission is required to determine the wheeling charges and surcharge thereon. 125. The State Commission is also given the task of regulating electricity ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terest as the Central Government may give to it in writing. (2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the Central Government thereon shall be final. *** Section 108. (Directions by State Government): ---- (1) In the discharge of its functions, the State Commission shall be guided by such directions in matters of policy involving public interest as the State Government may give to it in writing. (2) If any question arises as to whether any such direction relates to a matter of policy involving public interest, the decision of the State Government thereon shall be final." (Emphasis supplied) 131. As could be seen from the above, in the discharge of its functions, the Commission (Central or State) is required to be guided by such directions in matters of policy involving public interest, if they are given to it in writing by the respective Governments. The use of the phrase "be guided" in both the provisions would indicate that the directions given in writing will not be binding on the respective Commissions but they would only act as guiding factors. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 17. That the state regulatory commissions are not 'bound' by the directions of the state government, or the Central Government is also evident from the text of Section 108. The provision reads: "In the discharge of its functions, the State Commission shall be guided by such directions in matters of policy ...". This indicates that the state commission shall only be 'guided' by the directions issued by the state government and is not automatically bound by them. This interpretation is strengthened by the divergence in the language used in other provisions of the Act, such as Section 11 of the Act which reads as follows: "Section 11. (Directions to generating companies): --- (1) Appropriate Government may specify that a generating company shall, in extraordinary circumstances operate and maintain any generating station in accordance with the directions of that Government. Explanation. - For the purposes of this section, the expression "extraordinary circumstances" means circumstances arising out of threat to security of the State, public order or a natural calamity or such other circumstances arising in the public interest. ..." 18. The above provision use....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion (2) thereof confers the powers in respect of several matters mentioned thereunder. 138. Section 178 of the Electricity Act deals with the powers of Central Commission to make regulations, and Section 180 confers power on the State Government to make Rules. 139. Section 181 deals with the powers of the State Commission to make regulations. Clauses (i), (j), (k), (l), (m), (n), (o), (p), (q) and (r) of Subsection (2) of Section 181, which are relevant for these cases, reads as under: "Section 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 sub-section (1), such regulations may provide for all or any of the following matters, namely: (a) x x x (i) payment of the transmission charges and a surcharge under sub-clause (ii) of clause(d) of sub-section (2) of section 39; (j) reduction of surcharge and cross subsidies under second proviso to sub-clause (ii) of clause (d) of sub-section (2) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....les to carry out the provisions of the Act. 144. As already extracted and enunciated above, the Apex Court in the case of Naresh Chandra Agarwal (supra) has laid down the law that a rule-making body must function within the purview of the authority conferred to it. While dealing with the phrases used in the rule making power i.e., "to carry out the provisions of the Act" or "to carry out the purposes" and "without prejudice to the generality of the foregoing power", the Apex Court has laid down the principle that where a statute confers particular powers without prejudice to the generality of a power already conferred, the particular powers are only illustrative of the general power, and do not, in any way, restrict the general power. 145. The Apex Court has stated that even if the Rules framed can be related to general powers, it must be remembered that such power delegated by an enactment does not enable the authority, by rules or by regulations, to extend the scope or general operation of the enactment and it is strictly ancillary. In fact, it is stated that the Rules will authorize the provision of subsidiary means of carrying into effect what is enacted in the statute it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egard. 152. It will therefore have to be held that the impugned GEOA Rules, 2022 framed by the Central Government is beyond its competence and it lacks legal authority to do so, and the said Rules will thus have to be struck down. 153. Another factor which has to be noticed here is that Rule 5 of the GEOA Rules that have been framed by the Central Government positively directs the State Commissions to amend the State Regulations to conform to the impugned GEOA Rules. Rule 5 of said Rules reads as follows: "5. Green Energy Open Access.- (1) To provide Green Energy Open Access to consumers of green energy, the appropriate Commission may, if necessary, amend the relevant regulations made by it and such regulations shall be consistent with these rules. (2) All applications for open access of green energy in this regard shall be allowed by the nodal agency within a period of fifteen days: Provided that only consumers who have contracted demand or sanctioned load of hundred kW and above shall be eligible to take power through Green Energy Open Access and there shall be no limit of supply of power for the captive consumers taking power under Green Energy O....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to them. It was their contention that the agreement entered into with the Government under the 2004 Regulations provided them with an annual banking facility which enabled them to bank their energy which they generated through renewable sources such as water, wind and air, but under the impugned Regulations the banking facility was curtailed to a monthly facility. They also contended that the KERC, being entrusted with the task of promoting the generation of renewable energy, was bound to provide them with annual banking facility and this was sought to be nullified by the regulations. 159. The KERC as well as the distribution licensees contended that the petitioners have no statutory right of banking and, in fact, the concept of banking is not even provided for in the statute. It is contended that in order to encourage generation of green energy, the Regulator had provided for banking as a promotional measure. It is contended that the provision for banking was only related to the contract and not to any statutory regulations, and since the contract with the petitioners had come to an end, they could not demand that they be provided with banking facility as before. 160. The Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nergy price was low but would have to provide energy to the hydel power generating company by procuring electricity at a higher rate during the peak summer months. This, therefore, necessarily causes a huge financial burden on the licencees. 165. It has to be stated here that the provision of the Electricity Act only statutorily obligates the regulators to provide for open access as providing open access is essential to encourage private sector participation in the generation of electricity. It is to be noticed here that if the same private generator is called upon also to lay transmission lines for the distribution of electricity generated by it, that would cause a huge burden on them resulting in their generation of electricity being unviable for commercial exploitation. 166. Consequently, the law provides for such generator to utilise the transmission network as well as distribution network which has already been established by the Central Government as well as by the respective State Electricity Boards and this would also result in better and optimal utilisation of the State's infrastructure with the consequential saving a huge amount of capital expenditure. 167. The l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion is infirm and is dependent on nature such as wind or rainfall as the case may be and hence scheduling and balancing will not be practicable on a real time basis under open access. In this contest commission had opined that in such cases banking facility for a period of 1 month needs to be provided without carry over to the next financially year. Comments received Special Secretary Gok is of the view that banking can be allowed only when both the input and drawal of energy is based on TOD meters and seasonal tariff. ESCOMs are not in favour of giving Banking facility to renewable sources of every. KPTCL has stated that it is agreeable to provide banking facility to wind and mini-hydel projects on the condition that they pay the difference between the UI charge at the time of injection and the UI charge at the time of drawal without any time limit. IPPAI and IWPA also agreed to the said proposal of KPTCL. REDAK have suggested if banking is allowed, banking charges of 0.5% in kind shall be levied. Reliance Energy is in favour of providing Banking only for NCE and infirm sources of power. IWPA has stated that banking facility is bare necessity for the viability o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplicable for wind and mini-hydel projects only. 174. The annual banking facility was also continued with a condition that if the banking energy was unutilised at the end of the wind year, water year or financial year, it was deemed to have been purchased by the distribution licencees of the area where the generator was located and the generator would be paid 85% of the generic tariff determined by the Commission. 175. It is on the basis of this order that the petitioners have entered into wheeling and banking agreements which were valid for a period of ten years, and the same have admittedly expired. Since the banking facility was a creation of the contract, which is approved by the Regulatory Commission, upon expiry of the contract, the contractual right of the generators to demand banking facility would also cease. 176. As already stated above, the generators have entered into an agreement, and the terms of the agreement read as follows: "Article 11 TERM, TERMINATION AND DEFAULT 11.1 Term of the Agreement: This Agreement shall become effective upon the execution and delivery thereof by the Parties hereto and unless terminated pursuant to other Provisions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rned Senior counsel and also by Sri. Shridhar Prabhu, learned counsel, in respect of two cases, i.e., in the petitions filed by M/s. Soham Renewable Energy India Private Limited-W.P. No.23729 of 2023 and in the writ petition filed by M/s.Brindavan Hydropower Private Limited-W.P. No.11235 of 2024 to the effect that the petitioners therein were signatories to an agreement of the year 1995 which guaranteed them the right of annual banking facility for a period of thirty years and, therefore, the Regulator could not reduce the banking facility to a period less than a year. 179. It is also contended by them that the agreement entered into by the petitioners is saved under the provisions of KER Act and therefore, these agreements should be adhered to and not the subsequent agreements. 180. This argument was countered by the respondents to the effect that though the agreements were entered into in the year 1995 i.e., prior to the enactment of the Electricity Act of 2003, subsequently, on the enactment coming into force, the Regulator was obligated to frame statutory regulations to administer the entire process of granting open access and the Regulator in exercise of its statutory po....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cepted and the same are rejected. 185. Another argument was advanced by the petitioners to the effect that the APTEL in the case of Fortune Five Hydel Projects Pvt. Ltd. (supra) has held that the Regulations cannot alter the terms of the Wheeling and Banking Agreement. As already observed above, the Regulator has passed an order on 09.01.2018 by which it had reduced the banking period from one year to six months and ordered levy of additional surcharge on open access customers. 186. This order was the subject matter of an appeal before the APTEL in Appeal No.42 of 2018. The APTEL while deciding the appeal took note of the fact that there was an existing Wheeling and Banking Agreement which provided for annual banking and in light of this agreement, it was impermissible for the Regulator to reduce the banking period from one year to six months, especially in the absence of sufficient data and analysis of the said data. 187. Obviously, a decision rendered by the APTEL - to the effect that the terms of an existing Wheeling and Banking Agreement cannot be modified by an order of the Regulator in the absence of data to back the order - cannot be relied upon to contend that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f an existing law. 194. As already stated above, the Parliament has enacted the Electricity Act with the underlying purpose of de-licensing the entire electricity Sector and one of the important facets of the de-licensing is to establish a Regulator which would be able to promote, co-ordinate and administer the generation, transmission and distribution of the electricity generated. 195. If the Parliament made a law specifically conferring power on the Regulator to frame Regulations which governed every aspect of open access, it is inconceivable that the Central Government can side-step the requirement of the Parliament enacting a law in that regard and straight away proceed to frame the impugned Rules. 196. If Article 253 of the Constitution of India contemplates a law to be made by the Parliament, necessarily, the Parliament has to pass the enactment. The Central Government cannot use the power to frame Rules - which is only a piece of sub-ordinate or delegated legislation - to side-step the Parliament. I am therefore of the view that this argument of the Union also does not merit acceptance. 197. As already observed above, the role of the Government under the Act is e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mission charges as per the interim order dated 05.07.2024 passed in these writ petitions. 203. The petitioners, under the orders of the KERC pursuant to which they had entered into Wheeling and Banking Agreements, were also required to pay wheeling charges at 5% till the KERC frames regulations for open access to the green energy generators pending framing regulations. The petitioners shall continue to pay wheeling charges at 5%. 204. The petitioners were also permitted to bank their energy annually, subject to payment of 2% under the Wheeling and Banking Agreement. However, by virtue of the Regulations which have now been invalidated, they were required to pay 8%. 205. Since these regulations have been struck down and liberty is given to the KERC to frame regulations for grant of open access to green energy generators and consumers, the petitioners shall be permitted to avail banking facility subject to payment of 4%. 206. The petitioners had the benefit of annual banking facility from 2014 in the standard Wheeling and Banking Agreement. Since the Wheeling and Banking Agreements have expired, they obviously would not have a contractual right to demand annual banking fa....