CERC Has Jurisdiction Over Inter-State Transmission Disputes and Unscheduled Interchange Rates Notwithstanding SLDC’s Grid Monitoring Powers

In brief

The question

1. Whether Regulation 8 of the CERC (Open Access in Inter-State Transmission) Regulations, 2008, is ultra vires the Electricity Act, 2003

The court held

The Court answered all issues in the negative and dismissed the appeal, holding that: (i) Regulation 8 of the Open Access Regulations is intra vires the Act; (ii) the CERC had the requisite jurisdiction under Section 79(1)(f) to adjudicate the dispute as it related to inter-State transmission; and (iii) the impugned Clause (m) was invalid as the SLDC cannot fix tariffs or override CERC’s UI accounting scheme.

It also directed

The Court upheld the Single Judge's order and the CERC's direction to settle SSL's dues as per Regulation 20(5) of the Open Access Regulations.

01Facts

Respondent No. 1 (SSL), a generating company, sold surplus power through inter-State open access after its PPA with the appellants ended in 2009

¶ 6-7

To facilitate this, SSL required a Standing Clearance/No-Objection Certificate (SC/NOC) from the State Load Despatch Centre (SLDC)

¶ 7

From April 2010, the SLDC inserted "Clause (m)" into the SC/NOC, stipulating that excess generation would be paid at low rates fixed by the State Commission (KERC) for old plants rather than the Unscheduled Interchange (UI) rates prescribed by the Central Commission (CERC)

¶ 10

SSL challenged this before the CERC, which set aside the clause as arbitrary and in violation of the CERC Open Access Regulations

¶ 4, 20-22

The appellants challenged the CERC's order via a Writ Petition, which was dismissed by a Single Judge

¶ 27-35

The appellants then filed this intra-court appeal

¶ 39

02Issues

i.1. Whether Regulation 8 of the CERC (Open Access in Inter-State Transmission) Regulations, 2008, is ultra vires the Electricity Act, 2003

¶ 40, 78

ii.2. Whether the CERC had the jurisdiction to adjudicate this dispute under Section 79(1)(f) of the Act

¶ 40, 90

iii.3. Whether the SLDC has the statutory authority to override CERC Regulations by imposing conditions related to tariffs and UI charges

¶ 40, 86

03Law Applied

Section 32 (functions of SLDC), Section 33 (compliance with directions), Section 79 (functions of CERC), and Section 178 (CERC's power to make regulations) of the Electricity Act, 2003.

¶ 45, 46, 52, 53

The Supreme Court's decision in PTC India Ltd. v. CERC, which established that CERC's regulations are delegated legislation and functions under Section 79 must conform to them.

¶ 42, 53-55

Central Power Distribution Co. v. CERC, affirming that the CERC has plenary power to regulate the Grid and specify the Grid Code, making State Commissions/SLDCs subservient to CERC in inter-State transmission matters.

¶ 60, 68-69, 76

Provisions in the judgment · 43 · Linked ones open on LawLens

Electricity Act, 2003 42 provisions

Section 2 Section 3 Section 14 Section 15 Section 16 Section 18 Section 25 Section 26 Section 27 Section 28 Section 29 Section 30 Section 31 Section 32 Section 33 Section 36 Section 38 Section 39 Section 40 Section 41 Section 42 Section 52 Section 57 Section 59 Section 61 Section 62 Section 64 Section 66 Section 76 Section 79 Section 82 Section 86 Section 91 Section 92 Section 111 Section 128 Section 130 Section 176 Section 177 Section 178 Section 180 Section 181

KARNATAKA HIGH COURT ACT, 1961 Section 4

04Reasoning

The Court reasoned that while Sections 32 and 33 grant the SLDC power to ensure integrated grid operations within a State, these powers are restricted to intra-State matters and must align with the Regional Load Despatch Centre (RLDC) and CERC guidelines.

¶ 77, 83

The dispute involved inter-State transmission, where the CERC holds exclusive jurisdiction to regulate and determine tariffs/charges.

¶ 75, 90

The Court found that Regulation 8 of the Open Access Regulations was a valid exercise of CERC’s power under Section 178 to carry out the provisions of the Act regarding inter-State movement.

¶ 79-80

The Court found that the SLDC’s "Clause (m)" was illegal because it sought to substitute UI rates—a commercial mechanism for grid discipline established by CERC—with rates for "old plants," an action for which the SLDC has no statutory authority under the Act.

¶ 86, 89

As delegated legislation, CERC Regulations prevail over the SLDC's administrative or statutory directions.

¶ 88