Entity Responsible for Commissioning Delay Prohibiting Asset Utility Must Bear Consequential Transmission Charges

In brief

The question

1. Whether the requirement of the 220 kV bays at Hamirpur was crystallized and approved such that the condition of a two-year advance intimation was inapplicable.

The court held

The Tribunal answered all issues in the negative against the Appellant. It held that HPPTCL is liable to pay the transmission charges for the 220 kV bays from the deemed COD (31.03.2019) until its downstream network was commissioned.

It also directed

The Tribunal upheld the CERC’s Impugned Order, ruling that the liability flows from the statutory planning process and the "defaulting entity pays" principle, regardless of the lack of a formal bilateral contract. Appeal No. 300 of 2022 was dismissed.

01Facts

Power Grid Corporation of India Ltd. (PGCIL) was entrusted with the augmentation of transformers at the Hamirpur Substation, which included two 220 kV line bays (Asset 2).

p. 6

These bays were intended to connect to HPPTCL’s downstream network (Hamirpur–Dehan line). PGCIL declared the commercial operation date (COD) as 31.03.2019, but the bays remained unutilized as HPPTCL’s downstream line was not ready.

p. 6

CERC, in the Impugned Order dated 21.11.2019, directed HPPTCL to pay transmission charges from 31.03.2019 until the commissioning of its downstream system.

p. 7

HPPTCL appealed, contending it never provided the mandatory two-year advance intimation for construction and that PGCIL failed to execute a formal Implementation Agreement (IA) required under the Grid Code.

pp. 8-10

02Issues

i.1. Whether the requirement of the 220 kV bays at Hamirpur was crystallized and approved such that the condition of a two-year advance intimation was inapplicable.

p. 16/para 22

ii.2. Whether the absence of a formal Implementation Agreement under the 2016 Amendment to the IEGC absolves the Appellant of liability for transmission charges.

p. 26/para 40

iii.3. Whether the principle of "defaulting entity pays" applies in the absence of a bilateral contract.

p. 34/para 52

03Law Applied

The court applied Regulation 4(3) of the CERC (Terms and Conditions of Tariff) Regulations, 2014, regarding the declaration of COD when an asset is ready but cannot be charged due to non-availability of the downstream system.

p. 6

It interpreted Regulation 6.3A(4) of the Indian Electricity Grid Code (IEGC) (Fourth Amendment) 2016 concerning the "endeavour" to match commissioning through Implementation Agreements.

pp. 26-27

The Tribunal further relied on the regulatory principle of "compensatory liability," established in Bhopal Dhule Transmission Company Limited v. CERC, which dictates that the entity responsible for the mismatch in commissioning must bear the transmission charges to ensure the ready-licensee is not deprived of its tariff.

p. 34

Provisions in the judgment · 8 · Linked ones open on LawLens

Electricity Act, 2003 Section 111 Section 76 Section 68 Section 178 Section 181 Section 62 Section 63

Indian Contract Act, 1872 Section 56

04Reasoning

The Tribunal found that the requirement for the bays was specifically requested by HPPTCL and crystallized during the 30th Standing Committee Meeting (19.12.2011) and 25th NRPC meeting.

pp. 19-21

Consequently, the general "two-year notice" proviso in the meeting minutes did not apply to these specific, already-approved assets.

p. 21

Regarding the IEGC 2016 Amendment, the Tribunal held that since the investment approval (2014) and implementation began before the Amendment's notification, the requirement for a mandatory Implementation Agreement could not be applied retrospectively.

pp. 29-30

The court distinguished this case from PSTCL v. CERC (Appeal 109/2021) because, unlike PSTCL, HPPTCL had actively sought the bays and provided status updates on its downstream line, thereby creating a binding regulatory obligation.

pp. 33-34

By failing to match PGCIL’s timeline, HPPTCL became the "defaulting entity" liable for the mismatch.

p. 32