Generators cannot seek normative parameter relaxation without first enforcing contractual remedies against defaulting fuel suppliers.

The Appellant, Assam Power Distribution Company Ltd. (APDCL), challenged the Central Electricity Regulatory Commission’s (CERC) orders dated 30.03.2017 and 03.05.2017.

The Respondent No. 1, ONGC Tripura Power Company Ltd. (OTPC), a joint venture primarily owned by ONGC (50%), operates the "Palatana" generating station.

OTPC sought a relaxation of the Normative Annual Plant Availability Factor (NAPAF) from 85% to 68% for the 2014–19 period, citing acute fuel gas shortages from its supplier, ONGC.

The CERC partially granted this, relaxing the NAPAF to 76%, thereby allowing OTPC to recover an additional ₹282.43 Crore from beneficiaries.

APDCL contended that since ONGC is the majority shareholder of OTPC and the sole fuel supplier, any gas shortage was a commercial risk that OTPC should have addressed via Liquidated Damages (LD) under its Gas Sale & Purchase Agreement (GSPA) rather than passing the cost to consumers.

1. Whether the CERC was justified in exercising its power to relax operational norms (NAPAF) under Regulation 54 of the 2014 Tariff Regulations due to fuel shortages.

2. Whether the fuel shortage constituted a valid "Force Majeure" event under the GSPA, exempting the generator from its primary obligation to arrange fuel.

3. Whether OTPC’s failure to invoke the penalty/Liquidated Damages clauses against its supplier (ONGC) precluded it from seeking tariff relaxation from the Commission.

The responsibility for procurement of primary fuel rests solely with the generating company and cannot be shifted to beneficiaries, as established in NTPC Limited v. CERC & Ors. (Appeal No. 110 of 2012).

A company and its shareholders are distinct legal entities (doctrine of corporate veil).

Mandatory contractual notice requirements are a condition precedent for relief under Force Majeure clauses, as per Maruti Clean Coal and Power Limited v. PGCIL.

Relaxation under Regulation 54 (Power to Relax) of the CERC 2014 Tariff Regulations cannot be granted to cover a generator’s failure to enforce its own contractual remedies.

OTPC and ONGC are distinct legal entities, and ONGC’s 50% shareholding does not exempt OTPC from enforcing its rights under the GSPA.

The GSPA (Clause 15) contained specific provisions for Liquidated Damages in the event of a supply shortfall.

OTPC failed to provide the mandatory 48-hour notice required by Clause 17.3 to claim a Force Majeure event under Clause 17.1(c).

By seeking NAPAF relaxation instead of claiming LD from ONGC, OTPC effectively passed the financial burden of the fuel supplier’s default onto the consumers.

Clause 14.3 (pro-rata supply) did not override the obligation to pay LD under Clause 15.

The CERC erred in granting relaxation for a situation that was within the commercial and contractual control of the generator.

OTPC failed to exercise its contractual remedies against its fuel supplier and could not shift the resulting financial loss to the beneficiaries.

All consequential calculations based on the relaxed NAPAF were annulled.