### Phased roll-out of distribution network by parallel licensee does not contravene universal service obligations under Electricity Act.

The Appellant, BEST, is a local authority and distribution licensee in the Island City of Mumbai

Respondent No. 2 (TPC-D) was granted a parallel distribution license on 14.08.2014 for 25 years

TPC-D submitted a Network Rollout Plan for the areas overlapping with BEST, which the Maharashtra Electricity Regulatory Commission (MERC) approved via a combined order dated 12.06.2017

This plan allowed TPC-D to develop its distribution network in two phases over a seven-year period

BEST challenged this order, contending that phased development violates the Universal Service Obligation (USO), encourages "cherry-picking" of high-end consumers, and creates an uneven playing field

1. Whether the phased development of a distribution network over seven years is permitted under the Electricity Act, 2003 or if it contravenes the Universal Service Obligation under Section 43

2. Whether the approved rollout plan violates the specific conditions of the distribution license granted to TPC-D

3. Whether the MERC failed to consider practical difficulties and stranded assets in the approved consumer migration/switchover protocol

The court primarily applied Section 42(1) of the Electricity Act, 2003, which mandates licensees to develop an efficient and economical distribution system

It also applied Section 43, regarding the duty to supply electricity on request within stipulated timelines, acknowledging that such supply may require extensions of distribution mains

The 6th Proviso to Section 14 was cited regarding the grant of parallel licenses

The Tribunal relied on its own precedent in *Noida Power Company Limited v. PVVNL*, holding that laying an entire network is not a precondition for a license

The Supreme Court's ruling in *BEST v. MERC (2015) 2 SCC 438* regarding the exemption of local authorities from providing open access under Section 42(3)

The Tribunal reasoned that Section 42(1) implies a continuous, progressive obligation to develop infrastructure rather than a one-time requirement to cover an entire area instantly

The MERC’s two-phase approach—prioritizing areas with existing substations (Phase I) before expanding to new areas (Phase II)—was deemed an "optimal approach" to prevent scattered, unplanned development and "cherry-picking"

The Tribunal noted that BEST’s challenge to the principle of phased development was barred by *res judicata* as the same issue was previously decided against them in Appeal No. 216 of 2014

Regarding the migration protocol, the Tribunal found that the 3-day information-sharing window had functioned effectively since 2009 in other Mumbai sectors and that pending legal disputes cannot be used to block a consumer's right to switch licensees

Finally, the "stranded assets" argument was rejected because the Electricity Act expressly permits competition and network duplication in the same area

Phased development of a distribution network is legally permissible and does not violate the USO under Section 43

the rollout plan was consistent with TPC-D’s license conditions as it balanced cost-effectiveness with USO requirements

the switchover protocol was valid, noting that as a local authority, BEST is not required to provide open access, making TPC-D’s network duplication an "inevitable statutory outcome"