Site icon SCC Times

All State Regulatory Commissions must frame Regulations for determination of Electricity tariff within 3 months: Supreme Court 

Supreme Court: The 3-judge bench of Dr DY Chandrachud, CJI* and AS Bopanna and JB Pardiwala, JJ has directed all State Regulatory Commissions to frame Regulations under Section 181 of Electricity Act, 2003 on the terms and conditions for determination of tariff within three months after holding that the provisions of the Act do not prescribe one dominant method to determine tariff as it seeks to distance the State Governments from the determination and regulation of tariff, placing such power completely within the ambit of the Appropriate Commissions.

The Court observed that though the Government, both at the Centre and in the States, have framed statutory policies and guidelines regulating the electricity sector, the Regulatory Commissions have not framed the necessary regulations to put into effect the principles prescribed under the Act.

The Court directed that,

Explaining the scheme of the Electricity Act, 2003, the Court observed that Sections 62 and 63 stipulate the modalities of tariff determination. While Section 62 bestows the Commission with wide discretion to determine tariff, Section 63 seeks to curtail this discretion where a bidding process for tariff determination has already been conducted. Section 63 contemplates that in such situations where the tariff has been determined through the bidding process, the Commission cannot by falling back on the discretion provided under Section 62 negate the tariff determined through bidding. This interpretation of Section 63 is fortified by the use of the phrase ‘such’ in Section 63 – the Commission is bound to ‘adopt’ ‘such’ tariff determined through bidding.

Explaining the features of Section 63, the Court observed:

The Court stressed that the non-obstante clause in Section 63 cannot be interpreted to mean that Section 63 would take precedence over Section 62 at the stage of choosing the modality to determine tariff. The criteria or guidelines for the determination of the modality of tariff determination ought to be notified by the Appropriate State Commission either through regulations under Section 181 of the Act or guidelines under Section 61 of the Act.

“There is nothing in Sections 62 or 63 that could lead us to interpret that Section 63 is the dominant route for determination of tariff. Both the provisions provide alternative modalities through which tariff can be determined.”

[TATA Power Company Limited Transmission v. Maharashtra Electricity Regulatory Commission, 2022 SCC OnLine SC 1615, decided on 23.11.2022]


*Judgment by: CJI Dr DY Chandrachud


For appellants: Sr Adv Shyam Divan

For respondent: Sr Advs Dr Abhishek Manu Singhvi and Vikas Singh

Exit mobile version