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Home News Power Sector News SERCs can decide power tariffs, rules Supreme Court

SERCs can decide power tariffs, rules Supreme Court

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Supreme CourtThe Supreme Court has ruled that the electricity regulatory commissions are vested with the powers to fix tariffs for electricity. The court set aside the order of the Appellate Tribunal for Electricity which had ruled that Andhra Pradesh Electricity Regulatory Commission has no such power. The apex court, however, asked AP Electricity Regulatory Commission to examine the issue of whether the private power developers could be permitted to sell the electricity to third parties other than the state-owned utilities.

The tribunal in its order passed on June 2, 2006 had said that AP Electricity Regulatory Commission has neither the power nor jurisdiction to compel the developers to sell the power generated by them to APTRANSCO and/or DISCOM.

The AP Electricity Regulatory Commission, Transmission Corporation of AP, Central Power Distribution Company of AP, Eastern Power Distribution Company of AP had challenged the order of the tribunal in a batch of appeals by making various private developers as parties before the apex court.

"The functions assigned to the regulatory commission are wide enough to specifically impose an obligation on the regulatory commission to determine the tariff. The specialised performance of functions that are assigned to regulatory commission can hardly be assumed by any other authority", said a bench comprising justices BS Chauhan and Swatanter Kumar. The court said: "The regulatory commission is vested with very vast powers and functions."

Perusing various statutory provisions of the Reform Act, 1998 and the Electricity Act, 2003, the court further said: "The regulatory commission is vested with the function for determining the tariff for generation, supply, transmission and billing of electricity etc., as well as regulation of electricity purchase and procurement process of distribution licensees, including price at which electricity shall be procured from the generating companies".

AP Electricity Regulatory Commission was created in furherance of the Reform Act, 1998.

According to court, though, Section 12 of the Act vests the state government with the power to issue policy directions on matters concerning electricity in the state, including the overall planning and co-ordination but all such policy directions should be consistent with the objects of the act and accordingly shall not adversely affect or interfere with the functions and powers of the regulatory commission.

The state government is further expected to consult the regulatory commission in regard to the proposed legislation or rules concerning any policy direction and shall duly take into account the recommendation by the commission on all such matters. The scheme of these provisions is to grant supremacy to the regulatory commission and the state is not expected to take any policy decision or planning which would adversely affect the functioning of the commission or interfere with its functions, court observed in its 183 page of elaborate judgement.

Andhra Pradesh Electricity Regulatory Commission had initiated suo motu proceedings for determination of tariff applicable to the non-conventional energy generation projects in the state. After hearing the non-conventional power project developers, the non-conventional energy development corporation of Andhra Pradesh, Transmission Corporation of AP and APTRANSCO in 2004, it had fixed the energy purchase rates at base unit price of Rs 2.25 as on April 1, 1994 and the escalation index of 5% per year but the escalation would be simple and not to be compounded every year. In other words, the base price as on April 1, 2004 will be Rs.3.37 per kwh, it had said.

It was challenged by the power developers before the tribunal.

Source- Economic Times


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