SC upholds MERC contract to Adani, rejects Tata Power’s plea

In April, Tata Power had approached the apex court challenging the Aptel order that upheld MERC’s decision to award the ₹7,000 crore transmission license on a nomination basis to Adani Electricity in March 2021.

MERC in March 2021 granted a transmission licence to Adani for setting up a 1000 MW HVDC (VSC based) link between 400 kV MSETCL Kudus and 220 kV AEML Aarey EHV Station.

Following which, Tata Power moved the Aptel on the the grounds that the grant of the license was not preceded by a Tariff Based Competitive Bidding process. And therefore, this was entirely contrary to public interest and statutory mandate, according to the 93-page order of the court.

APTEL, by its judgment dated 18 February 2022, dismissed an appeal by the Tata Power against a decision of MERC dated 21 March 2021.

The Electricity Act provides States sufficient flexibility to regulate the intra-state transmission systems, wherein the Appropriate State Commissions possess the power to determine and regulate tariff, a bench led by Justice DY Chandrachud held.

Adding that “The Electricity Act 2003 seeks to distance the State Governments from the determination and regulation of tariff, placing such power completely within the ambit of the Appropriate Commissions.

Electricity Act 2003 read with Maharashtra govt GOM does not make tariff only through bidding route. This case has brought to notice the ad hoc nature of state electricity transmission. MSETCL flip flops have led to waste of time,” the top Court said.

More important, Justice Chandrachud said that “Further, the regulations framed must be in consonance with the objective of the Electricity Act 2003, which is to enhance the investment of private stakeholders in the electricity regulatory sector so as to create a sustainable and effective system of tariff determination that is cost efficient so that such benefits percolate to the end consumers”.

Aptel this year in February held that MERC’s decision to choose the regulate tariff mode route under section 62 of the Electricity Act cannot be termed as, incorrect, perverse or inappropriate.

Tata Power in its plea had said that the Aptel’s order was perverse and therefore liable to be set aside. It also pointed that the tribunal had not examined the reasons for the regulator had opted for exclusion of the tariff Based Competitive Bidding route while discharging its functions, thus rendering the entire process of electricity contracting susceptible to significant abuse and misuse.