Supreme Court Upholds Independence of State Electricity Regulatory Commissions
The Supreme Court of India affirmed the autonomy of State Electricity Regulatory Commissions (SERCs), emphasising their discretion to operate independently of government directives, thus enhancing transparency and competition in the electricity sector nationwide.
October 17, 2024. By EI News Network
This ruling highlights the autonomy of SERCs in regulating electricity pricing, emphasising that policy directives cannot infringe upon the regulatory authority's adjudicative discretion under the Electricity Act.
The decision supports a previous judgment from the Appellate Tribunal for Electricity (APTEL), which stated that policy directives cannot undermine the statutory functions of the Kerala State Electricity Regulatory Commission (KSERC). APTEL pointed out that Section 86(1)(b) of the Electricity Act, 2003, explicitly grants KSERC the authority to regulate how distribution licensees procure electricity from generating companies.
In its ruling, the Bench, consisting of Chief Justice Dhananjaya Y Chandrachud, Justice JB Pardiwala, and Justice Manoj Misra, asserted that the independence of State Regulatory Commissions is evident from Section 108 of the Act. This provision indicates that while the state commission may be guided by government directions, it is not automatically bound by them.
The case arose from a tender process initiated by the Kerala State Electricity Board Ltd. (KSEB), where KSEB sought competitive bids for electricity procurement. After selecting L1 bidders who did not meet the required power quantity, KSEB invited additional bidders to match these tariffs, ultimately leading to bids exceeding the original power requirement.
When KSEB sought KSERC’s approval for the Power Supply Agreements (PSAs), the commission observed deviations from the standard bidding guidelines set by the Ministry of Power. KSERC noted that KSEB had not obtained prior approval for these deviations, prompting an appeal to APTEL. APTEL concluded that KSERC was not bound by the State Government's directives, affirming that such directives could not compel KSERC to exercise its quasi-judicial powers in a specific manner.
As said earlier, the Supreme Court also agreed with APTEL's view on the limited scope of review under Section 94(f) of the Act, which grants state commissions powers akin to a civil court for reviewing their decisions. The Court emphasised that an order may only be reviewed on specific grounds and cannot be contested as a review without clear evidence of error in the original ruling.
Overall, the Supreme Court's judgment not only strengthens the legal framework governing electricity regulation in India but also sets a precedent for other SERCs across the country to uphold their autonomy in decision-making processes related to electricity procurement and pricing. This ruling is expected to have far-reaching implications for the functioning of regulatory commissions and the governance of the electricity market in India.
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