SUPREME COURT ON THE SCOPE OF JURISDICTION OF THE STATE COMMISSION TO ENTERTAIN THE PETITION FILED BY ENTITIES OTHER THAN DISCOMS OR GENERATOR UNDER SECTION 63 OF THE ELECTRICITY ACT, 2003

In a landmark decision rendered by the Hon’ble Supreme Court, it is held that Section 63 of the Electricity Act, 2003 (“Act”) does not restrict the invoking of the jurisdiction of State Commission only by the Distribution Licensees (“Discom”) or the Generating Company for adoption of tariff discovered through the transparent bidding process.

In the present case, the primary question before the Hon’ble Supreme Court was whether only the Discom or the Generating Company can approach the State Commission under Section 63, read with Section 86(1) (b) of the Act for adoption of tariff. The Hon’ble Supreme Court has held that the provisions of Section 63 have to be read in harmony with the provisions of Section 86(1)(b) and the powers of the State Commission cannot be curtailed by interpreting that only the Discoms or the Generating Company can invoke the provisions of 63 under the Act.

The Municipal Corporation of Delhi (“MCD”) had approached the State Commission- Delhi Electricity Regulatory Commission (“DERC”) for the adoption of tariff for the Municipal Solid Waste to Energy (“WTE”) Processing Facility at Narela Bawana, New Delhi, for 3000 (± 20%) TPD of MSW (“Project”) discovered through the competitive bidding process conducted by MCD. The Project was to be established under Rule 15(v) of the Solid Waste Management Rules 2016 (“SWM Rules, 2016”), which mandated MCD for setting up the WTE Project. The MCD had also sought consent of the Discoms for initiating such a process and was also giving a viability gap funding to ensure such projects are executed in a smooth manner.

DERC through its Order dated 07.03.2023 had adopted the tariff discovered through the competitive bidding route and directed the successful bidder to renegotiate the terms of the PPA with the Discoms. However, the same was challenged before the Appellate Tribunal for Electricity (“APTEL”) wherein APTEL vide Order dated 31.08.2023 has held that under Section 63, only a Discom or a Generating Company can file a Petition for adoption of tariff under the Act.

By its Judgement, the Supreme Court has set aside the Order of the APTEL and affirmed the decision of DERC for adoption of tariff in the present case. The Supreme Court has also held that with regard to the WTE Projects, the provisions of Electricity Act have to be read in addition to the provisions of other Statutes. The Supreme Court has held that the APTEL ought to have kept in mind public interest while rendering any interpretation under the Electricity Act, 2003.

MSA Partners represented MCD at all stages before DERC, APTEL and the Hon’ble Supreme Court with the team comprising of Ms. Swapna Seshadri (Partner), Mr. Utkarsh Singh (Senior Associate), Ms. Sneha Singh Baghel (Associate) and led by Mr. Ramji Srinivasan (Senior Advocate)

Copy of the Judgement can be accessed here.