INTRODUCTION

On December 19, 2023, the Appellate Tribunal for Electricity (“APTEL”) delivered a key judgment on the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Renewable Energy Sources – Wind and Solar Energy) Regulation, 2014  (“2014 Regulations”) and its applicability on energy wheeling agreements (“EWAs”) in the matter of Kishangargh Hi-Tech Textile Park (“KHTP”) v. Rajasthan Electricity Regulatory Commission and Ors.  

The 2014 Regulations were introduced pursuant to the expiry of the effective term of 5 years of the Rajasthan Electricity Regulatory Commission (Terms and Conditions of Determination of Tariff) Regulation, 2009 (“2009 Regulations”). While the 2014 Regulations did not suppress, repeal or replace the 2009 Regulations, they modified the amount for transmission and wheeling charges applicable and the period for banking of energy. This impacted the open access charges payable and the terms of energy banking that KHTP had agreed to under its existing EWA. When the Rajasthan Rajya Vidyut Prasaran Nigam Limited (RVPN) and Ajmer Vidyut Vitaran Nigam Limited (AVVN) applied the 2014 Regulations, KHTP contested their applicability and approached the Rajasthan Electricity Regulatory Commission (“RERC”). The RERC held that the charges determined under the 2009 Regulations will be applicable for the control period of 5 years and from 2014 onwards, the 2014 Regulations will apply. Aggrieved by the RERC’s order, KHTP appealed to APTEL to decide on the applicability of the 2009 Regulations.  

FACTS OF THE CASE

KHTP commissioned its sustainable energy 8.4MW wind power project in Jaisalmer on 30^th December 2010 after receiving due approval from RERC. As part of the project development, KHTP executed EWAs with Rajasthan Rajya Vidyut Prasaran Nigam Limited (“RVPN”) and Ajmer Vidyut Vitaran Nigam Limited (“AVVN”) for a term of 20 years, both starting December 2012, for wheeling of power from the project to the off-taker. Under the 2009 Regulations, KHTP was entitled to (i) a concession of 50% on transmission and wheeling charges and (ii) a period of 6 months for the banking of energy. When RERC notified the 2014 Regulations, it modified the terms to (i) remove the concession on transmission and wheeling charges completely, requiring developers to make payment of 100% transmission and wheeling charges and (ii) reduced the banking period to 1 month. ¹

KHTP contended before the APTEL that the EWA executed on 30^th December 2010 would continue to be governed under the 2009 Regulations, and the 2014 Regulation would not be applicable to the EWA retrospectively. Based on this, KHTP approached the RERC and requested: 

1. levying open access charges at 50% of the rates in line with Regulation 90(3) of the 2009 Regulations; 
2. refund of the excess open access charges collected by the RVPN, AVVN and Rajasthan Discoms Power Procurement Centre from KHTP under the 2014 Regulations, along with interest for the delayed payment at the rate of 1.25% per month; and
3. provision of six-monthly banking facilities as specified in the 2009 Regulations.

The principal argument of KHTP was that the 2014 Regulations did not repeal, amend or override the 2009 Regulations, and hence could not be made applicable to KHTP’s EWAs. 

APTEL’s DECISION

APTEL held that the parties intended to govern the payment of transmission and wheeling charges by the orders of RERC, which were subject to further amendments.  The APTEL emphasised that the expression “as amended from time to time” in agreements was not merely a written expression but a fundamental principle of interpretation, allowing subsequent amendments, rules and regulations to apply. Citing the Supreme Court’s ruling in PTC India Ltd. v. Central Electricity Regulatory Commission², the APTEL stated that the 2014 Regulations were issued under Section 178 of the Electricity Act, 2003 and overrode existing contracts, compelling parties to align their agreements with the regulation in force. Consequently, APTEL held that the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Renewable Energy Sources – Wind and Solar Energy) Regulation, 2014 would govern the existing EWAs executed by KHTP. 

CONCLUSION

APTEL’s ruling reaffirmed the RERC’s order and established that regulations issued under the Electricity Act will override the existing contract, and regulated entities are required to align their contracts with the prevailing regulations. 

[1] Regulation 38 (3) and 39 of the 2014 Regulation.
[2] Civil Appeal No. 3902 of 2006