Supreme Court Affirms State Electricity Regulatory Commission’s Authority to Reject Non-Aligned Tariffs

Supreme Court Law Insider

LI Network

Published on: January 9, 2024 at 09:52 IST

In a significant ruling, the Supreme Court has upheld the State Electricity Regulatory Commission’s (SERC) power to decline the adoption of tariffs that are not in alignment with market prices.

The decision emphasizes that while determining tariffs, the Commission must prioritize consumer interests. This verdict overturns the rulings of the High Court and the Appellate Tribunal for Electricity (APTEL).

The bench, comprising Justices BR Gavai and Prashant Kumar Mishra, reinstated the State Commission’s order, emphasizing that the SERC can only adopt tariffs determined through a transparent bidding process.

This process must adhere to guidelines set by the Central Government. The Court highlighted Clause 5.15 of the Bidding Guidelines, allowing the rejection of price bids if rates quoted are not aligned with prevailing market prices.

The case involved Rajasthan Rajya Vidyut Prasaran Nigam Limited (RVPN) seeking approval for the procurement of 1000 MW of power through competitive bidding.

The State Commission reduced the quantum to 500 MW, leading to appeals from L-2 and L-3 bidders, subsequently allowed by APTEL.

The Supreme Court, while setting aside the reduction in quantum, directed the State Commission to examine the approval for adopting tariffs with respect to L-4 and L-5 bidders.

The ruling underscores the SERC’s authority to reject non-market-aligned tariffs, ensuring a balance between consumer interests and the larger public interest.

The decision sets a precedent for regulatory bodies to prioritize transparency and adherence to market principles in tariff determinations.

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