APTEL Verdict: Under-utilisation of Transmission Assets No Bar to Commercial Operation or Recovery of Charges through the PoC Mechanism

The Hon’ble Appellate Tribunal for Electricity has upheld POWERGRID’s contention that a transmission asset placed in regular service achieves commercial operation irrespective of the extent of its utilisation, and upon commercial operation, its charges are recoverable through the Point of Connection (‘PoC’) mechanism. The Tribunal thereby rejected the challenge of Tamil Nadu Generation and Distribution Corporation Ltd. (‘TANGEDCO’) to the commercial operation and PoC recovery of the Tuticorin–Salem transmission corridor planned for the generation projects of Coastal Energen Private Limited (Coastal Energen) and Ind-Barath Power (Madras) Limited (Ind-Barath).

The Hon’ble Appellate Tribunal for Electricity, in its judgment dated 13 October 2026 in Tamil Nadu Generation and Distribution Corporation Ltd. v. Central Electricity Regulatory Commission & Ors. (Appeal Nos. 56 and 329 of 2018), has delivered a significant ruling upholding the position consistently taken by Power Grid Corporation of India Ltd. (POWERGRID) before the Central Commission and the Hon’ble Appellate Tribunal.

TANGEDCO had challenged the Central Commission’s orders dated 19.09.2017 in Petition No. 235/TT/2016 and 21.11.2017 in Petition No. 71/TT/2017, which approved the date of commercial operation (COD) of the assets as 13.11.2016 and 23.10.2016 respectively and directed recovery of their charges through the PoC mechanism. TANGEDCO contended that the system was planned for 2,000 MW of Long-Term Access (LTA), of which only 558 MW was tied up through its Power Purchase Agreement (PPA) with Coastal Energen. It argued that the assets were therefore never put to “beneficial use”, and that charges for the unutilised 1,442 MW ought to be borne by the generators rather than the Designated Inter-State Transmission System Customers (DICs).

POWERGRID’s Contentions Before the Tribunal

Throughout the proceedings, POWERGRID consistently advanced the following positions:

1. The Assets Achieved COD upon being placed in Regular Service

• POWERGRID argued that the assets were completed in accordance with the CERC (Terms and Conditions of Tariff) Regulations, 2014. TANGEDCO’s own admitted drawal of 558 MW from Coastal Energen through the system established actual use from commissioning.
• It was submitted that the Regional Load Despatch Centre (RLDC) charging certificate and Central Electricity Authority (CEA) clearance merely corroborated regular service. The non-commissioning of Ind-Barath and right-of-way delays fell within proviso (ii) to Regulation 4(3), being reasons not attributable to the transmission licensee.

2. The Scheme was Implemented under a Final Regulatory Approval

• POWERGRID highlighted that the corridor was implemented under the Central Commission’s regulatory approval dated 31.05.2010 in Petition No. 233 of 2009, as permitted by Clause 22.7(iv) of the Detailed Procedure, 2009.
• TANGEDCO participated in those proceedings and never challenged that order. Its challenge to the necessity of the corridor was therefore an impermissible and belated collateral attack.
• Both generators had executed Bulk Power Transmission Agreements and furnished bank guarantees. Ind-Barath first disclosed abandonment only at the 15th Joint Coordination Committee (JCC) meeting on 10.06.2016, when the assets were already at an advanced stage.
• The 765 kV corridor, initially charged at 400 kV, was planned for about 6,500 MW of concentrated coastal generation in the Tuticorin area, so as to conserve right of way.

3. The Assets form part of the Meshed Inter-State Transmission Network and are Recoverable through PoC

• POWERGRID submitted that the assets form part of a common meshed network serving multiple users, not a system dedicated to the two generators.
• PoC recovery was therefore consistent with Regulation 43 of the 2014 Tariff Regulations read with the CERC (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010.
• The liability of Generator for relinquished LTA is addressed through relinquishment charges determined in Petition No. 92/MP/2015. Having implemented the assets after regulatory approval and incurred substantial expenditure and debt, POWERGRID could not be denied its legitimate transmission charges.

Hon’ble Tribunal’s Findings

The Hon’ble Tribunal upheld POWERGRID’s contentions and the Central Commission’s orders, holding that:

i) Regulation 4(3) of the 2014 Tariff Regulations requires the asset to be in regular service. “Regular use” must be distinguished from the “full use” on which TANGEDCO insisted.

ii) Transmission lines are lumpy assets planned over a long horizon and cannot be augmented in small increments. The N-1 reliability criterion itself requires lines to operate below their thermal capacity.

iii) Once an asset is completed, commissioned and capable of performing its intended function, the absence of full utilisation cannot postpone its COD. PSPCL v. PGCIL (Appeal No. 123 of 2011) was held inapplicable.

iv) The regulatory remedy for stranded capacity is relinquishment compensation under Regulation 18 of the 2009 Connectivity Regulations. Under Regulation 18(3), that compensation reduces the charges payable by other long-term and medium-term customers.

v) Clause 22.7(iv) of the Detailed Procedure permitted the scheme with the Central Commission’s approval, granted on 31.05.2010. By the time Ind-Barath disclosed abandonment, execution had progressed too far to be altered.

vi) The entire 2 x 660 MW of Coastal Energen, Kudankulam Nuclear Power Project (2 x 1,000 MW) and Tuticorin JV (2 x 500 MW) are pooled at Tuticorin Pooling Station.

vii) Likening planning agencies to an architect and the transmission licensee to a contractor, the Tribunal held that fixed-cost recovery turns on whether capacity is created, commissioned, maintained and kept available, not on power flow at a given time.

viii) The non-materialisation of planning assumptions was not attributable to POWERGRID, which implemented the approved scheme. Charges are recoverable under the 2010 Sharing Regulations, subject to prudence check of capital cost.

ix) Brevity of reasoning was no ground to set them aside, as the Tribunal decided the substantive challenge on merits. Both appeals were dismissed.

This judgment marks a significant affirmation of POWERGRID’s consistent stand before the Central Electricity Regulatory Commission and the Hon’ble Appellate Tribunal.

The ruling provides regulatory certainty to transmission licensees. Once a scheme approved by the competent authorities is implemented, commissioned and kept available, recovery of admissible tariff cannot be made hostage to the fortunes of the generators for whom it was planned.

It recognises the anticipatory and lumpy nature of transmission planning, while the relinquishment mechanism under the Connectivity Regulations shields other DICs from the cost of stranded capacity. This decision is a significant victory for POWERGRID and reinforces the stability of the PoC framework on which inter-State transmission investment depends.