Supreme Court Clarifies Priority of Secured Creditors over Government Dues in Insolvency Cases
In a recent landmark judgment, the Supreme Court clarified the hierarchy of debt repayment in insolvency cases, emphasizing that secured creditors enjoy higher priority than dues owed to the Central or State Government. The Court highlighted the overriding effect of Section 238 of the Insolvency and Bankruptcy Code (IBC), stating that it supersedes provisions of other specific enactments such as the Electricity Act, 2003. This decision provides essential clarity on the treatment of government dues and reaffirms the principles of the waterfall mechanism under Section 53 of the IBC.
Read More
Supreme Court’s Ruling on Change in Law Claims: Haryana Discoms vs GMR Kamalanga Energy Limited
What’s the impact of the Supreme Court ruling in favour of Haryana Discoms over GMR’s Change in Law claims? Unravel the legal complexities of this significant judgment here.
Read More
Delhi High Court holds that an Arbitration clause does not survive on Novation of the Contract
Recently, on 02.06.2023, the Delhi High Court passed a judgement in the case of B.L Kashyap and Sons Ltd Vs. Mist Avenue Private Ltd dismissed a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (‘the Act’) for setting aside an Arbitral Award. The issue involved was whether an arbitration clause survive on the novation of the contract.
Read More
APTEL Stays The Order of Central Commission Allowing The Claim for Deemed Fixed Charges From Distribution Licensees Not Procuring Any Power As Claimed Under the Section 11 Directions Issued By The Ministry of Power
On 18.04.2023, the Hon’ble Appellate Tribunal for Electricity (‘APTEL’) passed an order in an Appeal filed by Haryana and Punjab Utilities, staying the Order dated 03.01.2023 passed by the Central Electricity Regulatory Commission (‘CERC’) in the Petition filed by Tata Power Company Limited (‘Tata Power’) seeking compensation on account of the ‘adverse financial impact’ in terms of Section 11(2) of the Electricity Act, 2003.
Read More
Decoding the Supreme Court’s Stance on Unstamped Arbitration Agreements: A Legal Perspective
Delve into the recent verdict by the Supreme Court of India on unstamped arbitration agreements and its potential impact on arbitration practices in India. Explore the legal rationale and the implications for future proceedings with R Associates.
Read More
Supreme Court rules in favour of the Haryana Discoms allowing Inter-Plant Transfer of Coal as a “Change in Law Event”
Analysis of the historic Supreme Court ruling allowing Inter-Plant Transfer of Coal as a “Change in Law Event”. The ruling benefits Haryana Discoms and establishes the principle of passing on savings from change in law to the Distribution Licensees and consumers.
Read More
Central Electricity Regulatory Commission (‘CERC’) allows Time Over Run and Cost Over Run on account of Changes in Law and Force Majeure Events encountered by POWERGRID NM Transmission.
The Central Electricity Regulatory Commission (CERC) has given a green signal to cost and time overruns in POWERGRID NM Transmission’s project due to changes in law and force majeure events. Read the detailed analysis and insights here.
Read More
Discretion of the Adjudicating Authority under Section 7 of the IBC
In the recent case of M Suresh Kumar Reddy v. Canara Bank, the Supreme Court clarified the position of law regarding the discretion of the Adjudicating Authority in admitting applications under Section 7 of the Insolvency and Bankruptcy Code. Learn about the background, submissions, judgment, and analysis of the case.
Read More
Landmark Judgment on Enforcement of Workplace Harassment Laws: A Wake-Up Call for Dignity and Respect
In the case of Aureliano Fernandes v. State of Goa and Others, a significant judgment has been delivered, shedding light on the urgent need for robust enforcement of workplace harassment laws. Titled “Wake-Up Call: Landmark Judgment on Workplace Harassment Laws,” this ruling emphasizes the importance of procedural fairness and upholding dignity and respect in the workplace.
Read More
CERC allows Power Exchanges to charge a transaction fee up to the ceiling limit of 2 paisa/kWh from either party to the transaction
In the recent decision dated 05.04.2023 in Petition Nos. 143/MP/2022, 178/MP/2022 and 88/MP/2022, the Central Electricity Regulatory Commission (‘CERC’) allowed the Power Exchanges to charge a transaction fee up to the ceiling limit of 2 paisa/kWh from either party to the transaction under Regulation 23 of the Central Electricity Regulatory Commission (Power Market) Regulations, 2021 (‘PMR Regulations, 2021’). Emphasising that a differential transaction fee for different Power Exchanges on the basis of the volume traded may distort competition more than promoting it, the CERC upheld the flexibility of fixation of transaction fee so long as it is within the ceiling limit of 2 paisa/kWh from each party.
BACKGROUND
Regulation 12(3) of the recently notified PMR Regulations, 2021 required Power Exchanges to realign their Byelaws, Rules and Business Rules. In terms of the afore-mentioned provision, Indian Energy Exchange Limited (‘IEX’) filed Petition Nos. 46/MP/2022 and 143/MP/2022 seeking an approval of transaction fee of up to 2 paisa/kWh from either party to the transaction for the contracts covered under Clause (1) to (3) of Regulation 5 of the Power Market Regulations, 2021.
SUBMISSIONS OF IEX
IEX submitted that Section 66 of the Electricity Act, 2003 promotes the development of power market and does not envisage deep regulatory functions to be undertaken by the Appropriate Commission. Regulation 23 of the PMR Regulations, 2021 only sets a ceiling limit of 2 paisa/kWh on the transaction fee to be charged from either party to the transaction and thereby allows requisite flexibility to decide the terms and conditions of the transaction fee to the Power Exchange.
Micromanaging determination of transaction fees is antithetical to the spirit of competition. The voluntary nature of the power market fosters a healthy competition among the Power Exchanges. It is attributable to such competition that the prices discovered in the Power Exchange platforms have consistently been lower than the other avenues available in the market.
While IEX acknowledged that it has a greater market share in comparison to the other platforms, it is a fact that reduction in the ceiling limit of transaction fees will create entry barriers and stifle competition in the power market.
Over the years, Power Exchanges have generated a substantial economic surplus which has resulted in an overall cost saving to the buyers.
In so far as the Power Exchanges are providing a much higher value to the market participants in terms of offering a neutral & transparent automated platform as compared to the Trading Licensees, the Power Exchanges should also be eligible to a transaction fee of 2 paisa/kWh from either party to the transaction.
SUBMISSIONS OF THE ASSOCIATION OF POWER PRODUCERS
A correct interpretation of Regulation 23 provides for the regulation of transaction fee by the CERC and an evaluation of the proposal of Power Exchanges while granting approval of the transaction fee.
IEX does not provide any justification or basis for arriving at the transaction fee of 2 paisa/kWh from either party to the transaction. The savings purportedly made by the Power Exchanges is notional, and therefore, irrelevant in the determination of transaction fee.
Further, in view of the substantial increase in the volume of power traded on the Power Exchanges, the current level of transaction fees needs to be revised downwardly so as to protect the interest of the consumers and avoid any additional burden on the cost of power.
ANALYSIS OF THE CERC
The CERC held that any change in the transaction fee might hurt competition rather than promoting it, and any reduction in the ceiling limit of transaction fee would create entry barriers for prospective entrants and also make the Power market less sustainable for the smaller Power Exchanges. Moreover, a differential determination of transaction fee based on the power traded on the Power Exchange will distort participation, resulting in inequitable incentives to a few Power Exchanges.
While appreciating the changing trend in the price and consequent demand and supply of power, the CERC also noted that imposition of price caps across all market segments in the Power Exchanges has been undertaken in view of protection of consumer interest objective of the Electricity Act, 2003.
ORDER PASSED BY CERC
In view of the above, the CERC allowed the Power Exchanges, including IEX, to charge a transaction fee of up to the ceiling of 2 paisa/kWh from either party to the transaction. Thereafter, the CERC also directed its staff to prepare a discussion paper on factors affecting transaction fee after examining the aspects of risks involves in Power Exchange Operations, international best practices, etc.