Central Electricity Regulatory Commission Has The Power To Execute Its Own Orders Under The Garb Of Section 79 Of The Electricity Act, 2003

On 17.10.2024, the  Central Electricity Regulatory Commission (‘Central Commission’)directed Tamil Nadu Transmission Corporation Limited (‘TANTRANSCO’) to pay its outstanding transmission charges along with applicable Late Payment Surcharge to Power Grid Corporation of India Limited (‘POWERGRID’).

POWERGRID had been entrusted with the responsibility of setting up certain elements that are part of the transmission system associated with the Kalpakkam PFBR 500 MW project. Consequently, POWERGRID approached the Central Commission seeking approval of the transmission tariff for three assets associated with the said system that was being set up by it.

The Central Commission vide its Tariff Order dated 04.03.2021, approved the date of commercial operation of the said asset as 01.04.2014. It was further directed that the Transmission Charges from the said date would be borne by the generating company – BHAVINI and the transmission licensee – TANTRANSCO in equal proportion until either the generation by BHAVINI or the transmission system set up by TANTRANSCO is commissioned.

Pursuant to the above-mentioned Order dated 04.03.2021, bilateral invoices were raised on TANTRANSCO.

Thereafter, POWERGRID approached the Central Commission for truing up of the transmission tariff for the 2014-19 period and determination of the transmission tariff for the 2019-24 period. The Central Commission vide its order dated 05.12.2021 trued up the transmission tariff for the 2014-19 period. Subsequent to the passing of the aforementioned True-UpOrder, the final invoice was raised on TANTRANSCO.

As TANTRANSCO failed to make the payment within the stipulated time in terms of the final invoice raised, POWERGRID filed a Petition before the Central Commission under Section 79 of the Electricity Act, 2003 for the execution of the Tariff Order dated 04.03.2021.

1. TANTRANSCO has continuously defaulted in complying with the Tariff Order. Subsequent to the Tariff Order, bilateral invoices were raised on TANTRANSCO. However, even after several notices, TANTRANSCO has not paid the outstanding dues.
2. No Appeal or Review has been preferred against the Tariff Order by TANTRANSCO.
3. POWERGRID has no contractual mechanism to enforce the recoveries against TANTRANSCO. There is no bank guarantee or Letter of Credit available with PGCIL for encashment to recover the outstanding dues.
4. The Central Commission is vested with the powers of civil courts and therefore, it can execute its own orders under Regulation 119 of the Conduct of Business Regulations, 1999.
5. The Central Commission exercises regulatory powers under Section 79 of the Act which includes within its scope the power to enforce and implement its orders and can initiate suo-moto action under Section 142 of the Electricity Act, 2003 in the event of any non-compliance of regulation or the orders of  Commission.

The Central Commission observed in its Order that although Section 79 of the Electricity Act, 2003 does not specifically elaborate on the execution of orders passed by the Commission, it nevertheless enables the Commission to regulate the Inter-State Transmission of Electricity, to determine its tariff and also to adjudicate upon the disputes in connection therewith. 

Relying upon the judgement of the Hon’ble Supreme Court in Central Power Distribution Co. & Ors. v. Central Electricity Regulatory Commission &Ors., (2007) 8 SCC 197the Central Commission observed that the power to regulate also includes within it the power to enforce. 

Reliance was also placed upon the decision of the Hon’ble Supreme Court in Maharashtra State Electricity Distribution Company Ltd. v. Maharashtra State Electricity Regulation Commission & Ors. (2022) 4 SCC 657wherein it was observed that the Electricity Regulatory Commissions constituted under the Electricity Act, 2003 are to be seen as substitutes for civil courts in relation to disputes between the licensees and the generating companies. Therefore, the Commissions would have the power to execute their own orders.

The Central Commission rejected the contention of TANTRANSCO that POWERGRID failed to avail appropriate remedies under Section 142 of the Electricity Act, 2003. The Central Commission observed that invoking the provisions of Section 142 for non-compliance of an order is not the sine qua non in enforcement proceedings and is simply one of the means of ensuring compliance.

Further, the Central Commission has also observed that the truing-up exercise is not an independent exercise but is in furtherance to the determination of tariff under the tariff order. Merely because the applicable transmission charges for the said asset have undergone revision due to the truing-up exercise, it does not render the tariff order, especially the directions issued thereunder, non-executable or unenforceable.