Punjab State Commission Dismisses Unauthorized Power Injection Claim
The Punjab State Electricity Regulatory Commission (‘State Commission’) in its recent decision in the matter M/s Winsome Yarns Limited – the Captive Generating Plant (‘CGP’) v. Punjab State Power Corporation Limited and Anr., while dismissing the Petition in limine has ruled in favour of the Punjab State Transmission Corporation Limited (‘PSTCL’) and the Distribution Licensee – Punjab State Power Corporation Limited (‘PSPCL’). While doing so, the State Commission has observed “that injection of power into the grid without execution of the requisite agreement and without prior consent of the respondents amounts to an unauthorized transaction.”
The CGP has been wheeling upto 3.9 MW power under open access from its 5 Mini Hydro Electric Projects (‘MHPs’) located in Punjab for captive use at its industrial yarn manufacturing unit. Since the commissioning of the MHPs between 2008 – 2010, the CGP has been wheeling power on a short-term basis by taking approval from the State Load Despatch Centre (‘SLDC’) on an annual basis, after obtaining consent from PSPCL.
Clause 4.3(i) of the Procedure for Intra-State Medium Term Open Access and Long Open Term Access (‘MTOA/LTA Procedure’) provides for a specific time-frame for the grant of MTOA – namely where the start date of the MTOA cannot be any earlier than 5 months and later than 2 years, from the last day of the month in which the application was made.
Thus, upon CGP’s failure to timely prefer an application for the MTOA renewal in terms of the 8th amendment despite repeated reminders by PSTCL, which resulted in the intervening gap period between the expiry of STOA and the commencement of MTOA, the credit for such energy was not granted to them.
The matter was then referred to, discussed and deliberated upon by the Commercial & Metering Committee (‘CMC’) in its 26th meeting, wherein the CMC held that such unauthorised injection of power by the CGP shall not be adjusted at their drawl end. Aggrieved thereof, CGP challenged the findings of the 26th CMC Meeting before the State Commission.
Thus, the matter in issue for adjudication before the State Commission was whether the non-grant of credit for the electricity allegedly generated and injected by the MHPs of the CGP for the intervening period between the expiration of Short-Term Open Access (‘STOA’) till the execution/signing of the Medium-Term Open Access (‘MTOA’) agreements for its 5 MHPs by PSTCL was valid in terms of the applicable Open Access Regulations/procedures in the State of Punjab.
SUBMISSIONS OF PUNJAB STATE TRANSMISSION UTILITY:
PSTCL emphasized on the fact that the CGP has willingly injected power into the State Grid without availing any kind of open access or permission from SLDC or PSPCL, after expiry of the STOA Agreements, which is akin to “unauthorized open access transaction” i.e., in contravention of the PSERC Open Access Regulations, 2011 and ought to be dealt accordingly.
Despite the repeated warnings, and in the absence of any valid agreement of Open Access, CGP continued to inject power into the grid which was not only unauthorized but also amounted to grid indiscipline. Regulation 31.5(a) of the PSERC Open Access Regulations, 2011 introduced by way of the 3rd Amendment not only prohibits unauthorized open access transactions but also provides for levy of penalty for the same. Similar issues regarding injection of power without permission from the concerned SLDC have been dealt by the Hon’ble Appellate Tribunal in the matter of (a) Renew Wind Energy (AP) Pvt. Ltd. v. Karnataka ERC [Judgment dated 03.09.2017 in Appeal No.117 of 2016] and (b) Kamachi Sponge & Power Corporation Ltd. v. Tamil Nadu Generation and Distribution Corporation Ltd. [Judgment dated 08.05.2017 in Appeal No.120 of 2016 and I.A.No.272 of 2016, wherein it has been consistently held that injection of power in the absence of agreement/permission of SLDC is not only unauthorized but also amounts to grid in-discipline.
PSTCL further apprised the State Commission that it repeatedly informed the CGP for timely signing/application for MTOA by way of e-mails, which was borne out of PSERC Open Access Regulations, 2011 (8th Amendment) as read with the MTOA/LTA Procedure stipulating that any injection over and above three months would have to be considered through MTOA and the Applicant would only be eligible for grant of MTOA after 5 months from the date of applying.
That the time frame for grant of such MTOA had been stipulated under the MTOA/LTA Procedure approved by this Hon’ble Commission which clearly provides that “The start date of MTOA shall not be earlier than 5 months” from the date of Application. Accordingly, PSTCL was entitled to a time-frame of 5 months from the date on which application had been made to grant MTOA.
The grant of the first MTOA in case of one of the MHP was in the nature of a concession and a one-time dispensation owing to the change in the regime. Mere one-time accommodation/ dispensation granted to mitigate the impact does not in any manner bind PSTCL to grant the approval against the existing law during the relevant time. The past practice and the concessions granted in the past, if any, cannot be sought to be extended in perpetuity. The same is borne out of the legal principle being, “There can be no estoppel Against Law”. [ref. Durga Tea Industries Private Limited v. State of Assam and Others, (2016) 9 SCC 519, Tata Chemicals Limited v. Commissioner of Customs (Preventive) Jamnagar, (2015) 11 SCC 628, M/S Elson Machines Pvt. Ltd. v. Collector of Central Excise, 1989 (1) SCC671]
OBSERVATIONS AND FINDINGS:
The State Commission while appreciating the submissions of PSTCL upheld the decision of the CMC Meeting and held that “injection of power into the grid without execution of the requisite agreement and without prior consent of the respondents amounts to unauthorised transaction” and that for such injection the CGP “is not entitled for credit of the same to its account”. Reliance in this regard was placed on Regulation 31(5) of the PSERC Open Access Regulations (3rd Amendment) which stipulates penalty in the event of unauthorized open access power transaction and non-grant of any financial benefit.
The State Commission also noted that “that as per Clause 4.3 (i) of the LTA and MTOA procedure the start date shall not be earlier than 5 months and later than 2 years from the last day of the month in which application has been made. Clearly the petitioner ought to have applied for grant of MTOA, atleast 5 months prior to the date when it required MTOA which the petitioner has not done in the present petition.”
In addition to the above, the State Commission, while appreciating and drawing reference to PSTCL’s submissions, held that the one-time dispensation granted does entitle the CGP to any credit/adjustment is contrary to law. While doing so, it further held that “it is a settled legal position that there cannot be any estoppel against law. If the law requires that something be done in a particular manner, it must be done in that manner, and if not done in that manner has no existence in the eye of the law at all. Something that is illegal cannot convert itself into something legal by the act of a third person.”
Thus, the State Commission held the Petition to be not maintainable and dismissed it in limine.
COMMENT: The judgment upholding the CMC’s decision reinforces the importance of adhering to regulations in the power sector. It serves as a deterrent against unauthorized transactions and emphasizes the need for timely compliance with the prescribed procedures for obtaining open access, ensuring a fair and transparent power market.