Regulatory commission’s order restoring DBFOO power supply contracts “not in accordance with law,” says Aptel
Companies under no obligation to supply electricity to KSEB.
In a blow to the Kerala government, the Appellate Tribunal for Electricity (Aptel) has held that the order passed by the Kerala State Electricity Regulatory Commission on December 29, 2023, for restoring a clutch of long-term power supply contracts on the strength of a State government directive “is not in accordance with law.”
The Aptel order pertains to power purchase agreements (PPA) under Design, Build, Finance, Own and Operate (DBFOO) for the supply of 465 MW for which the Commission had originally declined approval through an order issued on May 10, 2023.
The rejection was on the grounds that the Kerala State Electricity Board (KSEB) had violated Central government norms in the bidding process.
However, through the December order (which Aptel has now set aside), the Commission had directed the companies to resume supply after the Kerala government, grappling with a power crisis in the State, invoked Section 108 of the Electricity Act to get the supply restored.
Aptel chairperson Ramesh Ranganathan and technical member Seema Gupta observed that the Commission, while bowing to the State government directive, had not found any fault with its earlier finding that the KSEB had violated Central norms. Moreover, since the Commission had specifically rejected the KSEB plea for approving the PPAs, the companies were under no obligation to supply electricity to KSEB.
Aptel noted that “public interest” is best served by complying with the law. The Commission itself had, through its May 10 2023 order, established that the KSEB’s bidding process was neither fair nor transparent nor in compliance with Central government guidelines.
Aptel observed that “public interest is best served in ensuring that the tariff determined by such an illegal process is not adopted and approval of power purchase agreements, executed pursuant thereto, is not granted.”
Aptel’s Friday order came on a petition filed by Jhabua Power Pvt Ltd, one of the DBFOO contractors, challenging the latter order directing the generators to resume supply under the original power purchase agreements (PPA).
Section 108
Notably, the Aptel has held, citing multiple court judgments, that Section 108 of the Electricity Act, which the Kerala government invoked “in public interest” to get the contracts restored, cannot be binding on the Commission.
The action of the Kerala government in invoking Section 108 and directing the Commission to review its May 10, 2023, order, and the action of the Commission “in acting at the dictates of the State government” and passing the December 29, 2023, order “are both contrary to law,” it said.
Section 108 stipulates that the Commission should be guided by the policy directive of the State government in matters of public interest. Aptel observed that “As the said policy directive is not binding on them, and they are only required to be guided thereby, the Commission ought to have refused to be guided by the Section 108 directive issued by the State Government on the ground that the said directive interferes with its statutory/quasi-judicial functions under the Electricity Act.”
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