SC upholds MERC contract to Adani; rejects Tata Power plea

The Supreme Court on Wednesday upheld an order passed by the Appellate Tribunal for Electricity (Aptel) on the 7,000 crore transmission contract awarded by Maharashtra Electricity Regulatory Commission (MERC) to Adani Electricity Mumbai Infra Ltd (AEMIL).

The apex court has in the process rejected Tata Power’s plea that had challenged this contract.

The Aptel order of 18 February 2022 had upheld MERC’s decision to award the transmission licence on a nomination basis to Adani Electricity in March 2021.

In April, Tata Power had approached the apex court challenging the Aptel order that upheld MERC’s decision.

MERC had in March 2021 granted a transmission licence to Adani for setting up a 1,000 MW high voltage direct current (voltage source convertor based) link between 400 kV Maharashtra State Electricity Regulatory Commission (MSETCL) Kudus and 220 kV AEML Aarey EHV Station.

Following this, Tata Power moved the Aptel on the ground that the grant of the licence was not preceded by a tariff based competitive bidding process and, therefore, was contrary to public interest and statutory mandate, according to the 93-page order of the court.

The Electricity Act provides states sufficient flexibility to regulate the intra-state transmission systems, wherein the appropriate state commissions possess the power to determine and regulate tariff, a bench led by Justice D.Y. Chandrachud held.

“The Electricity Act 2003 seeks to distance the state governments from the determination and regulation of tariff, placing such power completely within the ambit of the appropriate commissions. The Act, read with the Maharashtra government’s resolution of 4 January 2019 does not mandate that bidding is the only route to decide tariff. This case has highlighted the ad hoc nature of state electricity transmission. MSETCL’s flip flops have led to a waste of time,» the top court said.

“The regulations framed must be in consonance with the objective of the Electricity Act 2003, which is to enhance the investment of private stakeholders in the electricity regulatory sector to create a sustainable and effective system of tariff determination that is cost efficient so that such benefits percolate to the end consumers».

Aptel in February 022 held that MERC’s decision to opt for the regulated tariff route cannot be called incorrect, perverse or inappropriate.

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