In a landmark decision, the Supreme Court has bestowed upon the State Electricity Regulatory Commission the authority to refuse the adoption of tariffs not in sync with market prices. This ruling, overturning decisions by the High Court and the Appellate Tribunal for Electricity, underscores the Commission’s obligation to prioritize consumer interests while considering tariff adoption.
The bench, comprising Justices BR Gavai and Prashant Kumar Mishra, restored the State Commission’s order, emphasizing that the power to adopt tariffs lies only in transparent bidding processes aligned with Central Government guidelines.
The Court highlighted Clause 5.15 of the Bidding Guidelines, emphasizing that bidders quoting the lowest levelized tariff aligned with prevailing market prices should be considered for the award. The evaluation committee holds the right to reject all bids if the rates quoted deviate from market prices.
The case involved Rajasthan Rajya Vidyut Prasaran Nigam Limited seeking approval for procuring 1000 MW of power through competitive bidding. After negotiations, Power Purchase Agreements were signed with the L-1, L-2, and L-3 bidders. However, the State Commission approved only 500 MW, leading to appeals and subsequent legal proceedings.
The Supreme Court, in its disposal of civil appeals, reinstated the original quantum offered by bidders, directing the State Commission to reevaluate tariffs for L-4 and L-5 bidders. The Court stressed that tariffs must align with market prices, protecting consumer interests.
Addressing three key issues raised by APTEL, the Court reaffirmed the State Commission’s authority to reject tariffs misaligned with market prices. It rejected arguments that a transparent bidding process automatically validates tariffs, emphasizing the need to balance consumer and generator interests.
In conclusion, the Supreme Court’s ruling ensures that tariffs adopted by the State Electricity Regulatory Commission align with prevailing market prices, safeguarding both consumer and public interests.
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