The Appellate Tribunal for Electricity (APTEL) recently annulled an order of the Kerala State Electricity Regulatory Commission (KSERC) on the ground that it overstepped its jurisdiction by intervening in a dispute related to the generation and sale of electricity across multiple states—a domain that falls under the purview of the Central Electricity Regulatory Commission (CERC).

Background

The dispute arose when the Solar Energy Corporation of India (SECI) floated a tender to procure 300 MW of solar power through the Inter-State Transmission System. This procurement was structured under a Power Sale Agreement (PSA) between SECI and the Kerala State Electricity Board (KSEB), signed on September 20, 2021. The PSA was submitted to the KSERC for approval. However, the KSERC made two significant changes to the agreement:

• KSERC altered Article 1.1 of the PSA to redefine “Appropriate Commission” as either the CERC or the KSERC, depending on the specific context.
• This modification implied that both central and state commissions could claim jurisdiction, potentially leading to regulatory conflicts.

• KSERC clarified that if CERC adopted the tariff of ₹2.38 (~$0.028)/kWh for ReNew Power (the solar power producer) based on auction results, KSEB would be capped at paying 2.44 (~$0.029)/kWh, inclusive of the trading margin.
• This cap effectively limited SECI’s ability to charge more than ₹2.44 (~$0.029)/kWh, even if CERC approved a higher rate.

SECI contended that the PSA and the associated Power Purchase Agreement (PPA) were part of a single, composite scheme involving multiple states. Therefore, the jurisdiction for regulating and adjudicating disputes arising from these agreements should reside solely with the CERC. SECI argued that allowing KSERC to assert jurisdiction over non-tariff disputes would create inconsistencies and conflicts, as the CERC should oversee all aspects of such inter-state transactions.

KSERC defended itself by citing the Electricity Act 2003, which delineates the powers of state and central commissions. According to KSERC, while CERC has jurisdiction over tariff-related matters in inter-state transactions, state commissions have the authority to regulate and adjudicate other aspects of the PSA, particularly those unrelated to tariffs. KSERC claimed that its modifications to the PSA were intended to ensure that non-tariff disputes, such as contract interpretation and compliance issues, fell under its jurisdiction.

Tribunal’s Analysis

APTEL examined the order issued by KSERC and found that the commission had indeed capped the tariff payable by KSEB at 2.44 (~$0.029)/kWh, including the trading margin. The Tribunal sided with SECI, concluding that KSERC had overstepped its jurisdiction. Since SECI operates under a composite program involving multiple states, only CERC can regulate tariffs and associated matters. The Tribunal ruled that KSERC, as a state commission, does not have the power to limit or cap the tariff or trading margin in such inter-state transactions.

APTEL also noted the interconnected nature of the PSA and PPA, recognizing that splitting jurisdiction between different regulatory bodies could lead to inconsistency and legal conflicts. It emphasized that SECI’s role in inter-state transactions falls squarely under the CERC’s jurisdiction and that allowing KSERC to handle non-tariff disputes would only create confusion.

Considering these findings, APTEL quashed KSERC’s modification of the “Appropriate Commission” definition and clarified that all aspects of the PSA, including non-tariff disputes, should fall under CERC’s jurisdiction to ensure consistency and avoid regulatory conflicts.

The Tribunal allowed SECI’s appeal and set aside the KSERC order, reaffirming that CERC is the sole authority for handling disputes related to generating and selling electricity across multiple states.

Recently, the Tribunal ruled that POWERGRID Southern Interconnector Transmission System is entitled to a 289-day extension to complete a transmission project, acknowledging that the delay was due to “force majeure” events.

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