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Supreme Court of India
M/S Kkk Hydro Power Limited vs Himachal Pradesh State Electricity … on 29 August, 2025
2025 INSC 1057 Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3005 OF 2015
M/s. KKK Hydro Power Limited … Appellant
versus
Himachal Pradesh State Electricity Board
Limited and others … Respondents
JUDGMENT
SANJAY KUMAR, J
1. By way of this appeal filed under Section 125 of the Electricity Act,
20031, M/s. KKK Hydro Power Limited, Faridabad, Haryana, calls in
question the judgment dated 17.10.2014 passed by the Appellate
Tribunal for Electricity, New Delhi2, in Appeal No. 198 of 2013. In turn,
Appeal No. 198 of 2013 was also filed by M/s. KKK Hydro Power
Limited, the appellant herein, against the order dated 05.07.2013 of the
Himachal Pradesh Electricity Regulatory Commission 3, rejecting its
petition for payment of arrears at an enhanced tariff for the electricity
supplied by it to the Himachal Pradesh State Electricity Board Limited4.
Signature Not Verified
Digitally signed by
Deepak Guglani
Date: 2025.08.29
17:25:37 IST
Reason: 1
for short, ‘the Act of 2003’
2
for short, ‘the APTEL’
3
for short, ‘the Commission’
4
for short, ‘the HPSEB’
1
2. IA No. 4 of 2016 filed by the Commission seeking to be impleaded
as a party respondent in this appeal is allowed and the Commission is
brought on record as respondent No. 4.
3. By the impugned judgment dated 17.10.2014, the APTEL allowed
the appellant’s appeal in part and held that the tariff for its 3 MW hydel
power plant under the Power Purchase Agreement 5 dated 30.03.2000
required no redetermination but the tariff for its additional 1.90 MW hydel
power plant, commissioned on 10.07.2008, required to be redetermined
as per the Himachal Pradesh Electricity Regulatory Commission (Power
Procurement from Renewable Sources and Cogeneration by Distribution
Licensee) Regulations, 20076. The APTEL further directed that, as the
entire capacity of the appellant’s power project was to be injected and
evacuated from the same bus bars, a common tariff had to be
determined for the power project as a whole and held that the common
tariff would be the weighted average of the respective tariffs for the 3
MW and 1.90 MW plants. The appellant was held entitled to arrears on
account of the difference in tariff for the period for which payment had
already been made as per the existing tariff. The Commission’s order
dated 05.07.2013 was set aside to that extent and the Commission was
directed to pass a consequential order within a timeframe.
5
for short, ‘the PPA’
6
for short, ‘the Regulations of 2007’
2
4. Pursuant to the above direction, the Commission determined the
tariff as per the weighted average and quantified it at ₹2.60/- per
Kilowatt hour (kWh), vide order dated 11.06.2015. In accordance
therewith, the appellant and the HPSEB filed a joint petition, bearing No.
106 of 2015, seeking approval of the supplementary PPA dated
03.11.2015 entered into by and between them, stipulating the new tariff
as per the weighted average. Reference was made therein to the orders
of the Commission and the APTEL dated 11.06.2015 and 17.10.2014
respectively and the tariff of ₹2.60/- per kWh was incorporated for the
entire project of 4.90 MW capacity with effect from 14.07.2008. Be that
as it may.
5. The factual narrative needs recounting from scratch to properly
gauge the issues raised in this appeal. The Government of Himachal
Pradesh7 and the appellant executed Implementation Agreement 8 dated
30.03.2000, whereby the appellant was to establish Baragran Hydro
Electric Power Project of 3 MW capacity on Sanjoin Nallah, a tributary of
River Beas, in District Kullu. Pursuant to this IA, the appellant and the
GoHP executed a PPA on the same day, i.e., 30.03.2000. Clause 6.2 of
the said PPA, titled ‘Tariff for Net Saleable Energy’, fixed the price to be
paid by the HPSEB to the appellant at a fixed rate of ₹2.50/- per kWh. It
was stated therein that ‘this rate is firm and fixed and shall not be
7
for short, ‘the GoHP’
8
for short, ‘the IA’
3
changed due to any reason whatsoever’. The PPA was to be in force for
a period of 40 years from the synchronization date of the first unit of the
project.
6. It was only thereafter, i.e., on 30.12.2000, that the Commission
came to be constituted under the Electricity Regulatory Commissions
Act, 1998. The 3 MW hydel power project was commissioned by the
appellant on 05.08.2004. While so, on 05.02.2005, the appellant sought
the approval of the GoHP to augment the capacity of its power project by
increasing it to 4.90 MW. Accepting its request, the GoHP forwarded a
draft IA to the appellant under letter dated 06.09.2006, wherein it
proposed that royalty for water usage, in the shape of free power to be
given to GoHP, would continue as per the IA for the existing 3 MW plant,
but it would be waived for the upgraded 1.90 MW plant for 12 years,
reckoned from the Commercial Operation Date of the third turbine, and
beyond the period of 12 years, the royalty would be 12% for the next 18
years and beyond that, 18%. This proposal was in modification of clause
13.1 of the earlier IA dated 30.03.2000, which stated that royalty for
water usage, in the shape of free power @ 10% of deliverable energy,
would be leviable but it would be waived for 15 years from the
Commercial Operation Date.
7. A supplementary IA was then executed by the GoHP and the
appellant on 05.07.2007, wherein both parties agreed that the project for
4
the revised capacity of 4.90 MW should be implemented, subject to the
terms and conditions mentioned therein. Clauses 13 and 13.1 of this
supplementary IA dealt with the GoHP’s rights on water and stated that
royalty for water usage, in the shape of free power, from the appellant’s
4.90 MW power project would be waived for 12 years, reckoned after 30
months from the date of signing of the supplementary IA and beyond the
period of 12 years, the royalty would be @ 12% for the next 18 years
and beyond that, @ 18%. This was in alteration of the earlier
understanding.
8. Thereafter, on 04.12.2007, on the joint petition of the HPSEB and
the appellant, the Commission conditionally approved the draft PPA
submitted by them in accordance with the supplementary IA dated
05.07.2007 for the revised capacity of 4.90 MW. The relevant portion of
the order reads as follows:
‘The Commission under sub-section (1)(b) of Section 86 of
Electricity Act, 2003 grants consent to the said PPA, subject to the
following observations: –
i) The Model PPA approved by the Commission vide its
order dated 24th March, 2003 provides for Government
Guarantee and the same can only be omitted from the
PPA with the approval of the Commission for which
purpose the parties need to file a joint application within
one month of the date of issue of this order.
ii) The approved model PPA provides that the Company shall
provide to the Board, free of cost, 10% of the energy
generated by the project as measured at the5
interconnection point commencing from the date falling 15
years from the date on which the Company synchronizes
the first unit of the project. The stipulation made in this
regard in the PPA submitted for approval is however on
the basis of “Hydro Power Policy 2006” notified
subsequently by the GoHP in December, 2006. The
deviation can only be allowed after the parties file a joint
application for necessary approval in this regard with the
Commission.
iii) Construction Schedule attached to the Implementation
Agreement PPA needs to be got approved as Appendix-B
from the competent authority as per the standard
Implementation Agreement and attached as such with the
PPA.
iv) Page 2 of the Implementation Agreement is missing.
v) Tariff and other terms and conditions of the PPA shall be
subject to the provisions of the Himachal Pradesh
Electricity Regulatory Commission (Power Procurement
from Renewable Sources and Cogeneration by
Distribution Licensee) Regulations, 2007.’
(emphasis is ours)
9. Pursuant to the conditional approval granted by the Commission,
vide order dated 04.12.2007, the appellant and HPSEB executed PPA
dated 11.03.2008. ‘Project’ was defined therein under clause 2.2.56 to
mean Baragran Hydro Electric Project of 4.90 MW (revised) capacity.
Clause 6.2 dealt with the ‘Tariff for the Net Saleable Energy’ and stated
that the HPSEB would pay for the net saleable energy delivered to it by
the appellant at a fixed rate of ₹2.50/- per kWh. It was further stated that
‘this rate is firm and fixed without indexation and escalation and shall not
6
be changed due to any reason whatsoever’. However, another clause
was added thereunder which reads as follows:
‘Further, the tariff as per clause 6.2 above and other terms &
conditions of the PPA shall be subject to the provisions of the
Himachal Pradesh Electricity Regulatory Commission (Power
Procurement from Renewable Sources and Cogeneration by
Distribution Licensee) Regulations, 2007 and when such
regulations are framed as per the HPERC order dated 04.12.2007
incase no. 241/2007 (Annexure-IV).’
10. Pursuant to the Regulations of 2007, the Commission issued the
Tariff Order for ‘Small Hydel Power Projects not exceeding 5 MW’ on
18.12.2007. Clause 5.35 thereof stated that it would be applicable to all
PPAs (not exceeding 5 MW) already approved by the Commission, with
a specific clause that the tariff and other terms and conditions of the PPA
shall be subject to the provisions of the Regulations of 2007, and also to
the PPAs to be approved by the Commission thereafter. The tariff fixed
by the Commission under this Tariff Order is ₹2.87/- per kWh.
11. Thereafter, the APTEL adjudicated two appeals filed against this
tariff of ₹2.87/- per kWh for small hydel power projects of upto 5 MW
and, by order dated 18.09.2009, the APTEL remanded the matter to the
Commission to redetermine the tariff for such projects. Pursuant thereto,
the Commission issued orders dated 09/10.02.2010, enhancing the tariff
to ₹2.95/- per kWh.
12. On the strength of the Commission’s orders dated 09/10.02.2010,
the appellant approached the HPSEB on 01.04.2010 to execute a
7
supplementary PPA with the enhanced tariff of ₹2.95/- per kWh.
Aggrieved by the lack of response, the appellant filed Petition No. 94 of
2010 before the Commission seeking a direction to the HPSEB to act
upon its plea and execute a supplementary PPA, incorporating the tariff
of ₹2.95/- per kWh. However, supplementary PPA dated 10.09.2010
came to be executed by the appellant and the HPSEB, without the
intervention of the Commission, modifying the tariff from ₹2.50/- per kWh
to ₹2.95/- per kWh. Pertinent to note, a caveat was added therein by the
HPSEB that such enhancement would be without prejudice to its rights
as available under law.
13. Pursuant to this supplementary PPA, the HPSEB started paying
the appellant the higher tariff of ₹2.95/- per kWh. As arrears of payment
at this enhanced tariff from April, 2008 to August, 2010 were not made
and payments for that period had only been made at the initial tariff of
₹2.50/- per kWh, the appellant filed Petition No. 6 of 2011 before the
Commission. Its prayer therein was to direct the HPSEB to pay the
arrears of ₹2,77,50,960/- for the period in question. During the pendency
of this petition, the HPSEB cleared the bill for the aforestated amount
and stated that the same would be released in 5 installments of
₹55,50,192/- each. The first installment of ₹55,50,192/- was released by
the HPSEB on 26.02.2011. According to the appellant, the only issue
that survived thereafter in Petition No. 6 of 2011 was as to the interest
8
payable on the arrears from 11.03.2008 to 10.09.2010. While so, the
HPSEB filed Petition No. 118 of 2012 before the Commission, seeking
recall/modification/ clarification of its earlier conditional approval order
dated 04.12.2007.
14. By common order dated 05.07.2013, the Commission dismissed
Petition No. 6 of 2011 filed by the appellant for payment of arrears and
also dismissed Petition No. 118 of 2012 filed by the HPSEB. Perusal of
the order reflects that the following issues were framed for consideration:
1. Whether the Commission has the power to look into the
agreement entered into or concluded prior to its existence?
2. Whether the observation No. (v) of the Commission’s consent
letter on PPA is relevant in the present case and if it is relevant
what is the import of the regulations and the orders issued
thereunder on tariff and other conditions?
3. Whether the provisions in the Model PPA have the binding
force?
4. Whether the parties to the PPA have the power to
amend/modify the PPA and if so does it require Commission’s
approval?
5. Whether the parties have executed the PPA, including the
Supplementary PPA, in conformity with the approval accorded
by the Commission?
6. Whether the petitioner is entitled to seek directions as prayed
for in the petition?
15. As regards Issue No. 1, the Commission held that PPAs executed/
concluded prior to its existence had to be complied with in accordance
with the stipulations made therein and it lacked the power to look into
such PPAs. It held that neither the Act of 2003 nor the Regulations of
9
2007 framed thereunder provided for such interference. As regards Issue
No. 2, the Commission held that there was no need to recall or modify
the consent order dated 04.12.2007, the subject matter of the petition
filed by the HPSEB. The Commission noted that the order dated
04.12.2007 made it clear that the consent conveyed thereunder for the
PPA was subject to certain observations and it was for the parties to
finalize and execute the PPA accordingly. As per the Commission,
instead of proceeding on the basis of mere assumptions and
presumptions, the parties ought to have worked out the terms and
conditions of their PPA after due consideration of the Regulations of
2007, subject to which it had accorded its approval on 04.12.2007. The
Commission observed that the confusion had arisen from the wrongful
interpretation of the said observations by the parties and held that the
supplementary PPA dated 10.09.2010 was not in conformity with the
provisions of the Regulations of 2007, subject to which it had accorded
its approval.
16. With regard to Issue No. 3, the Commission opined that the model
PPA was generic in nature and its amendment would normally have
prospective applicability. It was further observed that if the same
impacted concluded PPAs, the parties would have to adopt the model
PPA with the approval of the Commission on a case-to-case basis. As
regards Issue No. 4, the Commission opined that a statutory duty is cast
10
on the regulated entities to align their existing and future contracts with
the Regulations of 2007 and the PPA could be amended/modified only
with the consent of both the parties and, further, whenever such
modification involved a change in tariff, such amendment and
modification could be made only with the approval of the Commission.
17. On Issue No. 5, the Commission observed that neither the
Regulations of 2007 nor the Tariff Order dated 18.12.2007 issued
thereunder contained any express provision to regulate tariff in relation
to enhanced capacities of existing projects. The Commission pointed out
that its order dated 04.12.2007 made it clear that it had conveyed its
consent for the PPA subject to certain observations and it was for the
parties to finalize and execute the PPA accordingly. As the parties had
neither worked out the terms and conditions of their PPA in conformity
with the consent given by it nor did they move a petition for review of
their tariff, they had no power to do so unilaterally. On the last issue, viz.,
Issue No.6, with regard to the prayer of the appellant, the Commission
noted that the appellant’s 3 MW project had been commissioned in the
year 2004 at the tariff of ₹2.50/- per kWh and even thereafter, energy
generated from the revised capacity was also paid for under the PPA
dated 11.03.2008 at the same rate. The Commission noted that the
appellant could not take advantage of its own non-fulfilment of the
conditions precedent to the execution of the supplementary PPA dated
11
10.09.2010, resulting in additional revenue of more than ₹1 crore per
annum under a PPA, which was neither firm nor conclusive as it was
subject to the HPSEB’s rights under law. The Commission, therefore,
held that it could not enforce the supplementary PPA. The Commission
dismissed both the petitions accordingly. In effect, the Commission held
that the appellant was entitled to payment @ ₹2.50/- per kWh for the
entire 4.90 MW project. Aggrieved by the Commission’s order, the
appellant approached the APTEL, resulting in the passing of the
impugned order dated 17.10.2014.
18. Perusal of the impugned order dated 17.10.2014 indicates that,
after noting the findings of the Commission, the APTEL observed that
the IA dated 30.03.2000 and the supplementary IA dated 05.07.2007
along with the PPA dated 30.03.2000 and the PPA dated 11.03.2008
dealt with one single project and there was only a capacity revision,
which came about due to augmentation from 3 MW to 4.90 MW. The
APTEL noted that the consequential PPA, on account of capacity
revision, was signed after the Regulations of 2007 came into force. It
also noted that, as per the proviso to Regulation 6 in the Regulations of
2007, there was no power to review the PPAs signed prior to existence
of the Commission. As the energy generated from the original 3 MW
plant did not fall within the purview of the Commission’s regulation, per
the APTEL, the only issue was to see how the incremental energy
12
needed to be regulated for purchase. The APTEL, therefore, found no
mistake on the part of the Commission in including observation No. (v) in
its approval order dated 04.12.2007, which made it clear that the
consent of the Commission was conditional and it was for the parties to
finalize and execute their PPA accordingly. The APTEL noted that both
parties did not work out the terms and conditions of their PPA in
conformity with the consent given by the Commission and they also
failed to move a petition for review of the tariff thereafter.
19. The APTEL, therefore, opined that the appellant could not seek
release of arrears on the basis of the supplementary PPA dated
10.09.2010, which was not in line with the approval accorded by the
Commission. It noted that the supplementary PPA dated 10.09.2010 was
not approved by the Commission at all and it did not meet the test of law.
The APTEL observed that, as the PPA dated 30.03.2000 pertaining to
the 3 MW plant was prior to the constitution of the Commission and as
the said plant was commissioned on 05.08.2004 itself, i.e., prior to the
notification of the Regulations of 2007, the appellant was not entitled to
claim tariff for the said 3 MW plant on the basis of the enhanced tariff
determined by the Commission under the Regulations of 2007.
20. The APTEL, however, noted that the augmented 1.90 MW capacity
plant was planned after the commissioning of the 3 MW capacity plant,
as an extension. The APTEL also noted that this 1.90 MW capacity plant
13
was commissioned on 10.07.2008, i.e., after the Regulations of 2007
and the Tariff Order dated 18.12.2007 came into effect. Reference was
made to observation No. (v) in the Commission’s order dated 04.12.2007
and it was pointed out that, as per the proviso to Regulation 6, as
amended on 27.11.2007, the Commission was empowered to modify
PPAs by reason of change in statutory laws/rules or the State policy.
Therefore, in so far as the 1.90 MW plant was concerned, the APTEL
opined that it would be subject to the tariff determined under the
Regulations of 2007. The APTEL, accordingly, disagreed with the
Commission’s finding that the 1.90 MW plant would also have to be
treated on par with the initial 3 MW plant and be bound by the same tariff
of ₹2.50/- per kWh.
21. As regards the failure of the appellant to obtain the approval of the
Commission for the supplementary PPA dated 10.09.2010, the APTEL
opined that the said supplementary PPA was signed with the mutual
consent of both parties, modifying the tariff of ₹2.50/- per kWh to ₹2.95/-
per kWh and as the augmented 1.90 MW plant would be covered by the
tariff determined under the Regulations of 2007, it held that the failure to
seek approval of the supplementary PPA, in so far as the said plant was
concerned, could not be held against the appellant. The APTEL further
held that, in so far as the original 3 MW plant was concerned, in relation
to which the PPA was executed on 30.03.2000, even before the
14
establishment of the Commission, the tariff thereunder could not have
been modified by the parties even by mutual consent, as it was fixed
and, therefore, the appellant could not seek benefit of the enhanced tariff
for the said plant, notwithstanding the supplementary PPA dated
10.09.2010. The APTEL opined that, merely because the expanded unit
was commissioned after notification of the Regulations of 2007, it did not
give a right to the appellant to claim the higher tariff for the entire project.
22. The APTEL, accordingly, concluded that the Commission had
correctly exercised its jurisdiction to examine the validity of the
supplementary PPA dated 10.09.2010 entered into by the parties,
purportedly on the basis of the Commission’s order dated 04.12.2007.
The APTEL held that the tariff for the 3 MW plant which was
commissioned on 05.08.2004 under the PPA dated 30.03.2000, long
prior to the notification of the Regulations of 2007, could not be
redetermined thereunder. As regards the 1.90 MW plant, which was an
extension of the 3 MW plant, the APTEL held that the same would be
governed by the tariff determined as per the Regulations of 2007. Lastly,
as the 1.90 MW capacity plant was also available at the same project
site and the entire capacity of the project is to be injected and evacuated
from the same bus bars, the APTEL directed that a common tariff be
determined for the power project as a whole. Such tariff, as per the
APTEL, would be the weighted average of the respective tariffs
15
envisaged for the 3 MW and 1.9 MW plants. The appellant was held
entitled to payment of arrears on account of the difference in the tariff for
the project as per these directions.
23. Having given thoughtful consideration to the matter, we are of the
opinion that the APTEL misguided itself on certain crucial aspects. The
Commission’s Tariff Order dated 18.12.2007 worked out the levelized
tariff for small hydel projects of upto 5MW at ₹2.87/- per kWh but in
appeal, the APTEL remitted the matter to the Commission for
reconsideration, vide its order dated 18.09.2009. Pursuant thereto, the
Commission passed orders dated 09/10.02.2010 revising the tariff for
such hydel power projects to ₹2.95/- per kWh. In the concluding
paragraph of its order dated 09.10.2010, the Commission observed as
under:
‘The Commission is aware that after issuance of the SHP (Small
Hydro Power Projects) Order dated Dec., 18, 2007 and till the
issuance of this Order, the hydel power producers and the Board,
have executed and signed the Power Procurement Agreements
with the provision of the tariff of Rs.2.87/Unit for the power producer
by the SHPs in this State. In order to give the benefit of increase of
tariff of Rs.2.95/unit from Rs.2.87/Unit to the hydel power
producers, who have executed the PPAs with the stipulation of
Rs.2.87/Unit, such hydel power producers and the Board are
directed to modify the clauses in PPAs, in accordance with law.’
24. Significantly, the appellant’s PPA dated 11.03.2008 did not
stipulate the tariff of ₹2.87/- per kWh, but only ₹2.50/- per kWh. Per se,
16
the aforestated direction in the concluding paragraph of the
Commission’s order dated 09.02.2010 did not apply to the appellant’s
supplementary PPA. However, by its letter dated 01.04.2010 addressed
to the HPSEB, the appellant straightaway sought amendment of its PPA
and requested for execution of a fresh PPA stipulating the higher tariff of
₹2.95/- per kWh. Aggrieved by the inaction on the part of the HPSEB,
the appellant thereupon approached the Commission praying for a
direction to the HPSEB to modify the PPA dated 11.03.2008 by
enhancing the tariff from ₹2.50/- per kWh to ₹2.95/- per kWh. This
petition was, however, rendered infructuous owing to the HPSEB
addressing letter dated 12.07.2010 to the appellant requesting it to
supply the draft of the amendments to be incorporated in the existing
PPA dated 11.03.2008, so that the Commission’s order dated
09.02.2010 could be implemented. Pursuant thereto, the supplementary
PPA dated 10.09.2010 came to be executed by the appellant and the
HPSEB. Therein, it was observed as under:
‘The rate of Rs.2.50 per kilowatt hour appearing under clause 6.2,
6.4 & 16.5 in the PPA referred to above shall be taken as tariff at
Rs.2.95 per kilowatt hour, as per HPERC Order dated 09.02.2010.
This is without prejudice to the rights of second part as available
under law.’
25. Pertinently, after the conditional approval of the initial draft PPA by
the Commission, vide its order dated 04.12.2007, resulting in the PPA
dated 11.03.2008, the subsequent supplementary PPA dated 10.09.2010
17
was never placed before the Commission for its approval. The earlier
PPA dated 11.03.2008 can be sustained as it was based on the approval
of the draft PPA by the Commission on 04.12.2007 but insofar as the
supplementary PPA dated 10.09.2010 is concerned, no draft PPA was
ever submitted to the Commission for its approval and it appears that the
supplementary PPA dated 10.09.2010 was executed independently and
unilaterally by the parties themselves, incorporating a tariff which was
never subjected to the review and approval of the Commission. In this
context, Section 86(1)(b) of the Act of 2003 assumes great significance.
It reads as under:
‘86. Functions of State Commission. – (1) The State Commission
shall discharge the following functions, namely: –
(a). …..
(b). regulate electricity purchase and procurement process of
distribution licensees including the price at which electricity shall be
procured from the generating companies or licensees or from other
sources through agreements for purchase of power for distribution
and supply within the State;
(c). ……. .’
26. This provision puts it beyond the pale of doubt that fixing of the
price for the purchase of electricity is not a matter of private negotiation
and agreement between a generating company and a distribution
licensee. The price as well as the agreement, i.e., PPA, incorporating
such price and providing for purchase of electricity at that price
necessarily have to be reviewed and approved by the State Commission
18
under this provision. The order dated 09.02.2010 passed by the
Commission, without reference to the appellant’s case, required only
those existing PPAs which stipulated the tariff of ₹2.87/- per kWh to be
amended so as to give effect to the enhancement of tariff from ₹2.87/-
per kWh to ₹2.95/- per kWh. This order had no application at all to the
case of the appellant as its PPA dated 11.03.2008 did not stipulate the
tariff of ₹2.87/- per kWh. In this scenario, the appellant and the HPSEB
were bound to approach the Commission to secure its approval before
they could effect any enhancement of the tariff stipulated in the PPA
dated 11.03.2008. Without doing so, the appellant and the HPSEB, on
their own and without the Commission’s review and approval, enhanced
the tariff from ₹2.50/- per kWh to ₹2.95/- per kWh under their
supplementary PPA dated 10.09.2010!
27. Viewed thus, the Commission was fully justified in ignoring the
supplementary PPA dated 10.09.2010 and asserting that it could not
enforce it. However, the APTEL overlooked this crucial aspect and held
that, insofar as the additional 1.90 MW plant was concerned, the
supplementary PPA dated 10.09.2010 can be given effect to, by applying
to it the tariff of ₹2.95/- stipulated therein. The observation of the APTEL
that no adverse inference could be drawn against the appellant for not
obtaining the approval of the Commission for the tariff agreed to by the
19
parties under this supplementary PPA 10.09.2010 completely overlooked
the binding mandate of Section 86(1)(b) of the Act of 2003.
28. However, as the HPSEB did not choose to file an appeal against
the APTEL’s order and mutely accepted the direction therein to go before
the Commission for computation of the weighted average so as to
quantify the tariff for the entire 4.90 MW power project of the appellant,
we choose not to interfere with the same at this late stage. It may be
noted that the revised tariff of ₹2.60/- per kWh, on the basis of the
weighted average computed by the Commission, stipulated in the
supplementary PPA dated 03.11.2015 has been acted upon for a long
time now and we would not wish to upset the apple cart and start the
process all over again. More so, as the HPSEB did not even choose to
file an appeal against the impugned order. We, however, hasten to clarify
the legal position so as to obviate a similar error being committed in
future.
29. Though, the appellant would seek to draw parity with power
projects which entered into PPAs after establishment of the Commission,
the very fact that its PPA was dated 30.03.2000 distinguishes it from
such cases, and there can be no possibility of drawing parity as sought
by it.
30. As regards the issue of royalty on water usage, the change in the
GoHP’s policy in that regard since the PPA dated 30.03.2000
20
undoubtedly had an adverse impact on the appellant. We may, however,
note that Regulation 6 of the Regulations of 2007, which dealt with
determination of tariff for electricity from renewable sources, came to be
amended by the Commission, vide Notification dated 12.11.2007. The
amendment of Regulation 6, to the extent relevant, reads as under:
‘3. Amendment of regulation 6. – In sub-regulation (1) of
regulation 6 of the said regulations, –
a) …….;
b) …….; and
c) for the second proviso, the following proviso shall be
substituted, namely: –
“Provided further that, –
(i) where the power purchase agreement, approved prior to
the commencement of these regulations, is not subject to
the provisions of the Commission’s regulations on power
procurement from renewable sources; or
(ii) where, after the approval of the power purchase
agreements, there is change in the statutory laws, or
rules, or the State Govt. Policy;
(iii) the Commission, in order to promote co-generation or
generation of electricity from renewable sources of
energy, may, after recording reasons, by an order, review
or modify such a power purchase agreement or a class of
such power purchase agreements.’It would, therefore, be open to the appellant to approach the
Commission for appropriate relief under the amended proviso to
Regulation 6 of the Regulations of 2007. We leave it at that.
31. On the above analysis, we hold that the appellant was granted
relief by the APTEL, ignoring the mandate of Section 86(1)(b) of the Act
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of 2003, but the HPSEB allowed the same to attain finality by not filing
an appeal. We, therefore, stay our hand and do not interfere with the
same at this late stage. We, however, clarify and affirm that a generating
company and a distribution licensee cannot, by private agreement,
execute a PPA on their own or stipulate tariff therein as per their choice,
for supply of electricity within a State, without seeking the review and
approval of the Electricity Regulatory Commission under Section 86(1)
(b) of the Act of 2003.
32. In summation, the plea of the appellant that it should be extended
the enhanced tariff of ₹2.95/- per kWh for the entire project, including the
3 MW plant covered by the PPA dated 30.03.2000, is bereft of merit.
33. The appeal is accordingly dismissed.
I.A. No. 4 of 2016 is allowed.
Registry to carry out necessary amendment in the cause title.
Other pending applications, if any, shall stand dismissed.
…………………………., J.
SANJAY KUMAR
…………………………., J.
N.V. ANJARIA
August 29, 2025
New Delhi.
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