Section 86(1)(e) of the Electricity Act, 2003 provides for renewable purchase obligation on consumption of energy by distribution companies, captive power plants and also open access consumers.
The Supreme Court of India in its order dated May 13, 2015 in the matter of Hindustan Zinc v. Rajasthan Electricity Regulatory Commission has ruled that the application of the renewable purchase obligation on captive power plants is justified and interpreted it in the context of Article 51A(g) of the Constitution of India which sets out the fundamental duty of every citizen to protect and improve the environment and Article 21 which guarantees to every citizen the right to live with a healthy life.
Hindustan Zinc Limited, Ambuja Cements Limited, Grasim Industries Limited, and 14 other companies had in August 2012 appealed and challenged the renewable purchase obligation regulations enacted by the Rajasthan Electricity Regulatory Commission for put application of renewable purchase obligation on captive power plants, before the Rajasthan High Court, which appeal was dismissed by the Rajasthan High Court.
The captive power plants and the open access users had challenged that the Rajasthan Electricity Regulatory Commission did not have the jurisdiction and authorization for imposing surcharge (penalty) as captive power plants and the open access users were completely de-licensed activities under the Electricity Act 2003.
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