ARTICLE
29 September 2016

Power Of The State Electricity Regulatory Commission To Review Tariffs Under A Power Purchase Agreement

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DSK Legal

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As per the provisions of the Electricity Act, 2003, the State Electricity Regulatory Commission has the power to fix tariff.
India Energy and Natural Resources

As per the provisions of the Electricity Act, 2003 (the Act), the State Electricity Regulatory Commission (SERC) has the power to fix tariff. In Gujarat Urja Vikas Nigam Limited v. Tarini Infrastructure Limited, Civil Appeal No. 5875 of 2012, the important question of law before the Hon'ble Supreme Court of India was whether the SERC has the power to review the tariff as fixed under the Power Purchase Agreement (PPA).

As per the facts, the respondent is a power producer which entered into PPAs with the appellant, for a term of 35 years at the tariff rate of Rs. 3.29 per Kilo – Watt – Hour (kWh) subject to escalation of 3% per annum till date of commercial operation. The Hon'ble Supreme Court decided on the ambit of power to fix tariff under Section 61, Section 62, Section 64 and Section 86 of the Act along with the Gujarat Electricity Regulatory Commission (Multi – Year Tariff) Regulations, 2016 (GERC Regulations). Under the said judgement, the Hon'ble Supreme Court opined that as per the GERC Regulations read with Section 86 of the Act, the tariff as fixed is subject to periodic review taking into consideration force majeure events and therefore it would be difficult to curtail power of revision of tariff of the SERC even if such tariff is crystallised as part of the PPA.

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