Projects, Energy & Infrastructure Monthly Newsletter | May 2025

LEGAL & POLICY UPDATES

In this Section

• MNRE issues draft amendment to procedure for inclusion/updating wind turbine model in revised list of models and manufacturers of wind turbines
• Ministry of Power has amended the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022
• Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2025
• Draft Uttar Pradesh Electricity Regulatory Commission (Captive and Renewable Energy Generating Plants) Regulations, 2024

MNRE issues draft amendment to procedure for inclusion/updating wind turbine model in revised list of models and manufacturers of wind turbines

• The Ministry of New and Renewable Energy (MNRE), through its circular dated April 17, 2025, has issued a draft amendment to the procedure for inclusion/updating of wind turbine models in the revised list of models and Manufacturers (RLMM) of wind turbines (Draft Amendment) for stakeholder consultation.

The key proposed amendments are as follows:

Para 4(g): The uploaded details for RLMM inclusion will now mandatorily include not only the wind turbine model name along with the details of the wind turbine manufacturer, technical details and certifications but also the domestic vendor/source details for blade, tower, gearbox and generator.

Para 4(h): It is proposed that the type certificate for a wind turbine model must mandatorily include blade, tower, gearbox and generator manufacturing facilities located in India. Furthermore, a. An exemption shall be applicable for importing the aforementioned components for up to 50 turbines or 200 MW, whichever is lower, by any new manufacturer and/or new model for a period of one year from the date of inclusion in RLMM. b. The requirements for the gearbox and generator manufacturing facility will be applicable after six months from the issuance of the Draft Amendment.

Para 4(i): Certain new cybersecurity norms have been prescribed:

Data centres and/or servers must be mandatorily located within India. Further, all data in relation to the wind turbine must be stored and maintained in India.

Real-time operational data transfer outside India shall be prohibited and operational control of wind turbines must be conducted exclusively from a facility in India.

A R&D centre will be mandatorily established in India within six months from the date of issuance of the Draft Amendment.

Para 4 ): The application along with all required documents shall be submitted in soft copy to the designated officers.

All stakeholders have been invited to submit comments on the Draft Amendment within three weeks from the date of issuance, i.e., April 17, 2025, to the designated MINRE officer.

Ministry of Power has amended the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022

The Ministry of Power (MoP) issued notification dated May 2, 2025, amending the Electricity (Late Payment Surcharge and Related Matters) Rules, 2022.

The latest amendment brought a single substitution: the words "inter-state transmission licensees" in Rule 1(3) have now been replaced with "transmission licensees". In effect, this brings intra-state transmission utilities under the same Late Payment Surcharge (LPS) regime that already applies to generating companies and inter-state licensees.

State Discoms can no longer claim exemption from surcharge rules on intrastate dues.

Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2025

• The Karnataka Electricity Regulatory Commission (KERC) has issued the Karnataka Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2025.
• The Regulations have been introduced after the Karnataka High Court's decision to strike down the previous Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules 2022 and the KERC (Terms and Conditions for Green Energy Open Access) Regulations, 2022.
• The Karnataka High Court directed KERC to frame new regulations aligning with the National Electricity Policy and the tariff policy and to consider the interests of all stakeholders.
• KERC has introduced a new framework that applies to all consumers who use the state's transmission and distribution systems for accessing renewable energy. The Karnataka State Load Despatch Centre (SLDC) has been appointed as the authority to process and manage open access applications under this framework.
• One of the important features of the new regulations is the classification of consumers based on how long they intend to use open access. Consumers are grouped into long-term, medium-term, and short-term categories. This classification is aimed at helping authorities manage power flow and distribution more smoothly and efficiently.
• A key feature of the new regulations is the provision for electricity banking, which allows consumers using wind, solar, or hydropower to store their excess energy in the grid and retrieve it later when needed. This system will benefit renewable energy producers by improving energy management and promoting clean power usage.
• The regulations are designed to simplify and strengthen the process of accessing renewable energy in Karnataka. They aim to create a more transparent, efficient, and system that benefits industries, green energy producers, and electric vehicle infrastructure. By encouraging the use of clean power, the updated framework supports the state's move toward a more sustainable energy future.

Draft Uttar Pradesh Electricity Regulatory Commission (Captive and Renewable Energy Generating Plants) Regulations, 2024

The Uttar Pradesh Electricity Regulatory Commission (UPERC) has issued Draft UPERC (Captive and Renewable Energy Generating Plants) Regulations, 2024.

The regulations aimed at promoting renewable energy development and enhancing the regulatory framework for captive power generation. The draft regulations are aligned with the provisions of the Electricity Act, 2003, and are designed to streamline policies, encourage investment, and support sustainable energy initiatives across the state.

The Regulations introduce several key reforms particularly in the areas of energy banking, tariff determination, and fuel pricing. Notably, the draft proposes differentiated banking provisions for renewable energy (RE) and non-RE captive generating plants, aligning these with the Green Energy Open Access Rules issued by the Ministry of Power.

With respect to the generating projects commissioned on or after April 1, 2009, will retain 100% of the clean development mechanism (CDM) proceeds during their first year of commercial operation. From the second year onwards, the procurer's share of CDM benefits will increase by 10% each year, eventually reaching 50%.

The electricity supply tariff from generating projects having more than one unit commissioned in different years will be based on the weighted average of the tariff of contracted capacities of the units commissioned in different years.

In the case of bagasse, biomass, and other renewable energy projects, the tariff between the date of synchronization and commercial operation date (COD) will be equivalent to the variable cost. Additionally, a plant load factor of at least 50% will be necessary to recover full capacity charges for biomass and bagasse-based projects.

Distribution licensees will be required to seek approval for Power Purchase Agreements (PPAs) with generating projects, and it will be required to furnish the data on the energy received from various captive and renewable sources. The regulations also allow any entity setting up and operating a generating project to meet its electricity needs through open access or by purchasing power from the local distribution licensee.

All generating projects must maintain grid discipline and will not be entitled to compensation in case of grid failures. Provisions of the deviation settlement mechanism will apply to all projects, except small hydro and municipal solar waste plants.

Regarding energy banking, captive projects meeting the criteria set in UPERC (Verification of Generating Plants and Captive Consumers) Regulations, 2022 may bank energy for self-use during the control period, subject to entering into wheeling and banking agreements with distribution licensees.

For bagasse-based projects, banking is capped at 49% of the energy injected in a quarter, while other renewable sources are limited to 25% of energy injected monthly or 30% of the total monthly consumption. Energy banking will be allowed at 100% on a 15-minute time block basis, with withdrawals made on a first-in, firstout basis. Energy banked during off-peak hours can only be withdrawn during offpeak periods.

RECENT JUDGMENTS

In this Section:

• Jaipur Vidyut Vitaran Nigam Ltd. v. Rajasthan Textile Mills Assn. & Ors.
• Powergrid Corporation of India Limited v. Central Electricity Regulatory Commission and Others.
• M/s Kundlas Loh Udyog v. State of Himachal Pradesh & Ors.
• Metsil Exports (P) Ltd. v. West Bengal Electricity Regulatory Commission & Ors.
• Power Grid Corporation of India Limited Vs Madhya Pradesh Power Transmission Company Limited & Ors.
• Suryataap Energies and Infrastructure Private Limited v. Assam Electricity Regulatory Commission & Anr.
• Mumbai Urja Marg Limited v. Maharashtra State Electricity Distribution Company Limited & Ors.
• M/s K.M. Sugar Mills Limited v. Uttar Pradesh Electricity Regulatory Commission & Ors.
• Directions by the Commission to the Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2021
• Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) v. Braithwaite Nacof Solar Project Ltd.

Jaipur Vidyut Vitaran Nigam Ltd. v. Rajasthan Textile Mills Assn. & Ors.

Supreme Court Judgment dated April 29, 2025 in Civil Appeal Nos. 8862-8868 of 2022

Background facts

The case pertains to the statutory appeals under Section 125 of the Electricity Act, 2003 ('the Act') against a common judgment ('Impugned Judgement') delivered by the Appellate Tribunal for Electricity ('the APTEL') in a group of appeals. The issue involved in these appeals relates to the determination of the Cross-Subsidy Surcharges ('CSS') by the Rajasthan Electricity Regulatory Commission ('RERC'). The determination was made under Section 42 (2) of the Act.

The present Appellants were the Respondents before the APTEL. The Respondents (Appellants before the APTEL) are the industries/industrial units located in various parts of the State of Rajasthan, running their operations by availing their supply of electricity from connectivity through the State grid at EHT levels of 132/33/11 KV voltage. These industrial units were granted open access within the contract demand for drawing electricity through such open access, including from power exchanges.

In exercise of the powers under Section 61 read with Section 181 of the Act, RERC notified the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2014 ('RERC Tariff Regulations').

The RERC determined the tariff for the FY 2015-2016 by the tariff order dated 22.09.2016. On 20.08.2016, the distribution licensees approached the State Commission by a petition praying for determination of the CSS under Section 42 (2) read with Sections 39 and 40 of the Act. While dealing with the said petition, RERC identified the issues for its consideration, including the issue as to whether distribution licensees were entitled to claim the CSS, and if so entitled to, what the appropriate formula for its determination is. RERC noted that the distribution licensees had not applied for fixation of tariff for the F.Y. 2016-2017, and the tariff petition for F.Y. 2015-2016 had been decided by the commission in September 2016 by holding that the tariff will be in force till the next tariff order.

The commission observed that mere absence of tariff petition for F.Y. 2016-2017 will not restrict or prevent the State Commission from determining the CSS for F.Y. 2015-2016 and apply the same for F.Y. 2016-2017 till new tariff petition for F.Y. 2016-2017 is filed and the CSS is revised based on the same. After hearing the Respondents-consumers, the State Commission, by order dated 01.12.2016, determined the CSS payable entirely based on the tariff determined for F.Y. 2015- 2016 by order dated 22.09.2016.

These industrial units (Appellants before the APTEL) were aggrieved by the determination of the CSS made applicable from 01.12.2016 by the order passed on 01.12.2016 by RERC. Being aggrieved by the said order of the State Commission, the industrial units preferred statutory appeals before the APTEL. By the impugned judgment, the order of the RERC was set aside. However, the APTEL clarified that the RERC will be within its jurisdiction to undertake the process of revisiting the subject of the CSS vis - à -vis distribution licensees operating in the State of Rajasthan as and when it takes up the exercise of tariff determination in future in accordance with law.

The Act introduced the concept of open access, enabling the consumers/end users to procure electricity from sources other than the distribution licensees of the area where the premises of such end use are situated. Earlier, electricity was generally procured only from distribution licensees.

There was a significant amount of cross -subsidisation of certain categories of consumers by other categories of consumers. The consumers benefitting from the subsidy include agricultural consumers, low -end domestic consumers and public works. They are known as subsidised consumers. The consumers paying for the subsidy include industrial consumers, commercial consumers, and high -end domestic consumers, and they are known as subsidising consumers. Allowing open access users to source electricity from sources other than distribution licensees benefited such subsidising consumers and would become a burden on the distribution licensee. The reason is that such customers stopped taking electricity from the distribution licensees, thereby reducing the distribution licensees' funds to subsidise the subsidised consumers.

By order dated 01.12.2016, RERC determined the CSS based on the FY 2015 -2016 tariff, fixing rates at Rs. 1.63 per unit for 132 KV and above, Rs. 1.39 per unit for 33 KV, and Rs. 0.83 per unit for 11 KV large industrial service open access consumers.

The APTEL, relying on prior decisions, held that RERC erred by determining the CSS without a tariff petition for FY 2016 -2017 and without authenticated data, and that the CSS increase was against the policy of progressively reducing CSS rates.

Issues at Hand

Whether the CSS can be determined independently and based on the previous tariff order if no fresh tariff order exists for the relevant financial year?

Whether the RERC erred in determining CSS for FY 2016 -17 in absence of a separate tariff order for that year?

Decision of the Court/Tribunal

• The Commission analysed the Petitioner's financial restructuring plan and determined that the requested security creation was necessary for project viability.
• The Supreme Court relied upon its judgement of Sesa Sterlite Ltd. v. Orissa Electricity Regulatory Commission 2015 SCC OnLine APTEL 75 wherein it has laid down the rationale and purpose of levying the CSS stating that "27. The issue of open access surcharge is very crucial and implementation of the provision of open access depends on judicious determination of surcharge by the State Commissions. There are two aspects to the concept of surcharge — one, the cross -subsidy surcharge i.e. the surcharge meant to take care of the requirements of current levels of cross -subsidy, and the other, the additional surcharge to meet the fixed cost of the distribution licensee arising out of his obligation to supply. The presumption, normally is that generally the bulk consumers would avail of open access, who also pay at relatively higher rates. As such, their exit would necessarily have adverse effect on the finances of the existing licensee, primarily on two counts — one, on its ability to cross -subsidise the vulnerable sections of society and the other, in terms of recovery of the fixed cost such licensee might have incurred as part of his obligation to supply electricity to that consumer on demand (stranded costs). The mechanism of surcharge is meant to compensate the licensee for both these aspects."
• The Supreme Court stated the determination of CSS is not necessarily a part of the tariff determination process. The CSS can be determined along with the tariff and it can be determined separately in accordance with Regulation 90 of the RERC Tariff Regulations based on the prevailing rate of tariff. Further the Hon'ble Supreme Court held that the APTEL committed an error by holding that the determination of the tariff and the determination of the CSS should always coincide and set the Impugned Judgement and restored the RERC order dated 01.12.2016.
• The Court clarified that this order remained in force until 02.11.2017, when a new tariff order was passed.
• The Supreme Court further held that RERC correctly determined the CSS using the tariff fixed on 22.09.2016 for the FY 2015 -2016. The Court further noted that the Respondents did not challenge the tariff order dated 22.09.2016, and the CSS determination was consistent with the applicable legal framework. The Commission emphasized that any transfer of assets or ownership changes must ensure uninterrupted transmission services and compliance with regulatory requirements.

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