Projects, Energy & Infrastructure Monthly Newsletter – February 2026

LEGAL & POLICY UPDATES

Draft National Electricity Policy, 2026

• The Ministry of Power (MoP), Government of India, through communication No. 23/23/2018-R&R dated January 20, 2026, has issued the Draft National Electricity Policy, 2026. Invoking the mandate under Section 3 of the Electricity Act, 2003, which requires the Central Government to formulate and periodically revise the National Electricity Policy, this draft aims to replace the previous policy notified on February 12, 2005. The revision is driven by the "significant transformation of the power sector," particularly in the distribution segment and the requirements of India's energy transition.
• The policy establishes a strategic roadmap aligned with the vision of "Viksit Bharat @ 2047," targeting an increase in per capita electricity consumption to 2,000 kWh by 2030 and over 4,000 kWh by 2047. It reinforces India's updated Nationally Determined Contributions (NDCs) to achieve a 45% reduction in emission intensity by 2030 and net-zero emissions by 2070. The vision is defined as: "Providing reliable 24x7 quality power through a financially viable and environmentally sustainable power sector furthering energy security at an affordable price."
• To ensure the financial vaiability of the sector, the policy mandates that from FY 2026-27, State Commissions must ensure tariffs fully reflect costs "without creating regulatory assets." Landmark regulatory shifts include the mandatory separation of distribution and supply tariffs, the conclusion of regulatory proceedings within 120 days, and the requirement that power purchase cost increases "must be automatically passed through to consumers on a monthly basis."
• The draft policy proposes a paradigm shift in market competition by suggesting that the monopoly in distribution be "phased out by allowing multiple players" and promoting Public-Private Partnerships (PPP). For the industrial sector, it recommends that State Commissions "should exempt manufacturing enterprises, Railways, and Metro Railways from payment of cross-subsidies and surcharges." Furthermore, it suggests exempting distribution licensees from the Universal Service Obligation for consumers with a contracted load of 1 MW and above who are capable of self-procurement.
• Regarding resource management and renewable integration, the policy introduces a "structured mechanism for resource adequacy" at national, state, and utility levels. It mandates the enforcement of Renewable Consumption Obligations (RCO) and promotes market-based growth through mechanisms like Virtual Power Purchase Agreements. Notably, it discourages net metering beyond 5 kW and promotes peer-to-peer (P2P) energy trading and consumerowned energy storage systems (ESS)
• In terms of grid governance and infrastructure, the policy directs State Governments to "unbundle" functions by establishing independent companies responsible for state load dispatch operations (SLDC), separate from the State Transmission Utility (STU). It also establishes the "India Energy Stack" as a foundational framework for interoperable energy systems and mandates that all power sector entities make their operational and market -related data publicly accessible, excluding personally identifiable information.
• The policy introduces a dedicated Cybersecurity framework, requiring the establishment of a Computer Security Incident Response Team (CSIRT -Power) as the central agency for the sector. On the financial front, it projects an investment requirement of approximately ₹50 lakh crore by 2032 and proposes the development of a "Climate Finance Taxonomy" to attract concessional green financing.

Draft Second Amendment to the Andhra Pradesh Electricity Regulatory Commission (Green Energy Open Access, Charges, and Banking) Regulation, 2024 (Regulation No. 3 of 2024)

• The Andhra Pradesh Electricity Regulatory Commission (APERC), through its draft notification dated February 19, 2026, has proposed the Second Amendment to the Green Energy Open Access Regulations, 2024. Exercising powers under Sections 42, 61, 62, and 86(1)(b) read with Section 181 of the Electricity Act, 2003, this amendment provides explicit regulatory clarity for Renewable Hybrid Energy Projects, specifically addressing non -colocated assets.
• The amendment introduces a new definition under Clause 2(1)(m -a), defining a Renewable Hybrid Energy Project as one that produces electricity from a combination of renewable sources connected at the same or different interconnection point(s). To qualify, the rated capacity of one resource must be at least 25% of the rated capacity of the other, and the project must achieve a minimum Capacity Utilization Factor (CUF) of 40%.
• A landmark provision is added to Clause 9(2), stipulating that Non -Colocated Renewable Hybrid Energy Projects shall be treated as a single generating project. This allows individual sources of a hybrid project to be connected "anywhere in the State," subject to technical feasibility requirements by TRANSCO or the DISCOMs.
• Regarding energy accounting and scheduling, the amendment mandates that while the project is treated as a single entity, the schedule for each individual source must be furnished separately. The sum of these schedules must not exceed the total capacity of the RE hybrid project; any injection in excess of the project's capacity will be treated as "inadvertent energy."
• Settlement protocols are restructured to require that energy injection be scheduled source -wise at each respective interconnection point for the purposes of energy settlement, forecasting deviations, and deviation treatment. To facilitate this, Clause 11 is amended to require the installation of interface meters for each individual source at their respective grid substations.
• The amendment modifies Clause 12(b) to address wheeling charges and loss allocation. It provides an exemption for Distribution/Wheeling charges if the injection and drawal of power occur at the same voltage level, irrespective of DISCOM boundaries. However, for hybrid projects where constituent components are connected at different voltage levels, wheeling charges and loss allocations will be applied to each component based on its specific voltage level of interconnection.
• The primary objective of these proposed changes is to remove the restrictive requirement of a single interconnection point, thereby facilitating enhanced participation in Green Energy Open Access by providing a flexible framework for definition, metering, and energy accounting for hybrid RE systems .

Sixth Amendment to Madhya Pradesh Electricity Regulatory Commission (Terms And Conditions for Intra -State Open Access in Madhya Pradesh) (Revision -I) Regulations, 2021

• The Madhya Pradesh Electricity Regulatory Commission (MPERC), through its notification dated January 20, 2026 (published in the Gazette on January 23, 2026), has issued the Sixth Amendment to the Intra-State Open Access Regulations, 2021. Exercising powers under Sections 39, 40, 42, and 86 read with Section 181 of the Electricity Act, 2003, this amendment restructures the framework for consumers availing open access relative to their contract demand.
• The amendment substitutes Regulation 13.2 of the Principal Regulations to introduce specific classifications for open access applications. Consumers must now explicitly specify their requirement under one of three categories: (i) up to the contract demand, (ii) over and above the contract demand, or (iii) a combination of both. This requirement applies to both new applicants and existing open-access customers.
• For consumers opting for open access within the contract demand (Case 1), Annexure-II clarifies that no separate technical feasibility study is required at the drawl end. Crucially, while energy adjustments are made in 15-minute time blocks, no adjustment of open access demand is permitted in the billing demand. Under this category, no additional surcharge is leviable on the open access energy drawn.
• For arrangements involving open access over and above the contract demand (Case 2), technical feasibility is mandatory, considering the total load (contract demand plus open access demand) on the feeder/system. In this scenario, additional surcharge is applicable on the open access energy drawn and consumed, except in cases of captive power plants where such surcharge is not applicable.
• The amendment introduces a hybrid model (Case 3) where consumers avail open access partially within and partially above their contract demand. Here, a clear financial distinction is drawn: Additional surcharge is leviable only on energy corresponding to the open access demand over and above the contract demand. The portion of energy corresponding to open access within the contract demand remains exempt from additional surcharge.
• To ensure strict grid discipline, the Provisos to Regulation 13.2 mandate that open access customers injecting power must ensure their actual sent-out capacity does not exceed the inter-connection limits. Furthermore, all balancing and settlement must strictly adhere to the Madhya Pradesh Electricity Balancing and Settlement Code 2023, and the Grid Code, 2024.
• To enhance transparency in renewable energy accounting, the amendment mandates Distribution Licensees to provide details of actual energy credited to consumers in 15-minute time blocks for Intra-State Renewables (Wind, Solar, Hybrid) to the MP State Load Despatch Centre (SLDC) on a weekly basis, and monthly by the 3rd of every month.

RECENT JUDGEMENTS

M/s Saisudhir Energy Limited Vs. M/S NTPC Vidyut Vyapar Nigam Limited

SC order dated January 30, 2026, in 2026 INSC 103

Background facts

• In 2010, the Ministry of Power launched the Jawaharlal Nehru National Solar Mission (JNNSM) to deploy grid-connected solar power. NTPC Vidyut Vyapar Nigam Ltd. (NVVNL) was designated as the nodal agency to enter into Power Purchase Agreements (PPA) with developers.
• On January 24, 2012, NVVNL entered into a PPA with M/s Saisudhir Energy Ltd. (SEL) for the supply of 20 MW solar power. The scheduled commissioning date was February 26, 2013.
• SEL failed to meet the deadline. It commissioned 10 MW after a delay of two months and the remaining 10 MW after a delay of five months.
• NVVNL sought liquidated damages (LD) under Clause 4.6 of the PPA. A threemember Arbitral Tribunal passed a split award: the majority awarded a "paltry" ₹1.2 crores, while the minority held that the LD mentioned in the PPA (approx. ₹49.92 crores) was a genuine pre-estimate of loss and should be paid in full.
• Both parties challenged the award under Section 34. A Single Judge of the Delhi High Court set aside the majority award and, exercising discretion to balance equities, modified the award to grant NVVNL 50% of the stipulated LD (calculated at ₹27.06 crores).
• In Section 37 appeals, the Division Bench further modified the amount, recalculating the damages based on its own reading of the PPA to reduce the amount to ₹20.70 crores. Both parties appealed to the Supreme Court..

Issues at Hand

• Whether NVVNL was required to prove "actual loss" to claim liquidated damages under Section 74 of the Indian Contract Act, 1872, given that the project was of public utility.
• Whether the Court, while exercising jurisdiction under Section 34 of the Arbitration Act, has the power to modify an arbitral award.
• Whether the Division Bench, under Section 37, was justified in re-calculating and further reducing the compensation determined by the Single Judge.

Decision of the Court

• The Supreme Court set aside the Division Bench's judgement and restored the Single Judge's order.
• The Court held that the project (JNNSM) was definitely in the "public interest" to promote green energy. Relying on Construction and Design Services vs. DDA, the Court affirmed that in public utility projects, delay itself can be taken to result in loss (e.g., environmental degradation or deprivation of social objectives). In such cases, the burden shifts to the defaulting party to prove that no loss was caused. SEL failed to discharge this burden.
• Following the Constitution Bench decision in Gayatri Balasamy vs. ISG Novasoft Technologies Ltd., the Court held that Section 34 courts possess a limited, nuanced power to modify an award (using the doctrine of severability) to prevent "extra rounds of arbitration" and avoid hardships. The Single Judge's modification to 50% LD was a permissible exercise of this limited jurisdiction.
• The Court ruled that the Division Bench exceeded its jurisdiction under Section 37. It held that a Section 37 court should only determine if the Section 34 court exercised its jurisdiction properly. Since the Single Judge's view was "plausible" and not arbitrary, the Division Bench was not justified in substituting its own view or re -calculating the figures
  
  Viewpoint
  This Supreme Court judg ement reinforces robust enforcement of liquidated damages in public utility solar projects under JNNSM, prioritizing PPA timelines for green energy goals over strict proof of actual loss per Section 74. It limits Section 37 appellate modifications to jurisdictional errors, curbing merit re - appraisals while affirming limited Section 34 modification powers post Gayatri Balasamy. The ruling erects a clear barrier against diluting pre -estimated damages in infrastructure delays, upholding public interest without arbitrary reductions.

Gujarat Urja Vikas Nigam Limited vs Central Electricity Regulatory Commission & Ors.

SC order dated January 16, 2026, in CIVIL APPEAL NO(S). 15195/2025

Background facts

• In response to energy crises, the Ministry of Power (MoP) issued "2023 Directions" under Section 11(1) of the Electricity Act, 2003, requiring imported coal -based (ICB) power plants, including Tata Power Company Limited (TPCL), to operate at full capacity.
• Section 11(2) mandates that the CERC "off -set the adverse financial impact" of such directions. While a MoP -appointed Committee set a provisional "benchmark" Energy Charge Rate (ECR), TPCL claimed this rate was insufficient to cover actual prudent costs of imported coal.
• TPCL filed Petition No. 179/MP/2023 before the CERC seeking final compensation and sought interim relief. On March 10, 2025, the CERC granted interim relief, allowing TPCL to recover 50% of the difference between its claimed ECR and the Committee's benchmark rate.
• The Appellant -Procurers (GUVNL, PSPCL, and Rajasthan Discoms) challenged this interim order before APTEL, arguing that the CERC lacked power to grant interim money payments in Section 11 proceedings and that the ECR calculations were fallacious .

Issue s at hand

• Whether the CERC's power to grant interim relief under Section 94(2) extends to proceedings for offsetting financial impact under Section 11(2).
• Whether the CERC correctly applied the "triple test" (prima facie case, balance of convenience, and irreparable injury) for granting an interim mandatory injunction for payment of money.
• Whether the CERC's ECR computation suffered from patent errors (e.g., treating Cost & Freight (CFR) shipments as Free on Board (FOB) shipments) .

Decision of the Court

• The Supreme Court of India issued an order on January 16, 2026, in Civil Appeal No(s). 15195/2025 (Gujarat Urja Vikas Nigam Limited vs. Central Electricity Regulatory Commission & Ors.), dismissing the appeals by procurers (including GUVNL and others) and declining to interfere with the Appellate Tribunal for Electricity (APTEL) judg ement. This upheld the framework for interim relief.
• APTEL affirmed CERC's "extremely wide" power under Section 94(2) to grant interim relief in Section 11(2) proceedings, ensuring that generators need not await a final order to mitigate the financial impact of coercive government directions.
• It was clarified that while financial loss generally does not constitute "irreparable injury" (as it is compensable by money) and future procurement issues are extraneous to Section 11(2), substantive justice may override such technicalities if the outcome remains equitable.
• Identified mathematical errors in CERC's energy charge computation regarding shipping costs (CFR vs. FOB), but declined to set aside the order because the effective price granted was actually lower than the Appellants' own internal calculations.
• A limited remand directing CERC to recalculate the exact entitlement based on verified data for the period of April 16, 2023, to March 10, 2025, to ensure mathematical precision in the final recovery was issued.
• Imposed strict safeguards to protect procurers, requiring the generator (TPCL) to furnish an unconditional Bank Guarantee for the full interim amount and an undertaking to pay "carrying costs" should the main petition eventually be dismissed.
• Requested the Commission to adjudicate the substantive dispute on its merits with utmost expedition, targeting a final disposal within a six -month timeline.
  
  Viewpoint
  This judg ement is a crucial precedent for the implementation of Section 11 of the Electricity Act. It balances the "Public Interest" in ensuring power plants remain financially viable during national emergencies with "Procurer Protection" while ensuring interim payments are backed by bank guarantees and undertakings. APTEL has rightly prioritized substantive equity over procedural perfection by refusing to quash an order despite technical errors, provided the final dollar value was reasonable. This limited remand approach prevents the litigation from entering a perpetual loop while ensuring that the final ECR is based on verified mathematical data rather than approximate samples .

The West Bengal State Electricity Distribution Company Limited & Ors. vs Jyotish Chandra Rice Mill & Ors.

Kolkata HC order dated February 04, 2026, in F.M.A. 179 of 2023

Background facts

• The Respondent, a rice mill owner in Jamalpur, Purba Bardhaman, had a transformer replaced by the Appellant -Licensee (WBSEDCL) on July 12, 2019.
• For the subsequent four months, energy consumption was recorded by the existing meter, and bills were raised based on actual readings. The Respondent discharged these liabilities via RTGS, which the Licensee accepted without demur.
• In November 2019, the Licensee unilaterally refunded the Respondent's payments and issued "Revised Bills" totalling Rs. 55,80,653/ -. This demand was based on a technical inspection dated November 29, 2019, which allegedly detected a "polarity reversal" at the Potential Transformer (PT).
• The Licensee contended that this defect caused the meter to under -record consumption for 140 days and invoked Regulation 3.6.1 of the WBERC Regulations to "regenerate" bills on an average basis.
• The Electricity Ombudsman, in an order dated April 26, 2022, recorded a finding that the Forum was "not satisfied" with the Licensee's evidence regarding the rectification of the defect, yet proceeded to affirm the demand for average billing.
• The Learned Single Judge, in a judg ement dated June 7, 2022 (W.P.A. No. 8916 of 2022), set aside the demand, terming the Ombudsman's order a case of "patent perversity" for holding the consumer liable while finding the rectification unproven.
• The Licensee preferred the instant intra -court appeal against the Single Judge's order .

Issue s at hand

• Whether the "establishment of a defect" constitutes a jurisdictional condition precedent for invoking the power of bill regeneration.
• Whether the Licensee met the mandatory burden of proof under Regulation 3.3.1 to displace the statutory presumption of a "correct meter."
• Whether the Ombudsman's order survives the doctrine of perversity as articulated in State of U.P. v. Johri Mal.
• Whether an accessory liability, such as Late Payment Surcharge (LPSC), can survive once the principal demand is quashed as a "legal corpse."

Decision of the Court

• The High Court dismissed the appeal and upheld the Single Judge's decree in its entirety. The Court held that under Regulation 3.3.1, there is a bedrock presumption of a "correct meter." Regulation 3.6.1 provides a narrow window for bill regeneration only "after the defect is established." The Court ruled that the Potential Transformer (PT) is an inseparable component of the metering circuit and falls under the protection of a "correct meter."
• The Court applied the doctrine of onus probandi, stating the Licensee must establish the terminus a quo (birth of defect) and terminus ad quem (rectification) with "clinical precision."
• The Licensee's demand was built upon a foundation of sand. The on -site Meter Reading Card contained no contemporaneous entry of defect, the Technical Inspection Report (TIR) lacked the requisite consumer verification, and the Licensee failed to produce any verified documentation regarding the "rectification" of the alleged polarity reversal.
• In the absence of a proven terminus ad quem (the point of return to normalcy), the calculation of an "average" becomes a mathematical fiction like an anchor cast into mid -air.
• The Court affirmed that the Ombudsman's order was perverse. A quasi -judicial authority cannot find the factual basis (rectification) "unproven" yet hold the citizen liable.
• Reliance on subsequent affidavits to bolster the administrative order was rejected, citing Mohinder Singh Gill v. Chief Election Commissioner. The order was deemed a jurisdictional nullity and a "legal corpse" that cannot be resuscitated by supplemental grounds.
• Regarding the Late Payment Surcharge (LPSC) of Rs. 32.72 Lakhs, the principle of accessorium non ducit sed sequitur suum principale applies with full force. Interest and surcharges cannot breathe life into a void debt. Since the supplemental demand is a jurisdictional nullity, void ab initio, the LPSC has no host upon which to subsist.
• Directions issued:
  • The principal supplemental demand (crystallized at Rs. 47,06,213/ -) is declared null and void.
  • The Licensee shall delete and waive the entire LPSC of Rs. 32.72 Lakhs and associated interest.
  • The sum of Rs. 11,70,855/ - deposited under protest shall be adjusted against future bills.
  • All disconnection notices are quashed .

To view the full article, click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.