Proposed electricity contract enforcement authority mired in confusion

Former regulators question its need, legal experts cite loopholes

One of the new additions, among a dozen, to the draft Electricity Bill, 2020 by the Centre is the proposal to set up a new body to enforce and oversee contracts in the power sector.
 

The Electricity Contract Enforcement Authority (ECEA) under Section 109 (A) of the Bill will be set up to resolve matters relating to the contracts of sale, purchase, and transmission of power between two or more parties.
 

The power ministry released the amendments made to the Electricity Act, 2003 last week, and invited public comments. While sector executives welcomed this new organisation, saying it will speed up judgement, some experts have questioned the ambiguity in powers prescribed to the ECEA. Former members of the electricity regulatory commissions (ERCs) said another body with overlapping authority was just an added layer that did not serve any purpose.
 

At present, the State Electricity Regulatory Commissions (SERCs) oversee disputes, with the next layer being the Central Electricity Regulatory Commission (CERC) and the Appellate Tribunal of Electricity (APTEL). A party may also approach civil courts and then the Supreme Court, which is the final authority.
 

“The scope of adjudicatory jurisdiction of SERCs has been reduced, and the power to adjudicate disputes and enforce performance of contracts related to the purchase, sale, or transmission of power is now vested in the ECEA. They have tried to create a central body for adjudicating disputes,” said Aditya K Singh, associate partner at HSA Advocates.
 

He said a possible objective of the move is to bring more uniformity in dispute resolution. “Investors were worried about the political risk of their investment. Developers are dealing with a different set of regulators, and need to worry about different types of issues when getting disputes adjudicated from SERCs. It has also given more teeth to this authority,” said Singh.
 

A K Khurana, director general, Association of Power Producers (representative body of private power generators), said because the ECEA has been given the power of a civil court, it will help “instil discipline among contracting parties to adhere to contractual obligations, which was missing in the current environment”.

On the contrary, some experts have pointed to the ambiguous language in the Bill, which makes the purview and power of the ECEA unclear. Overlapping functions with existing SERCs might also create confusion, said a senior power executive.

“We may waste great effort and time on fight for jurisdictional space between the ECEA and ERCs. For instance, on the multi-state power purchase agreements (PPAs), it took three years to get clarity from the Supreme Court. There should be a clear demarcation between the two authorities. To avoid any jurisdictional issues between CERC and this newly formed body, the bifurcation of functions should be spelt our clearly,” said Khurana.
 

A former ERC member said the new authority has no unique features. “There is no need of a new body. Unlike SERCs, it seems the ECEA will have no jurisdiction over any matter related to regulation or determination of tariff, or any dispute involving tariff. Tariff disputes are the most highly contested matters. If the ECEA is not doing that, why is it being formed separate from SERCs?” he said.
 

Highlighting another anomaly in the draft Bill, Singh said the new powers given to APTEL were incorrectly mentioned. Under the new Bill, it has been proposed to give APTEL the powers of a civil court.
 

“The proposed Bill has inserted a new sub-section under Section 121 of the Bill, giving the same power as a high court to the Appellate Tribunal, in cases of civil contempt. The process of invocation of civil contempt jurisdiction in the draft has been borrowed from the Contempt of the Court Act. But the process copied is from the Criminal Contempt procedure and not Civil contempt procedure,” he added.