SC upholds Tata-BEST deal

Case relates to power pact between Tata Power, RInfra.

A Supreme Court bench headed by Justice SB Sinha today upheld the order of the Maharashtra Electricity Regulatory Commission (MERC) approving the power purchase agreement between Tata Power Company (TPS) and Brihanmumbai Electric Supply and Transport (BEST) for 800 Mw.

The apex court’s verdict also strikes down the decision of the Appellate Tribunal for Electricity (ATE) which directs MERC to reconsider the RInfra’s claim over TPC’s power.

Interestingly, only on Tuesday, RInfra and TPC had reached an agreement to sign the agreement even as a legal battle between them continued in the apex court.

The TPC, which has a generation capacity of 1,777 Mw, supplies around 650 Mw to BEST, which supplies power in the island city, 760 Mw to RInfra on infirm basis (without any contract which could be discontinued at any time), which distributes power in Mumbai’s suburbs. The power major supplies the remaining power to bulk consumers like railways, airport and other utilities and some industrial consumers.

However, dispute broke out between TPC and REL in 2007 when MERC gave approval to PPA between TPC and RInfra as the latter’s share in TPC reduced by around 150 Mw and RInfra had to bridge this gap by buying power from the spot market.

Subsequently, RInfra filed a review petition before MERC but the power regulator rejected its petition saying it has no jurisdiction over commercial agreement between two entities. Subsequently, RInfra challenged MERC’s order before the Appellate Tribunal for Electricity (ATE), which reversed the regulator’s order. Then TPC challenged ATE’s order in the apex court.

The contentious issues between the two power utilities were on the duration of the PPA and the quantity of power. TPC wanted commitment from RInfra for a minimum of 10 years, whereas RInfra wanted to sign the PPA for 760 Mw but TPC was ready to sign PPA only for 500 MW. According to a compromise formula between the two companies, RInfra had to accept TPC’s both conditions that RInfra would sign the PPA for 12 years and only for 500 Mw.