SC rules in favour of Himachal in power dispute with JSW Hydro Energy

Supreme Court upholds Himachal Pradesh's claim to 18% free power from JSW Hydro Energy, rejecting plea to align supply with CERC's 13% cap under 2019 regulations

The Supreme Court on Wednesday ruled against JSW Energy subsidiary JSW Hydro Energy in its dispute with the Himachal Pradesh government over supply of 18 per cent free power to the state.

 

JSW Hydro Energy had claimed that, according to the Central Electricity Regulatory Commission (CERC) Tariff Regulations, it was required to supply no more than 13 per cent of free power to the state.

 

“We have allowed the appeal by the State of Himachal Pradesh by interpreting the provisions of the Electricity Act, 2003 and the CERC Regulations, 2019 in the context of the subsisting and continuing contractual relationship between the parties,” the Bench of Justices PS Narasimha and Joymalya Bagchi said.

 

The Bench held that the CERC will give effect to the Regulations and provide a pass-through to the extent of 13 per cent free power. However, the remaining part of the obligation is contractual in nature and will be governed by the provisions of the implementation agreement. 

 

It further said that on interpreting the CERC Regulations, 2019, they think it does not restrain or prohibit JSW Hydro Energy from supplying free power beyond 13 per cent but it is only meant for the calculation and fixation of tariff.

 

“Further, a writ petition before the high court for aligning the implementation agreement with the CERC Regulations, 2019 and the CERC’s order dated 17.03.2022 is not maintainable,” it held.

 

Allowing the appeal of the state government, the Bench was critical of the high court intervening in the tariff fixation aspect, a domain which falls under the CERC.

 

JSW Hydro Energy Limited, a power generating company, operates a 1,045 Mw hydroelectric project at Karcham Wangtoo, originally allotted to Jaiprakash Industries Limited through a memorandum of understanding in 1993. 

 

Under the subsequent implementation agreement with the Himachal Pradesh government, JSW (through its predecessor) agreed to provide 18 per cent of net power to the state free of cost after the first 12 years of commercial operation.

 

Later, JSW approached the CERC and the high court when the state did not agree to limit the free power to 13 per cent.

 

The high court ruled in the company’s favour and directed the state to align its implementation agreement with the CERC regulations.