In CIVIL APPEAL NOs. 2578-2579 OF 2008-SC- Top Court holds National Electricity Policy, 2005 to be in tune with provisions of Electricity Act, says association of corporate bodies can establish Captive Power Plant Justices L. Nageswara Rao & B.R.Gavai [12-05-2022]

Read Judgment: CHHATTISGARH STATE POWER DISTRIBUTION  COMPANY LTD v. CHHATTISGARH STATE ELECTRICITY REGULATORY COMMISSION AND ANOTHER 

LE Correspondent

New Delhi, May 13, 2022: The Supreme Court has opined that the use of electricity by SBMPL (M/s Shri Bajrang Metallics and Power Ltd.), sister concern of M/s Shri Bajrang Power and Ispat Ltd.(SBPL), would be for captive use under the provisions of the Electricity Act, 2003 as SBMPL holds 27.6% of the ownership of the power plant and the joint consumption by SBIPL and SBMPL is more than 51% of the power generated.

The Division Bench of Justice L.Nageswara Rao and Justice B.R.Gavai laid out the conditions mentioned in Rule 3(1) of the Electricity Rules, 2005 which need to be satisfied so that a power plant can qualify as a “Captive Generating Plant” under Section 9 r/w Clause (8) of Section 2. The first requirement is that not less than 26% of the ownership is held by the captive user. The second requirement is that not less than 51% of the aggregate electricity generated in such a plant, determined on an annual basis, is consumed for captive use. Making a reference to the fourth proviso to Section 42(2), the Division Bench clarified that surcharge would not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use.

In this case, SBPIL had established a Captive Generation Plant and SBMPL submitted a petition to the Chhattisgarh State Electricity Regulatory Commission for providing open access and wheeling of power through the transmission system of the appellant for captive use by SBMPL.  This petition came to be resisted by the appellant and the Commission held that SBPIL was entitled to supply electricity to its sister concern SBMPL and the same would qualify to be treated as ‘own consumption’ within the ambit of Section 9 r/w Section 2(8). Being aggrieved, the appellant preferred appeals before the APTEL which were  dismissed by the APTEL and so, the present appeals were filed.

Referring to the provisions of the Act and the Rules, the Bench said, “As already discussed hereinabove, even an association of corporate bodies can establish a power plant.” The Apex Court was of the opinion that both the conditions as provided under Rule 3 were satisfied as  SBMPL holds 27.6% of the ownership and joint consumption by SBIPL and SBMPL is more than 51% of the power generated.

Asserting that the National Electricity Policy, 2005 has a statutory flavour, the Bench held that no case was made out for interfering with the order passed by the Commission and the impugned judgment of the APTEL. Thus, the appeal was dismissed.