In a significant ruling, the Karnataka High Court has struck down the Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022, established by the Central Government. The court declared that the central government overstepped its boundaries as the Electricity Act of 2003 delegates the authority to regulate this domain exclusively to the Karnataka Electricity Regulatory Commission (KERC).
Justice N S Sanjay Gowda delivered the judgment, highlighting that the Electricity Act ensures regulatory oversight, including tariff setting and open access, remains with independent state bodies such as KERC, devoid of governmental interference. The court’s decision responded to challenges from hydroelectric power companies, which argued that the central rules infringed on the exclusive powers granted to KERC under Sections 42(2) and 181 of the Electricity Act.
The petitioners contended that the rules not only undermined KERC’s autonomy but also rendered it subordinate to the central government, contradicting the legislative intent to shield the sector from governmental influence. While the central government defended its position by citing its powers under various entries of the Union and Concurrent Lists and the Electricity Act, it also claimed the rules were essential for meeting international treaty obligations.
However, the court maintained that the central government’s powers under Section 176(2) of the Electricity Act do not extend to enacting rules that contravene the established regulatory framework. It emphasized that the National Electricity Policy of 2005 explicitly assigns the responsibility for facilitating open access to state regulatory commissions.
Further complicating matters, the court also nullified the Karnataka Regulatory Commission (Terms and Conditions for Green Energy Open Access) Regulations, 2022, which were formulated by KERC in alignment with the now-invalid central rules. The court instructed KERC to formulate new regulations concerning open access for renewable energy generators and consumers.
To minimize disruption, the court extended its interim order allowing petitioners to continue utilizing wheeling and banking facilities until new regulations are established. The judgment also advised KERC to consider implementing an annual banking facility for green energy generators, with mechanisms to avoid market manipulation. Generators would be credited for energy charges at the time of energy injection into the grid, rather than at withdrawal, to prevent exploitation.
