The Supreme Court on Tuesday upheld the Rajasthan Electricity Regulatory Commission’s (RERC) 2016 regulations that set terms and conditions for open access of power to industrial consumers. The bench, led by Justices Vikram Nath and Prasanna B Varale, rejected a series of appeals by industrial entities, including Ramayana Ispat Pvt Ltd, which had challenged the earlier decisions of the Rajasthan High Court’s Jodhpur and Jaipur benches.
The High Court had previously affirmed the legality of the RERC (Terms and Conditions for Open Access) Regulations, 2016, which primarily aimed to introduce restrictions on the simultaneous use of open access electricity and contracted demand from distribution licensees. These regulations were designed to prevent the over-withdrawal and under-withdrawal of power, imposing penalties for non-compliance, which some industrial companies, including Hindustan Zinc Limited, argued hindered their operations and created disadvantages for captive power generators.
Companies affected by the 2016 regulations argued that the rules restricting the use of open access electricity along with contracted demand from distribution licensees were arbitrary and contravened the Electricity Act, 2003. They contended that these regulations limited their ability to efficiently manage power consumption from multiple sources, a flexibility they enjoyed under the earlier 2004 regulations.
However, the Supreme Court’s judgment, penned by Justice Nath in an extensive 83-page document, articulated that the RERC acted within its statutory rights under the Electricity Act, 2003. The court found that the regulations were necessary to ensure fair competition, grid discipline, and stable power distribution.
The judgment highlighted that the advance scheduling requirements and penalties for deviations are intended to prevent market manipulation and ensure a reliable electricity supply. The top court confirmed that these measures do not infringe upon constitutional rights or the provisions of the Electricity Act but align with the act’s objectives to promote equitable treatment among all electricity consumers and safeguard the integrity of the power grid.
The court also addressed broader issues regarding the jurisdiction of the RERC to regulate interstate open access and whether penalties for variations in withdrawal from contracted demand constitute an unreasonable restriction under the 2003 law. It concluded that the regulatory framework established by the RERC is crucial for maintaining grid stability and ensuring that the electricity market operates fairly and effectively.
