# TRANSMISSION CORPORATION OF ANDHRA PRADESH LIMITED v. M/S RAIN CALCINING LIMITED & OTHERS

- **Citation:** [2019] 17 S.C.R. 474
- **Court:** Supreme Court of India
- **Decided:** 2019-11-29
- **Case number:** Civil Appeal No. 4569 of 2003
- **Bench:** Arun Mishra, M. R. Shah, B. R. Gavai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/transmission-corporation-of-andhra-pradesh-limited-v-m-s-rain-calcining-limited-33662
- **Pages:** 53

## Headnote

Andhra Pradesh Electricity Reforms Act, 1998: ss.11, 26 -
Competence of APERC (Commission) to determine Wheeling
Charges - s.11 primarily deal with the generation, transmission,
and distribution - These three processes suggest that s.11 does
include in its ken the power to fix the wheeling charges relating
to the generation, transmission, distribution, supply, and utilization
of electricity - The distribution is not possible without transmission
- The Commission is the regulator for transmission and, therefore,
has the power to fix the wheeling charges - Under 1999
Regulations, various agreements have also been amended, and
there is plenary power to prescribe the tariff and charges
concerning Transmission and Bulk Supply or Distribution and
Retail Supply as provided in Regulation 45-A(2) - Under
Regulation 45-A(8), upon hearing the licensee and such other
parties, the Commission make an order and notify the licensee of
its decision on the revenue calculations and tariff proposals, as
provided in s.26(5) of the Reforms Act, 1998 - Thus, the
Commission can exercise the power of fixation of such charges,
which power is legislative - There is no question of attracting the
equitable principles of promissory estoppel, as there was no
unequivocal promise in this case, and statutory provision can make
inroad and supersede the contracts - Electricity (Supply) Act, 1948
- Andhra Pradesh Electricity Regulatory Commission (Business
Rules of the Commission), Regulations, 1999.
Andhra Pradesh Electricity Reforms Act, 1998: Competence
of Commission to determine Grid Support Charges - Commission
by order dated 8.2.2002 held that Grid Support Charges would
be payable at the rate of 50% of prevailing demand charges on
the differential of CPP capacity and CMD - Propriety - Held:
 [2019] 17 S.C.R. 474
474
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Under s.11 read with s.26 of the Reforms Act, 1998, all fixed
charges under the distribution and Grid Support Charges are
leviable only at the instance of a distribution company, and the
Commission has the powers to determine it.
Andhra Pradesh Electricity Reforms Act, 1998: Whether
Government Orders issued on 18.11.1997 and 22.12.1998, by the
Andhra Pradesh Government, extending specific incentives to the
producers of electricity from non-conventional energy resources,
are binding and Doctrine of Promissory Estoppel against the
Government and Commission was bound to give effect to them -
Held: Plea of promissory estoppel is not attracted, as there was
no unequivocal promise - The Regulatory Commission had power
of reviewing the tariff and incentives - There was no unequivocal
commitment to the respondent/purchasers/generators/developers to
bind the State for all times to come - There was no definite,
unambiguous representation, hence plea of estoppel was not
attracted.
Andhra Pradesh Electricity Reforms Act, 1998: Object of
enactment - Discussed.
Andhra Pradesh Electricity Reforms Act, 1998: APTRANSCO
- Constitution and functions - Discussed.
Administrative Law: Judicial review - Tariff determination
by APERC (Commission) -Scope of interference - Held: Once the
expert body has determined specific tariffs, it is not for the Court
to interfere ordinarily in such matters - In the instant case, the
determination of tariff by the Commission was proper and did not
suffer from any infirmity or illegality - The Commission made an
elaborate discussion for arriving at the figure - The recovery
network charges, tariff structure, and the question of wheeling
charges in cash or kind were also considered - Interference not
called for.
Allowing the appeals, the Court
HELD:
1. IN RE: COMPETENCE OF APERC TO DETERMINE
WHEELING CHARGES
1.1 Section 11 of the Reforms Act, 1998 deals with the
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v.
M/S RAIN CALCINING LTD. & OTHERS
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functions of the Commission. Under Section 11(1)(a), the
Commission shall aid and advise in matters concerning
elec

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TRANSMISSION CORPORATION OF
ANDHRA PRADESH LIMITED
v.
M/S RAIN CALCINING LIMITED & OTHERS
(Civil Appeal No. 4569 of 2003)
NOVEMBER 29, 2019
[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
Andhra Pradesh Electricity Reforms Act, 1998: ss.11, 26 -
Competence of APERC (Commission) to determine Wheeling
Charges - s.11 primarily deal with the generation, transmission,
and distribution - These three processes suggest that s.11 does
include in its ken the power to fix the wheeling charges relating
to the generation, transmission, distribution, supply, and utilization
of electricity - The distribution is not possible without transmission
- The Commission is the regulator for transmission and, therefore,
has the power to fix the wheeling charges - Under 1999
Regulations, various agreements have also been amended, and
there is plenary power to prescribe the tariff and charges
concerning Transmission and Bulk Supply or Distribution and
Retail Supply as provided in Regulation 45-A(2) - Under
Regulation 45-A(8), upon hearing the licensee and such other
parties, the Commission make an order and notify the licensee of
its decision on the revenue calculations and tariff proposals, as
provided in s.26(5) of the Reforms Act, 1998 - Thus, the
Commission can exercise the power of fixation of such charges,
which power is legislative - There is no question of attracting the
equitable principles of promissory estoppel, as there was no
unequivocal promise in this case, and statutory provision can make
inroad and supersede the contracts - Electricity (Supply) Act, 1948
- Andhra Pradesh Electricity Regulatory Commission (Business
Rules of the Commission), Regulations, 1999.
Andhra Pradesh Electricity Reforms Act, 1998: Competence
of Commission to determine Grid Support Charges - Commission
by order dated 8.2.2002 held that Grid Support Charges would
be payable at the rate of 50% of prevailing demand charges on
the differential of CPP capacity and CMD - Propriety - Held:
 [2019] 17 S.C.R. 474
474
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Under s.11 read with s.26 of the Reforms Act, 1998, all fixed
charges under the distribution and Grid Support Charges are
leviable only at the instance of a distribution company, and the
Commission has the powers to determine it.
Andhra Pradesh Electricity Reforms Act, 1998: Whether
Government Orders issued on 18.11.1997 and 22.12.1998, by the
Andhra Pradesh Government, extending specific incentives to the
producers of electricity from non-conventional energy resources,
are binding and Doctrine of Promissory Estoppel against the
Government and Commission was bound to give effect to them -
Held: Plea of promissory estoppel is not attracted, as there was
no unequivocal promise - The Regulatory Commission had power
of reviewing the tariff and incentives - There was no unequivocal
commitment to the respondent/purchasers/generators/developers to
bind the State for all times to come - There was no definite,
unambiguous representation, hence plea of estoppel was not
attracted.
Andhra Pradesh Electricity Reforms Act, 1998: Object of
enactment - Discussed.
Andhra Pradesh Electricity Reforms Act, 1998: APTRANSCO
- Constitution and functions - Discussed.
Administrative Law: Judicial review - Tariff determination
by APERC (Commission) -Scope of interference - Held: Once the
expert body has determined specific tariffs, it is not for the Court
to interfere ordinarily in such matters - In the instant case, the
determination of tariff by the Commission was proper and did not
suffer from any infirmity or illegality - The Commission made an
elaborate discussion for arriving at the figure - The recovery
network charges, tariff structure, and the question of wheeling
charges in cash or kind were also considered - Interference not
called for.
Allowing the appeals, the Court
HELD:
1. IN RE: COMPETENCE OF APERC TO DETERMINE
WHEELING CHARGES
1.1 Section 11 of the Reforms Act, 1998 deals with the
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v.
M/S RAIN CALCINING LTD. & OTHERS
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functions of the Commission. Under Section 11(1)(a), the
Commission shall aid and advise in matters concerning
electricity generation, transmission, distribution and supply in
the State. Section 11(1)(b) empowers the Commission to
regulate the working of the licensees and to promote their
working in an efficient, economical, and equitable manner. The
Commission under Section 11(1)(c) has the power to issue
licences in accordance with the provisions of the Act. Section
11(1)(d) also empowers the Commission to promote efficiency,
economy, and safety in the use of the electricity. Under Section
11(1)(e), the Commission has the power to regulate the purchase,
distribution, supply, and utilization of electricity, the quality of
service, the tariff, and charges payable. The wheeling charges
are part of tariff, and the provisions of Section 11 are inclusive
and primarily dealing with the generation, transmission, and
distribution. These three processes suggest that Section 11
does include in its ken the power to fix the wheeling charges
relating to the generation, transmission, distribution, supply, and
utilization of electricity. The licensee is required to submit a
calculation of annual expected aggregate revenue, and the
Commission has the power to fix the tariff for the licensees that
would include the licence for transmission also. The
Commission, while fixing the wheeling charges, has to act upon
the settled principles as specified in the order and in consonance
with the provisions contained in Sections 11, 15, and 26. [Paras
34, 35, 36] [509-F-H; 501-A-D-E]
Ashok Soap Factory v. Municipal Corporation of Delhi
(1993) 2 SCC 37 : [1993] 1 SCR 124 ; Pawan Alloys
& Casting Pvt. Ltd., Meerut v. U.P. State Electricity
Board (1997) 7 SCC 251 : [1997] 3 Suppl. SCR 266
; Oil and Natural Gas Commission v. Association of
Natural Gas Consuming Industries of Gujarat, (1990)
Supp. SCC 397 : [1990] SCR 157 ; Rohtas Industries
Ltd. v. Chairman, Bihar State Electricity Board (1984)
Supp. SCC 161 : [1984] SCR 59 - relied on.
1.2 The Andhra Pradesh Electricity Regulatory
Commission (Business Rules of the Commission), Regulations,
1999 were framed in exercise of powers conferred by Section
9, Sub-Section 2 and Section 54, Sub-Section (2)(a) of the
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Reforms Act, 1998 and they were amended by Regulations of
2000. The Regulations reflect a broad spectrum of powers and
various functions relating to fixation of the tariff. As per
Regulation 45-A of the Regulations, 2000, inserted by
amendments to Chapter IV-A of the Conduct of Business
Regulations, it is open to the Commission to fix a tariff. Under
regulations, various agreements have also been amended, and
there is plenary power under the regulations to prescribe the
tariff and charges concerning Transmission and Bulk Supply or
Distribution and Retail Supply as provided in Regulation 45-A(2).
Under Regulation 45-A(8), it is clear that upon hearing the
licensee and such other parties as the Commission considers
appropriate and upon making such other inquiry, the
Commission shall make an order and notify the licensee of its
decision on the revenue calculations and tariff proposals, as
provided in section 26(5) of the Reforms Act, 1998. The
commission can exercise the power of fixation of such charges,
which power is legislative. The statutory contracts have been
superseded by the regulations which have been made. No
estoppel is created. It was not the subject matter of policy
reserved for the Government under section 12 of the Reforms
Act, 1998. As per section 26(5), the exercise of fixation of
charges can be done. There is no violation of principles of
natural justice as the objections were invited, and the licensees
were heard. There is no question of attracting the equitable
principles of promissory estoppel, as there was no unequivocal
promise in this case, and statutory provision can make inroad
and supersede the contracts. [Paras 39, 45-47, 54] [502-D-E;
509-E-F; 512-D-H; 513-A; 516-A-B]
PTC India Limited v. Central Electricity Regulatory
Commission, (2010) 4 SCC 603 : [2010] 3 SCR 609
- relied on.
Indian Aluminium Company v. Kerala State Electricity
Board, (1975) 2 SCC 414 : [1976] 1 SCR 70 ; Gujarat
State Financial Corporation v. Lotus Hotels Pvt. Ltd.,
(1983) 3 SCC 379 ; Motilal Padampat Sugar Mills Co.
Ltd. v. State of Uttar Pradesh & Ors., (1979) 2 SCC
409 : [1979] 2 SCR 641 ; Pawan Alloys & Casting
Pvt. Ltd., Meerut v. U.P. State Electricity Board & Ors.,
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v.
M/S RAIN CALCINING LTD. & OTHERS
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(1997) 7 SCC 251 : [1997] 3 Suppl. SCR 266 ;
Andhra Pradesh Electricity Regulatory Commission v.
R.V.K. Energy Private Limited & Anr., (2008) 17 SCC
769 : [2008] 9 SCR 579 ; Binani Zinc Limited v.
Kerala State Electricity Board & Ors., (2009) 11 SCC
244 : [2009] 4 SCR 636 ; Adani Power (Mundra) Ltd.
v. Gujarat Electricity Regulatory Commission & Ors.
AIR 2019 SC 3397 - held inapplicable.
Karnataka Power Transmission Corporation Ltd. v.
Amalgamated Electricity Co. Ltd., (2001) 1 SCC 586 :
[2000] 5 Suppl. SCR 695 - Distinguished.
1.3 The High Court could not have interfered with the
findings on merits taken by the experts without entering into
the various aspects considered by the Commission. The High
Court has not gone into various reasons, and the details
considered by the Commission and once the expert body has
determined specific tariffs, it is not for the courts to interfere
ordinarily in such matters. The determination is proper and does
not suffer from any infirmity or illegality. The Commission has
made an elaborate discussion for arriving at the figure. The
recovery network charges, tariff structure, and the question of
wheeling charges in cash or kind have also been considered.
[Para 61] [519-B-D]
1.4 The use of the system cannot be isolated from losses
in the system as they form an integral part of the system. All
persons using the system should bear the system losses,
whether technical or non-technical. Incidentally, the terms of a
licence issued by APTRANSCO and DISCOMS specifically
refer to deliver such electricity, adjust losses of electricity to a
designated point. Technical losses in the system to be taken
into account as these are also an integral part of the system. It
is an integrated system where the electricity is supplied on
displacement basis rather than direct conveyance of the
particular electricity which is generated, the technical losses up
to the voltage level at which the electricity is delivered along
cannot be measured. The technical losses of the total system
need to be taken into account as it is impossible to determine
from which source electricity is being supplied to which
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particular customer. The electricity from all sources gets
combined in the system and loses its identity. As investment in
the system has also been made, it was evident that requisite
charges have to be paid. [Para 62] [519-E-G]
2. IN RE : GRID SUPPORT CHARGES
Grid Code is the basis for levy of the Grid Support
Charges, which came to be approved by the Commission on
26.5.2001. The same is also reflected in the impugned order.
Thus, in case of installation of another CPP, that would be an
additional load on the grid, and there is no embargo for setting
up additional grid CPP in the form of expansion as grid acts as
cushioning. Under section 11 read with section 26 of the
Reforms Act, 1998, all fixed charges under the distribution and
Grid Support Charges are leviable only at the instance of a
distribution company, and the Commission has the powers to
determine it. In the agreements also there is a power where the
Board could have fixed the Grid Support Charge unilaterally, but
because of Reforms Act, 1998 came to be enacted, the application
was filed in the Commission. After that, the Commission has
passed the order in accordance with the law. There is no fault
in the same. Thus, the order of the Commission concerning the
Grid Support Charges is upheld. [Para 64] [520-C-F]
3. IN RE : INCENTIVES TO NON-CONVENTIONAL
ENERGY
3.1 The Government Order dated 18.11.1997, encourages
renewable energy/non-conventional energy sources. The
Government decided to provide specific incentives. The
Government issued another GO MS No.112 dated 22.12.1998,
making precise clarification that the benefits shall be available
only to the power projects where fuel used is from nonconventional energy sources, which are of the nature of
renewable sources of energy. The Scheme shall be watched for
three years. After that, the State Electricity Board shall come
up with suitable proposals for the continuance of incentives in
the present form or modified form. [Paras 66-67] [521-B-H; 522A]
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v.
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3.2 The Commission had passed the tariff orders dated
22.3.2005 and 23.3.2006 for the years 2004-05, 2005-06, and
2006-09. The APTEL was not correct in allowing the appeals
and holding that effect of the policy decisions dated 18.11.1997
and 22.12.1998, which had a statutory flavor, had not been taken
away by the provisions contained in the Electricity Act, 2003 and
that the Doctrine of Promissory Estoppel is attracted, though
the Commission has the power to regulate wheeling charges.
To consider the applicability of Promissory Estoppel, it has to
be seen whether these Government Orders contained an
unequivocal commitment to extend benefits. On the contrary,
the benefit was confined only to three years. The Commission
under the provisions of the Reforms Act, 1998 extended it from
time to time and the last such extension came to an end on
28.7.2001.
The Commission decided not to extend the benefit
by the impugned order determining the tariff. [Paras 68, 69]
[522-B-F]
3.3 This Court in Transmission Corporation of Andhra
Pradesh Limited case considered G.O. MS dated 18.11.1997 and
22.12.1998, in which APERC undertook the review of tariff
applicable to the producers of electricity from non-conventional
energy resources. In the year 2003, the Commission undertook
a further review of the tariff. The Commission by order dated
20.3.2004, reduced the amount of tariffs. The Regulatory
Commission had power of reviewing the tariff and incentives.
There was no unequivocal commitment to the respondent/
purchasers/ generators/ developers to bind the State for all times
to come. There was no definite, unambiguous representation,
hence plea of estoppel was not attracted. [Para 70] [522-G-H;
523-C-D]
3.4 Section 65 of the Electricity Act, 2003, provides that
if State Government requires grant of any subsidy to any
consumer in the tariff determined by the State Commission under
Section 62, the State Government shall, notwithstanding, any
direction which may be given under Section 108, pay, in advance
and in such manner as may be specified, the amount to
compensate the person affected by the grant of subsidy in the
manner the State Commission may direct. Subsidy/incentive is
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governed by Section 65, and the Government has not issued any
such direction to continue the incentives in the form of subsidy.
It was open to the Government to do so because of the order
passed by the Commission, but it has not extended such benefit.
No command can be given to State to grant subsidy. Thus, the
order of APTEL based on the Doctrine of Promissory Estoppel
for continuing the benefit of Government Orders dated
18.11.1997 and 22.12.1998, cannot be said to be in accordance
with the law. [Paras 71, 72] [526-B-E]
Transmission Corporation of Andhra Pradesh Limited
& another v. Sai Renewable Power Private Limited &
others, (2011) 11 SCC 34 : [ 2010] 8 SCR 636 - relied
on
K. Ramanathan v. State of Tamil Nadu, AIR 1985 SC
660 : (1985) 2 SCC 116 : [1985] 2 SCR 1028 ; V.S.
Rice and Oil Mills v. State of Andhra Pradesh AIR
1964 SC 1781 : [ 1964] SCR 456 ; Deepak Theatre,
Dhuri v. State of Punjab, AIR 1992 SC 1519 ; D.K.
Trivedi & Sons v. State of Gujarat, AIR 1986 SC
1323 : 1986 SCR 479 - referred to
Case Law Reference
[1993] 1 SCR 124
relied on
Para 28
[1990] SCR 157
relied on
Para 28
[1984] SCR 59
relied on
Para 28
[1985] 2 SCR 1028
referred to
Para 29
AIR 1992 SC 1519
referred to
Para 29
[1986] SCR 479
referred to
Para 29
[2010] 3 SCR 609
relied on
Para 33
[1964] SCR 456
referred to
Para 48
[1976] 1 SCR 70
held inapplicable
Para 49
[2000] 5 Suppl. SCR 695
Distinguished
Para 50
(1983) 3 SCC 379
held inapplicable
Para 54
[1979] 2 SCR 641
held inapplicable
Para 54
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v.
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[1997] 3 Suppl. SCR 266
held inapplicable
Para 54
[2008] 9 SCR 579
held inapplicable
Para 54
[2009] 4 SCR 636
held inapplicable
Para 56
AIR 2019 SC 3397
held inapplicable
Para 57
[2010] 8 SCR 636
relied on
Para 70
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4569
of 2003.
From the Judgment and Order dated 18.04.2003 of the High
Court of Judicature, Andhra Pradesh at Hyderabad in C.M.A. No. 1025
of 2002.
With
Civil Appeal Nos. 5085, 5084, 5052, 5083, 5079, 5057, 5053, 5066,
5064, 5068, 5054, 5071, 5056, 5077, 5063, 5055, 5080, 5062, 5073, 5069,
5081, 5076, 5059, 5065, 5067, 5075, 5058, 5082, 5061, 5072, 5070, 5074,
5060, 5078, 7093, 7103, 7085, 7086, 7080, 7090, 7079, 7084, 7088, 7104,
7091, 7089, 7041, 7083, 7092, 7087, 7042, 7102, 7043-7078, 8969, 8970,
8971, 8974, 8978, 8972, 8976, 8975, 8977, 10125-10132 of 2003, 1945,
1946-1947 of 2004, 7029-7062 of 2008.
V. Giri, B. Adhinarayana Rao, Parag Tripathi, C. S. Vaidyanathan,
C. R. Sridharan, Sr. Advs., Nishant Sharma, Rakesh K. Sharma,
Matrugupta Mishra, Ms. Pratiksha Chaturvedi, Ms. Sharmila Upadhyay,
Y. Raja Gopala Rao, C. Gunaranjan, Sourjya Das, VRN Prasanth,
Sridhar Potaraju, Ms. Shiwani Tushir, Ms. Shweta Parihar, Ms. G. Usha
Sri, Lalltaksh Joshi, Manu Nair, Kuber Dewan, Ms. Suvarna Kashyap,
S. S. Shroff, Ms. Jayati Parashar, Ishan Narain, Rajan Narain, Gopal
Choudhary, Ms. Liz Mathew, Ms. Sonali Jain, Navnee R. (for M/s.
MCLM & Co.), K. V. Mohan, K. V. Balakrishnan, Rahul Kumar
Sharma, Matrugupta Mishra, Ms. Pratiksha Chaturvedi, Mrs. Sarla
Chandra, Ms. Bina Madhavan (for M/s. Lawyer's Knit & Co.),
Vishwajit Singh, Mahesh Agarwal, Ankur Saigal, Rishi Agrawal, Rajesh
Kumar, E. C. Agrawala, G. Ramakrishna Prasad, A. V. Rangam, Buddy
Ranganadhan, Ms. Stuti K., V. G. Pragasam, Mrs. D. Bharathi Reddy,
Nikhil Swami, Ms. Divya Swami, Mrs. Prabha Swami, Vikas Mehta,
Venkateswara Rao Anumolu, Tushar Jain, Alok Shankar, Pukhrambam
Ramesh Kumar, Umesh Kumar Khaitan, Ms. K. Mamatha Choudary,
Hitendra Kumar Rath, Ramakrishna Nookala, Pallav Mongia, Abhinav,
Advs. for the appearing parties.
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The Judgment of the Court was delivered by
ARUN MISHRA, J.
1. There are three batches of appeals; most of the questions are
common, which arise for consideration. In the first batch of appeals,
the question arises for consideration concerning the levy of wheeling
charges by the appellant - Transmission Corporation of Andhra Pradesh
Limited (APTRANSCO). In the second batch of appeals, the question
arises for consideration regarding the competence of the APTRANSCO
to levy the grid support charges. Admittedly, the outcome of the third
batch of appeals depends on the outcome of the first batch of appeals.
In the third batch of appeals, the question arises for consideration as
to continuance of incentives in respect of wheeling charges granted as
per Government Order issued during the year 1997-1998, had to be
continued, and whether Commission had the power to review them.
2. After independence, the electricity generation, distribution and
transmission, and other related activities were undertaken by the Andhra
Pradesh State Electricity Board (APSEB). After the amendment in 1991
in Electricity (Supply) Act, 1948 (Act of 1948), when liberalization was
made in the electricity sector, then APSEB entered into agreements
with Private Generators.
3. The Andhra Pradesh State Legislature enacted Andhra
Pradesh Electricity Reforms Act, 1998 (the Reforms Act, 1998). The
Governor reserved the same for the assent of the President under Article
254 of the Constitution. The Andhra Pradesh Electricity Regulatory
Commission (APERC) was constituted under the Reforms Act, 1998
on 31.3.1999, which started functioning with effect from 3.4.1999.
4. Under the provisions of the said Act, the transmission and
distribution and generation were separated, and APTRANSCO came
to be established. The Act received the Presidential assent on
21.10.1998 and was published in the Official Gazette on 29.10.1998.
On 1.2.1999, the Reforms Act, 1998, was brought into force, and
APTRANSCO succeeded APSEB in regards to transmission,
distribution, and supply of electricity.
5. The APERC granted License No.1/2000 to APTRANSCO on
31.1.2000, to deal with transmission and bulk supply of electricity.
License No.2/2000 was given to APDISCOMS for carrying out
distribution function in terms of Section 15 of the Reforms Act, 1998.
TRANSMISSION CORP. OF ANDHRA PRADESH LTD. v.
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The licenses granted were subject to the terms and conditions, which
required the Licensees to file ARR Proposals to be submitted every
year before 31st December, based on the expected revenue calculation
and tariffs. Subsequently, four DISCOMS were created on 31.3.2000,
which were enjoined with the function of the distribution of electricity.
The transmission of electricity is carried out over long distances at extrahigh voltage levels from generating stations to urban load centres, while
the distribution of electricity is carried out at below 33 KV, 11 KV level.
6. The infrastructure, i.e., transmission lines, State grid,
equipment, systems of APSEB, came to be held by APTRANSCO.
The higher voltage systems were vested in the APTRANSCO and the
lower voltage of APDISCOMs.
7. The APTRANSCO filed Aggregate Revenue Requirement
(ARR) for the year 2001-2002, before the Commission set up under
the Reforms Act, 1998. On 30.12.2000, each of the Distribution
Companies (DISCOMs), along with APTRANSCO, filed their
respective joint ARR applications. On 17.1.2001, the APTRANSCO
filed Tariff Proposal for the year 2001-02, for its transmission and bulk
supply business and jointly with each DISCOM proposal for distribution
and rental supply business. The Tariff Proposal also contained a
proposal for levy of wheeling charges on persons using the electricity
system of licensee in the State. The APTRANSCO proposed a
wheeling charge of Rs.1 per Kwh for energy it transmitted through its
network. On 24.3.2001, the Commission decided to consider the issue
relating to determination of wheeling charges and directed
APTRANSCO to file necessary applications and information in this
regard. On 24.3.2002, the Commission determined that the wheeling
charges for the year 2002-2003 effective from 1.4.2002 would be Paise
50 per Kwh for energy it transmitted through its network. Besides,
wheeling charges of 28.4 percent of energy input by the project
developer into the licensee's grid being the system loss was also to be
factored. The order of the Commission was questioned before the High
Court and the High Court by the impugned judgment and order dated
18.4.2003, allowed the appeal, setting aside the order dated 24.3.2002
of the Commission. Hence, the APTRANSCO and APERC are in
appeals.
8. In the case set up by APTRANSCO, it is stated that the
reason for carrying out bulk transmission of power at extra high voltages,
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is for reduction of the Technical Losses (T&D Losses or Aggregate
Technical Losses) in the transmission system, which are inevitable,
which means that at lower voltage (in distribution), the AT Losses are
more for the same quantum of power transmitted. The Technical
Losses depend on the distance/length of the transmission lines, i.e.,
directly proportional to the distance of transmission. Apart from that,
there are commercial losses in low tension or distribution network side
due to pilferage/theft of power inter alia by direct tapping, meter
tampering, which also contribute to financial losses to DISCOMs. Thus,
total losses are designated as AT&C Losses.
9. It is also the case set up by the APTRANSCO that HT (High
Tension or High Voltage) consumers are industrial consumers connected
to the grid at various high voltage level and avail the power drawn from
the utility as well as from other sources by way of wheeling, now called
as Open Access.
10. Before Reforms Act, 1998, the wheeling charges were
governed by the respective Government Orders, for example, the G.O.
MS No.93 dated 18.11.1997 as amended by G.O. MS No.112 dated
22.12.1998, dealt with wheeling charges for non-conventional energy
sources, such as Biomass, Bagasse, Mini-Hydel, Wind, Solar. The G.O.
MS No.116 dated 5.8.1995 as amended by G.O. MS No.152 dated
29.11.1995, dealt with wheeling charges applicable for Mini-Power
Plants set up by private sector and under Memorandum of
Understandings signed with AP Gas Power Corporation (APGPCL) for
wheeling of power to its captive consumers it specified the wheeling
charges to them for the applied voltage level, i.e., 132 KV, 33 KV, 11
KV, etc., and also the distance of transmission.
11. The incentive/concessional wheeling charges allowed in
Government Orders mentioned above were to be reviewed by the State
Government in the year 2000, but by the time the APERC was
constituted, which was vested with the function of tariff determination
in terms of Section 26 of the Reforms Act, 1998.
12. In the second batch of appeals, the question involves as to
grid support charges, which are levied on the HT consumers, who have
rated Contracted Maximum Demand (CMD) and Captive Power Plant
(CPP) capacity to meet their demands. When private Generators came
into existence, these consumers derated CMD from the APTRANSCO
network and obtained the remaining demand from private Generators
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(these Generators are respondents in wheeling charges batches). After
such deration, the service of grid support became a component for
which APTRANSCO was required to be compensated as CPPs running
in parallel obtains benefits to keep the system and grid up and running,
it is important to invest and maintain the system periodically and the
grid support cannot be given free to a nexus of third party private
Generators and HT consumer. The significant benefit which a CPP
gets is in case of outage of CPP generator power is drawn from the
grid, and in case of tripping, the entire load is transferred on to the grid.
Such disturbance is catered by way of grid support and equipment
installed by the APTRANSCO/DISCOM and involves investment
through public exchequer.
13. The grid support charges are not governed by any Government
Order or Incentive Scheme of the Government prior to Reforms Act,
1998, or after that. The grid code is the basis for the levy of the grid
support charges, which came to be approved by APERC on 26.5.2001.
By way of levy of grid support charges, there is no restriction
whatsoever on the installation of additional CPPs. The additional CPPs
put an additional load on the grid, and corresponding charges are paid
towards grid support. There is no embargo for setting up additional
new CPPs. In case of expansion of industry, additional duty for
additional units have to be paid as additional CPPs tantamount to
additional burden on grid and which further obtains additional service
from the grid, thus grid support charge is levied after taking into account
all sorts of supply agreements from DISCOMs/Third Party Generators.
The grid acts as a cushion/big buffer when the generation from CPP
is idled due to sudden outage in the load, thereby mitigating the forced
tripping of the CPP, and this support is known as grid support and CPPs
running in parallel are known as running with Parallel Grid Support.
14. The Commission vide order dated 8.2.2002, held that grid
support charges would be payable at the rate of 50 percent of prevailing
demand charges on the differential of CPP capacity and CMD. The
agreement entered into by the State Electricity Board provided in
clauses 9 and 10 that the Board could have fixed the grid support
charges unilaterally as agreed by these HT consumers. However, when
the Reforms Act, 1998 came into existence, APTRANSCO in the
interest of consumers applied to the Commission, and after hearing the
objections, the Commission has passed the order on 8.2.2002. The High
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Court has set aside the order passed by the Commission. Hence, the
appeals have been preferred by the APTRANSCO and APERC.
15. The third batch of appeals is concerned with the tariff orders
passed in the years 2004-05, 2005-06, and 2006-09, which have been
challenged by Non-Conventional Energy Developers and Gas Based
Developers. The APTRANSCO held the bulk supply license until 2005,
and after that, APDISCOMs became the bulk suppliers. The APERC
passed the orders mentioned above in exercise of powers conferred
under Section 62 of the Electricity Act, 2003, and the appeals were
preferred before the APTEL under Section 111 of the Electricity Act,
2003. The issue is limited whether incentive as per the Government
Orders of 18.11.1997 and 22.12.1998 to be continued in perpetuity, or
the Commission could have reviewed them.
16. The APERC was constituted under the Reforms Act, 1998,
and came to be treated as State Regulatory Commission under the
proviso to Section 82 of the Electricity Act, 2003. The functions of
the State Commission are provided in Section 86 of the Electricity Act,
2003. One of them is to facilitate the intra-State transmission and
wheeling of electricity read with Section 62 of the Act, which inter
alia provides that the Appropriate Commission shall determine the tariff
in accordance with the provisions of the Act for transmission of the
electricity under Section 62(1)(b) and wheeling of electricity under
Section 62(1)(c).
17. In the first batch of appeals, it has been pointed by the
APTRANSCO that there are six categories of Generators.
(a) In the first category, eight Generators have pre-existing
agreements entered into before the Reforms Act, 1998
as APERC was not in existence, and, in these
agreements, there was no clause providing tariff fixation
by APERC.
(b) Categories 2 to 5 are of those Generators who have
agreements either post Reforms Act, 1998, or their
agreements have been amended and restated in terms
of Reforms Act, 1998. Thus, they are indisputably
governed by the Reforms Act, 1998, and tariff fixation
is in accordance therewith.
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(c) The last category is the ones who do not have any
agreement of wheeling charges with APSEB because
they are scheduled consumers of Generators/Developers,
each of them having an HT supply agreement with
APSEB. The Generators/Developers are either Gas
Based, Coke Based, Mini Hydel Power Plants, NonConventional Plants.
18. The Government Order MS No.116 dated 5.8.1995, dealt with
fixation of wheeling charges. The permission was granted by the said
Government Order to set up a mini-power plant. Clause 4 provided
that the pricing arrangement is subject to fixation of tariff by the
Regulatory Commission ultimately. Clause 5 provided that any duties
or taxes that may be imposed by the Government or by the State
Electricity Board, shall automatically apply to the Scheme. As per clause
8, the Scheme shall operate within the framework of the Electricity
(Supply) Act, 1948, and the Rules made thereunder. The said
Government Order dated 5.8.1995 was amended vide Government
Order MS No.152 dated 29.11.1995. Para 4 of the Government Order
dated 29.11.1995 provided that wheeling charges may be collected from
the developers in kind and as a percentage of the energy delivered at
the interconnection point. The proposed rates of wheeling charges were
also specified.
19. The Government Order MS No.93 dated 18.11.1997, dealt
with wheeling charges for non-conventional energy sources. The
Government allowed uniform incentives to all projects based on the
renewal source of energy viz. Wind, Biomass, Co-generation, Municipal
Waste, and Mini Hydel.
20. On 22.12.1998, the Government amended Order MS No.93
dated 18.11.1997. It was decided that the incentives scheme shall be
watched for 3 years, and after that State Electricity Board shall come
up with suitable proposals concerning the continuance of the incentives.
21. The Commission, while determining the wheeling charges,
considered the assessment of the network charges and transmission
loss and various other factors included in the agreement in the post
Reforms Act, 1998 and pre-Reforms Act, 1998 scenario. The High
Court has held that the State Commission constituted under the Reforms
Act, 1998, has no power to levy charges for wheeling the energy
generated by the Generating Companies to their consumers. It has also
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been held that under the Reforms Act, 1998, the powers of the
Commission under the Reforms Act, 1998 are more like judicial function
exercisable by a Civil Court, but not legislative. The High Court has
also held that wheeling charges are irrational, illogical, and suffers from
serious infirmities. It has also been held that after the expiry of the
term of the agreement, the Government alone is competent to fix
wheeling charges since it is in the realm of the policy direction. The
agreements entered into by the State Electricity Board are statutory
agreements, and they are binding. The Commission has no power to
revise the wheeling charges under the guise of fixing tariff under Section
26 of the Reforms Act, 1998. The wheeling charges is a matter of
policy and not for the Commission to fix. The wheeling charges do
not fall under Section 26 of the Reforms Act, 1998. It is not proper to
revise the wheeling charges like a tariff for the sale of energy. The
State Government, as well as the State Electricity Board, are bound
by the principles of promissory estoppel. The joint application filed by
APTRANSCO and DISCOMs was not maintainable. Any alteration
or modification can be made after due opportunity of hearing to the
affected persons. Since Government Companies were giving subsidy
to farmers of the State, it was not proper to impose wheeling charges.
IN RE: COMPETENCE OF APERC TO DETERMINE
WHEELING CHARGES
22. The first question for consideration is the competency of the
APERC to levy wheeling charges under the Reforms Act, 1998.
23. The Reforms Act, 1998 has been enacted with a view to
provide for the constitution of an Electricity Regulatory Commission,
restructuring of the electricity industry, rationalization of generation,
transmission, distribution and supply of the electricity avenues for
participation of private sector, taking measures conducive to the
development and management of the electricity industry in an efficient,
economic and competitive manner and for matters connected therewith
and incidental thereto. Section 2(a) defines "area of transmission" thus:
"2.(a) "area of transmission" means the area within which
the holder of a transmission licence is for the time being authorised
by licence to transmit energy in accordance with the conditions
prescribed;"
"Transmission licence" has been defined under Section 2(o).
"Licence," as defined in Section 2(d), means a licence granted under
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Section 15. The definition of "transmit" has been given under Section
2(p). Sections 2(d) and 2(p) are extracted hereunder:
"2.(d) "licence" means a licence granted under section 15 of
this Act;"
2.(p) "transmit" in relation to electricity, means the
transportation or transmission of electricity by means of a system
operated or controlled by a licensee which consists, wholly or
mainly, of extra high voltage and extra high tension lines and
electrical plant and is used for transforming and for conveying
and/or transferring electricity from a generating station to a substation, from one generating station to another or from one substation to another or otherwise from one place to another;"
The APERC is constituted under Section 3. Section 5 deals with
the conditions of appointment as a member of the Commission. As
per Section 5(3)(a), persons who are considered for appointment as
members must have experience of generation, transmission, distribution
or supply of electricity, manufacture, sale or supply of any fuel for the
generation of electricity and other matters specified therein. The
proceedings, powers, and functions of the Commission are dealt with
in Part-III of the Act. Section 10 deals with the powers of the
Commission for the inquiry. The Commission has the power vested in
Civil Court under CPC while trying a suit in respect of matters as
specified in Section 10(1) and other provisions of Section 10. Section
11 deals with the functions of the Commission. The provisions of
Section 11(1) are inclusive, and certain functions have been specified
in clauses (a) to (l) of sub-Section 1 of Section 11, which are as under:
"11.