New Delhi, April 12: Supreme Court directed that even if fuel becomes costlier power distribution firms cannot raise preset power tariffs. SC has prohibited the TATA Power and Adani Power from raising the power tariffs in – Maharashtra, Gujarat, Haryana, Punjab and Rajasthan.
The companies Tata Power and Adani Power initially involved for charging more for electricity. Both the companies had originally moved the Central Electricity Regulatory Commission (CERC) seeking higher tariff on the grounds that their input costs had gone up due to rupee devaluation and higher.
A Bench headed by Justice P C Ghose and R F Nariman disagreed with these firms and said that an unexpected rise in coal price would not free the firms from adhering to the contract as they had knowingly taken the risk while submitting their bids.
The companies sought to charge compensatory tariff citing rise in price of coal imported from Indonesia. The rise in price was a result of change in law in Indonesia which took place in 2010 and 2011, which aligned the export price of coal from Indonesia to international market prices instead of the price that was prevalent. Hence after the change in law in Indonesia’s coal export, these firms wanted to increase tariffs as they imported coal from Indonesia. The court has asked the electricity regulator to consider the matter afresh keeping in mind the government's revised coal allotment and power tariff guidelines.
On March 30, a bench heard an appeal filed against a 2016 ruling of the Appellate Tribunal for Electricity that said that an unforeseen increase in the cost of coal would be a “force majeure event” under the Power Purchase Agreements signed between power generating companies and distributors. The appellate had asked the Central Electricity Regulatory Commission to grant relief to Tata and Adani in accordance with the PPAs.
According to the bench, a force majeure event in Clause 12 of the PPA takes place the moment performance of the contract is “hindered” and there can be no doubt that an astronomical rise in prices of Indonesian coal has certainly hindered performance. “The only benefit we are allowing is if the force majeure event is related to Indian laws.” Bench added.
The Central Electricity Regulatory Commission, CERC had ruled in 2013 that both companies could claim a higher tariff to compensate for the increase in coal prices which was upheld by the Appellate Tribunal for Electricity APTEL last year.