Electricity | Recipient Of Concession With No Vested Right Cannot Seek Continuation Of Waiver: Delhi High Court

A Division Bench of the Delhi High Court comprising the Chief Justice and Justice Sanjeev Narula recently dismissed a challenge brought against increase in Renewable Purchase Obligations (RPO) of Open Access Consumers and imposition of additional surcharges by DERC.

“...the fixation of tariffs through subordinate legislation is within the commission's purview, and no manifest arbitrariness has been demonstrated to call this decision into question”, it said.

The petitioner, a Hotel, had challenged the Delhi Electricity Regulatory Commission (Renewable Purchase Obligation and Renewable Energy Certificate Framework Implementation) Regulations, 2021 and the Open Access Charges and Related Matters (Fourth Amendment) Order, 2021 on the ground that the changes made by the same were anti-consumer and rendered procurement of green energy unviable.

It had contended that the impugned Regulations and Order impact competition and fairness in a manner that would create an oligopoly. Additionally, it was averred that no transparent bidding process in terms of Section 63 of the Electricity Act was adopted.

Essentially, the petitioner’s grievance was that it was earlier exempted from charges like wheeling, transmission, cross subsidy, and additional surcharge. However, DERC had partially reduced these exemptions, linking them to the quantum of RPO compliance (RPO is a requirement for certain entities to source a minimum percentage of their total annual electricity consumption from renewable sources).

DERC, on the other hand, pointed out to the court that the exemptions were provided to Open Access Consumers when per unit charges of renewable energy sources were INR 10-12 kWH. The same have now substantially dropped.

Noting that the scope of judicial review over tariff rate determinations was narrow, the court opined:

“Judicial intervention becomes justifiable only when the contested action is found to be illegal, arbitrary, or beyond the powers conferred by the governing statute.”

It also observed that, “the power to review policy decisions rests inherently within the prerogative of the governing bodies, allowing them to adapt and evolve in response to changing circumstances … while concessions might be granted, they can be retracted or modified if deemed to be in the best interests of the public.”

The court referred to State of Rajasthan v. J.K. Udaipur Udyog Ltd., where the Supreme Court has held that exemptions and concessions granted by government are privileges, which do not confer upon the beneficiary any legally enforceable right for grant of a concession.

It rejected the petitioner’s allegation of DERC’s failure to observe due process on the basis that the allegation was unsubstantiated and that bidding was not the only mechanism for determination of tariff u/s 63 of the Electricity Act.

The court also considered that DERC had floated public notices in newspapers and on its website regarding draft regulations, inviting suggestions, comments and objections from stakeholders. As such, the court said, a transparent process had been adopted.

Ms. Pushti Gupta and Mr. Joney, Advocates appeared for petitioner

Mr. Sanjeev Mahajan and Mr. Rishabh Varshney, Advocates appeared for DERC

Case Title: Juniper Hotels Private Limited v. Delhi Electricity Regulatory Commission and Anr

Citation: 2023 LiveLaw (Del) 1072

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