Supreme Court Upholds Delhi Municipal Corporation's Powers To Issue Tariff-Based Bids For Waste-To-Energy Project

The Supreme Court on January 2 upheld the Municipal Corporation of Delhi's (MCD) powers to issue tariff-based bids in Waste-to-Energy (WTE) projects under the Electricity Act 2003. The bench of Justices BR Gavai and KV Viswanathan was hearing the appeal filed by the Municipal Corporation of Delhi (MCD) against the order of the Appellate Tribunal for Electricity (APTEL) which set aside the decision of the Delhi Electricity Regulatory Commission (DERC) dated 6th and 7th March 2023. The Court observed that the impugned order of APTEL overlooked the larger public interest involved in the disposal of the huge quantity of waste produced in the National Capital."The APTEL also failed to take into consideration that the WTE project in question was in the larger public interest thereby providing for disposal of the huge quantity of waste generated in the city of Delhi." The DERC orders dismissed the petition filed by Waste to Energy Research & Technology Council (WTERT) challenging the MCD's powers to issue the tariff-based bid and Request for Proposal for setting up the Waste to Energy project at Narela Bawana, Delhi. The WTERT petition was filed after MCD had filed a petition before DERC seeking approval of the bidding process of the project. Notably, in its Order dated March 7, 2023, the DERC approved the bid tariff of Rs. 7.38/KWh for the project and directed the Distribution Licensee to negotiate the terms of the Power Purchase Agreement with the MCD. In its Order of March 6, 2023, the DERC held that MCD is mandated under the Solid Waste Management (SWM) Rules, 2016 to construct, operate, and maintain the solid waste processing facilities. In the impugned judgement, the APTEL set aside the DERC orders mainly on the grounds that the DERC lacked jurisdiction to adjudicate upon the petition filed by MCD in the first place and treated MCD as a stranger to the tariff determination procedure. The issue of law before the Court was "Whether the application under Section 63 of the Electricity Act 2003 could have been made by the present Appellant MCD which is a “local authority” within the meaning of Section 2(41) of the 2003 Act" Notably, S.63 of the Act lays the procedure for the determination of tariffs by bidding process. It states " Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through a transparent process of bidding in accordance with the guidelines issued by the Central Government." S. 62 outlines the general procedure for the determination of tariffs by the Appropriate Commission. S. 2(41) defines 'Local Authority' to mean any Nagar Panchayat, Municipal Council, municipal corporation, Panchayat constituted at the village, intermediate and district levels, body of port commissioners or other authority legally entitled to, or entrusted by the Union or any State Government with, the control or management of any area or local fund. Notably, S.86(1)(b) lays down the functions of the State Commission regarding electricity purchase and price of electricity procurement from distribution licensees. It states : "regulate electricity purchase and procurement process of distribution licensees including the price at which electricity shall be procured from the generating companies or licensees or from other sources through agreements for purchase of power for distribution and supply within the State" Arguments By The Parties Sr Advocate Ramji Srinivasan appearing for the MCD contended that (1) S. 86(1)(b) of the Electricity Act bestows wide powers on the State Commission for the regulation of electricity price as procured from the generating companies or licensees; (2) MCD is a statutory body under the Delhi Municipal Corporation Act and has been put under a statutory obligation under Rule 15(v)(b) of the SWM Rules 2016 to proceed with setting up the WTE projects. This duty is also recognised in the decision of Pune Municipal Corporation v. Sus Road Baner Vikas Manch and others.(3) s. 175 of the Act states that provisions of the 2003 Act are in addition to and not in derogation of any other law for the time being in force; (4) Thus, the mandate for setting up the WTE project by MCD has to be read in consonance with the provisions of the Environment (Protection) Act, 1986 and the Rules framed thereunder; (5) Since no guidelines exist for WTE projects, the DERC exercised powers under S. 86(1)(b) for approving the bidding process and adopting the tariff. This procedure was in consonance with the Court's decision in Energy Watchdog v. Central Electricity Regulatory Commission and others, wherein this Court has held that in a situation when there are no guidelines, then the general regulatory powers under Section 79(1)(b) can be exercised by the Commission. Sr Advocate Basava Prabhu Patil appearing for Respondent no.1 submitted that APTEL's decision was correct in light of Rule 6.4(2) of the National Tariff Policy, 2016 which states...

Supreme Court Upholds Delhi Municipal Corporation's Powers To Issue Tariff-Based Bids For Waste-To-Energy Project

Anmol Kaur Bawa

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Supreme Court Upholds Delhi Municipal Corporation's Powers To Issue Tariff-Based Bids For Waste-To-Energy Project

Anmol Kaur Bawa

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INR 1099+GST

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