Introduction

The judgment in ER NER Transmission Limited before the Central Electricity Regulatory Commission (CERC) dated January 16, 2023, marks a significant development in the regulatory framework governing transmission charges in India. The case revolves around the adoption of transmission charges for the "Inter-State Transmission System for System Strengthening Scheme for Eastern and North Eastern Regions" (hereafter referred to as the "Transmission System" or "the Project") proposed to be established on a Build, Own, Operate, and Transfer (BOOT) basis.

The parties involved include ER NER Transmission Limited (the Petitioner), REC Power Development and Consultancy Limited (RECPDCL) acting as the Bid Process Coordinator (BPC), Power Grid Corporation of India Limited (PGCIL) as the successful bidder, and the Central Transmission Utility of India Limited (CTUIL) as the Nodal Agency. The key issues pertain to the adoption of transmission charges determined through a competitive bidding process and ensuring compliance with the relevant guidelines and legal provisions under the Electricity Act, 2003.

Summary of the Judgment

The Central Electricity Regulatory Commission (CERC) evaluated a petition filed by ER NER Transmission Limited seeking the adoption of transmission charges for a major inter-state transmission project. The process adhered to the "Tariff based Competitive-bidding Guidelines for Transmission Service" under Section 63 of the Electricity Act, 2003.

The Bid Process Coordinator (BPC), REC Power Development and Consultancy Limited, conducted a transparent competitive bidding process involving multiple stakeholders. After a rigorous evaluation and an electronic reverse auction (e-reverse auction), Power Grid Corporation of India Limited (PGCIL) emerged as the successful bidder with the lowest transmission charges of ₹350 million per annum.

CERC, upon thorough examination of the bidding process and the documentation provided, approved the transmission charges as discovered through the competitive bidding process. The adoption of these charges is contingent upon the grant of a transmission license to the Petitioner.

Analysis

Precedents Cited

The judgment primarily references the statutory framework provided by the Electricity Act, 2003, specifically Section 63, and the accompanying "Tariff based Competitive-bidding Guidelines for Transmission Service" and "Guidelines for Encouraging Competition in Development of Transmission Projects" issued by the Ministry of Power. While no specific judicial precedents are cited, the judgment underscores adherence to these established guidelines as the primary basis for decision-making.

Legal Reasoning

The court's reasoning hinges on the meticulous compliance with the statutory and regulatory provisions governing transmission services procurement. Key aspects of the legal reasoning include:

• Compliance with Section 63: The Petitioner invoked Section 63 of the Electricity Act, which mandates the adoption of tariffs determined through a transparent competitive bidding process. The court examined whether the BPC adhered to the prescribed guidelines in conducting the bidding process.
• Adherence to Guidelines: The judgment scrutinized the BPC's adherence to the "Tariff based Competitive-bidding Guidelines for Transmission Service," ensuring that steps like RfP publication, bidder qualification, e-reverse auction procedures, and bid evaluations were conducted transparently and equitably.
• Transparency and Fairness: Emphasis was placed on the transparency of the bidding process, especially the electronic reverse auction mechanism, which aims to secure the lowest transmission charges while maintaining fair competition among bidders.
• Certification by BEC: The Bid Evaluation Committee (BEC) certified that the bidding process was in strict conformity with the guidelines, reinforcing the validity of the transmission charges proposed by PGCIL.

Impact

This judgment sets a precedent for the adoption of transmission charges determined through competitive bidding processes under the Electricity Act, 2003. The implications include:

• Enhanced Transparency: Reinforces the necessity for transparent bidding processes in the procurement of transmission services, thereby reducing the scope for malpractices.
• Cost Efficiency: Encourages competitive bidding, which can lead to more cost-effective transmission charges, benefiting end consumers and stakeholders.
• Regulatory Compliance: Serves as a benchmark for future cases, emphasizing strict adherence to established guidelines and statutory provisions.
• Boost to Renewable Projects: Facilitates the development of infrastructure projects under the BOOT model, promoting private sector participation in the energy sector.

Complex Concepts Simplified

Conclusion

The ER NER Transmission Limited judgment underscores the critical role of regulatory bodies in ensuring transparent and competitive processes in the energy sector. By adhering to the guidelines under Section 63 of the Electricity Act, 2003, and implementing robust bidding mechanisms, the Central Electricity Regulatory Commission has facilitated the adoption of cost-effective transmission charges. This decision not only promotes fair competition and economic efficiency but also sets a benchmark for future transmission projects, fostering an environment conducive to sustainable energy infrastructure development.

Moreover, the judgment highlights the importance of meticulous compliance with statutory and regulatory frameworks, ensuring that all stakeholders operate within a well-defined legal boundary. As the energy sector continues to evolve with increasing emphasis on renewables and infrastructure modernization, such judicial pronouncements will be pivotal in shaping the landscape of power transmission and regulation in India.