Introduction

The case of Power Grid Corporation of India Limited (PGCIL) v. Assam Electricity Grid Corporation Limited (AEGCL) was adjudicated by the Central Electricity Regulatory Commission (CERC) on January 8, 2016. This pivotal decision centered around the determination of transmission tariffs for high-voltage direct current (HVDC) and alternating current (AC) transmission systems under the “North East-Northern/Western Interconnector-I Project.” The primary parties involved were PGCIL, the petitioner seeking tariff determinations, and Assam Electricity Grid Corporation Limited, along with other regional distributors, as respondents contesting the tariff allocations.

Summary of the Judgment

CERC was approached by PGCIL to determine the transmission tariffs for two main assets associated with the HVDC and AC portions of the “North East-Northern/Western Interconnector-I Project.” PGCIL initially claimed tariffs based on their anticipated commercial operation dates, which later saw revisions due to actual commissioning timelines. The core issues revolved around the appropriate tariff rates, consideration of cost and time overruns, and the equitable sharing of transmission charges among various regional distribution companies (DICs).

After evaluating submissions from all parties, including feedback from entities like UPPCL, APDCL, CEA, and POSOCO, CERC concluded that the transmission assets in question were of strategic national importance. Recognizing the significant capital investment and the strategic benefits of the HVDC systems, CERC directed that the transmission charges should be shared across all regions rather than being borne solely by the beneficiaries in the North Eastern Region (NER). Moreover, acknowledging the delays in commissioning associated generation projects, CERC recommended seeking financial assistance from the Power System Development Fund (PSDF) and other governmental grants to alleviate the financial burden on the DICs.

The judgment emphasized the long-term benefits of the HVDC project in enhancing grid stability, facilitating renewable energy integration, and ensuring reliable power transmission across regions. CERC also highlighted the need for a revised methodology for sharing transmission charges, given the unique strategic position of the HVDC link in the “Chicken Neck” area.

Transmission Charges Claimed vs. Allowed

Transmission Charges Allowed

Analysis

Precedents Cited

This judgment primarily references internal regulatory frameworks and previous regulatory decisions rather than external judicial precedents. The key references include:

• Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014: These regulations outline the procedures and conditions under which transmission tariffs are determined.
• Central Electricity Regulatory Commission (Procedure for making of application for determination of tariff, publication of the application and other related matters) Regulations, 2004: These regulations govern the procedural aspects of tariff petitions.
• Central Electricity Regulatory Commission (Sharing of Transmission Charges) (3rd Amendment) Regulations, 2015: This amendment provided guidelines on sharing transmission charges, particularly for HVDC systems, which was pivotal in this case.
• CERC (Sharing Regulations, as amended from time to time): These regulations detail the methodologies for sharing transmission costs among various stakeholders.

Additionally, the judgment references internal correspondences and reports from entities like the Central Electricity Authority (CEA) and Power System Operation Corporation (POSOCO), which provided technical and operational insights influencing the decision.

Legal Reasoning

The Commission's legal reasoning hinged on several critical factors:

• Strategic National Importance: The HVDC link was deemed vital for the national grid, facilitating the evacuation of substantial hydroelectric power from the NER, Sikkim, and Bhutan to other regions. Its strategic positioning in the “Chicken Neck” area added to its national significance.
• Long-Term Benefits: CERC emphasized the long-term utility of the HVDC system, including enhanced grid stability, renewable energy integration, and mitigation of power flow oscillations. The temporary underutilization due to delays in generating assets was considered acceptable given the overarching benefits.
• Equitable Sharing of Costs: Recognizing the immense capital investment and the challenge of bearing transmission charges amid delays, CERC opted for a shared financial burden across all regions. This approach aimed to ensure that no single region, especially those outside NER, was disproportionately impacted.
• Financial Assistance: Given the substantial investment and while acknowledging the delay in generating assets, CERC directed PGCIL to seek financial assistance from the PSDF and governmental grants. This move was intended to alleviate the financial strain on the DICs while maintaining the project's viability.
• Regulatory Compliance: PGCIL's adherence to procedural regulations, including public notices and responses, was noted and favored in the judgment.

The Commission also considered technical validations from POSOCO regarding the operational benefits of the HVDC link, such as power oscillation damping and enhanced frequency control, further reinforcing the project's strategic value.

Impact

This judgment sets a significant precedent in the realm of electricity transmission regulation in India. The key impacts include:

• Transmission Cost-Sharing Model: By deciding that transmission charges for strategically important HVDC assets should be shared across all regions, CERC established a more equitable and sustainable financial model for such infrastructure projects.
• Encouragement of Strategic Investments: Recognizing the long-term national benefits over immediate financial returns encourages utilities to invest in critical infrastructure without fearing disproportionate financial burdens due to delays or initial underutilization.
• Facilitation of Renewable Integration: The decision underscores the importance of HVDC systems in integrating renewable energy sources into the national grid, promoting India’s renewable energy targets.
• Template for Future Projects: This judgment serves as a reference for future tariff determinations and cost-sharing mechanisms for large-scale transmission projects, particularly those of national strategic importance.
• Financial Relief Measures: By directing the seeking of grants and financial assistance, the judgment provides a framework for utilities facing similar financial challenges in the development of transmission infrastructure.

Complex Concepts Simplified

High-Voltage Direct Current (HVDC)

HVDC refers to the transmission of electricity using direct current (DC) at high voltages. Unlike alternating current (AC), DC can transmit power over long distances with lower losses and is ideal for underwater cables or connecting asynchronous grids.

Alternating Current (AC) Transmission

AC transmission involves the movement of electric charge oscillating in direction and magnitude. It is widely used for power distribution across various regions due to its efficiency in stepping up and stepping down voltages via transformers.

Transmission Tariff

Transmission tariff is the fee charged for the use of the high-voltage network that transports electricity from producers to consumers. It covers the costs associated with maintaining and operating the transmission infrastructure.

Distribution Licensee (DIC)

DICs are entities authorized to distribute electricity to end consumers within a specific geographic area. They are responsible for billing, customer service, and maintaining the distribution network.

Power System Development Fund (PSDF)

PSDF is a financial mechanism aimed at funding the development and enhancement of the power system infrastructure. It provides grants and financial assistance for projects that are crucial for the expansion and reliability of the power grid.

Phase-Shifter

A phase-shifter is a device used in power systems to control the flow of AC power by adjusting the phase angle between the sending and receiving ends of the transmission line. It enhances the stability and efficiency of power distribution.

Conclusion

The CERC's decision in the case of Power Grid Corporation of India Limited v. Assam Electricity Grid Corporation Limited marks a significant milestone in India's power sector regulation. By establishing a balanced and equitable methodology for sharing transmission charges of strategically important HVDC systems, the Commission not only ensured the financial viability of crucial infrastructure projects but also paved the way for enhanced national grid integration and renewable energy integration. This judgment underscores the need to evaluate the long-term national benefits of infrastructure projects over immediate financial concerns, thereby fostering a conducive environment for sustainable and strategic investments in the power sector. Moreover, the emphasis on seeking financial assistance from national funds reflects a proactive approach in mitigating financial burdens, ensuring that pivotal projects continue to advance irrespective of temporary setbacks. Overall, this landmark decision reinforces the Commission's commitment to fostering a robust, reliable, and forward-looking power transmission network that serves the entire nation effectively.