CERC Dismisses PGCIL's Review Petition on Time Over-Run: Reinforcing the Necessity of Explicit Justifications in Tariff Determinations

Introduction

The case of Power Grid Corporation Of India Limited Review v. Rajasthan Rajya Vidyut Prasaran Nigam Limited And Others (S) adjudicated by the Central Electricity Regulatory Commission (CERC) on March 31, 2022, underscores the critical importance of precise and explicit justifications in tariff determination petitions. The parties involved include the Power Grid Corporation of India Limited (PGCIL) as the petitioner and multiple state electricity boards and corporations as respondents.

Summary of the Judgment

PGCIL filed a review petition seeking the reconsideration of CERC's order dated August 17, 2020, which disallowed the Interest During Construction (IDC) and Incidental Expenditure During Construction (IEDC) for Asset-3 and Asset-4 under Petition No. 107/TT/2017. The crux of the dispute lay in whether the time over-run associated with these assets was adequately justified and condoned in previous petitions. CERC concluded that the time over-run for Asset-II and Asset-IV was never formally condoned, leading to the dismissal of PGCIL's review petition.

Analysis

Precedents Cited

The judgment references several pivotal cases, including:

NTPC Ltd. v. CERC (2019): Emphasized the necessity for clear justification when claiming time over-run.
D.B. Power Ltd. v. CERC (2020): Highlighted the importance of adhering to procedural norms in tariff petitions.
Maharashtra State Power Generation Co. Ltd. v. Maharashtra Electricity Regulatory Commission (2011): Established the principle that cost over-runs due to factors beyond the licensee's control should be condoned.

These precedents collectively reinforce the importance of meticulous documentation and justification when requesting tariff adjustments based on construction delays.

Legal Reasoning

The CERC meticulously reviewed the history of the petitions related to the transmission assets. The key points in their reasoning include:

Lack of Explicit Condemnation: The Commission found no explicit condoning of time over-run for Asset-II and Asset-IV in previous orders, contrary to PGCIL's assertions.
Procedural Adherence: PGCIL failed to provide new evidence or sufficiently justify the delay specific to the assets in question within the scope of the current petition.
No New Evidence: The review petitioner did not present any new facts or evidence that could have influenced the Commission's prior decisions.

Consequently, the CERC determined that PGCIL did not meet the criteria for review under the Civil Procedure Code, specifically failing to demonstrate "any other sufficient cause."

Impact

This judgment reinforces the necessity for regulated entities to provide comprehensive and explicit justifications when seeking tariff adjustments based on construction delays. It serves as a stern reminder that procedural lapses or omissions in presenting justifications can lead to dismissal of legitimate claims. Future petitions will likely need to ensure that all aspects, including time over-run for each asset, are thoroughly documented and addressed to avoid similar setbacks.

Complex Concepts Simplified

Interest During Construction (IDC): Financial interest accumulated during the period when a project is under construction but not yet operational.
Incidental Expenditure During Construction (IEDC): Additional costs incurred during the construction phase that are not part of the main project expenses.
Time Over-Run: Delays in the completion of a project beyond the initially planned timeline.
Civil Procedure Code (CPC) Order 47 Rule 1: Allows a party to seek a review of a judicial order under specific circumstances, such as the discovery of new evidence or apparent mistakes.

Understanding these terms is crucial for comprehending the intricacies of tariff determination and the legal standards governing such proceedings.

Conclusion

The dismissal of PGCIL's review petition by the CERC underscores the judiciary's unwavering commitment to procedural rigor and the necessity for explicit, asset-specific justifications in tariff petitions. Entities seeking tariff adjustments must ensure comprehensive documentation and adherence to procedural norms to substantiate claims, particularly concerning time over-run and associated costs. This judgment sets a clear precedent, emphasizing that assumptions or generalized arguments without explicit supporting evidence are insufficient for overturning regulatory decisions.