Establishing Connectivity Protocols for Bulk Consumers: CERC in Reliance Industries Ltd. v. CTUIL

Introduction

The case Reliance Industries Limited v. Central Transmission Utility of India Limited (CTUIL) And Others, adjudicated by the Central Electricity Regulatory Commission (CERC) on January 5, 2022, marks a significant development in the regulation of electricity transmission connectivity for bulk consumers in India. This petition, numbered 124/MP/2021, was brought forth by Reliance Industries Limited (RIL) seeking regulatory intervention to facilitate the connection of its oil refinery in Jamnagar, Gujarat, to the Inter-State Transmission System (ISTS) for the procurement of 500 MW of renewable power.

The primary issues revolved around the regulatory framework governing the construction of dedicated transmission lines by bulk consumers, a provision seemingly absent in existing regulations. The respondents included CTUIL, Power Grid Corporation of India Limited (PGCIL), and the Western Region Power Committee (WRPC).

Summary of the Judgment

The CERC observed that under the Electricity Act, 2003, particularly Section 38, bulk consumers like RIL are entitled to open access to the ISTS, which necessitates connectivity. However, existing Connectivity Regulations did not explicitly provide for bulk consumers to construct dedicated transmission lines. In response, the Commission proposed two viable options:

Option 1: Formation of a Special Purpose Vehicle (SPV) by RIL to construct and own the dedicated transmission line. This SPV would obtain a transmission license from CERC and be responsible for billing and maintenance.
Option 2: Implementation of the transmission line by PGCIL on a nomination basis. Under this arrangement, PGCIL would own the line, and billing would be managed bilaterally between PGCIL and RIL.

The Commission directed CTUIL to grant connectivity to RIL under the conditions outlined in these options, thereby ensuring compliance with regulatory mandates while facilitating RIL’s renewable power procurement objectives.

Analysis

Precedents Cited

The judgment extensively referenced Petition No. 299/MP/2018 involving BALCO, a bulk consumer seeking connectivity. In that instance, the Commission had clarified that the existing Act and Connectivity Regulations did not empower bulk consumers to construct dedicated transmission lines. This precedent underscored the regulatory vacuum that RIL sought to address. The CERC leveraged the BALCO case to highlight the need for clear protocols enabling bulk consumers to obtain connectivity, thereby influencing the outcome of the RIL petition.

Legal Reasoning

The CERC’s legal reasoning was anchored in interpreting Section 38 of the Electricity Act, 2003, which mandates the provision of non-discriminatory open access to the ISTS. The Commission identified that while the Act recognizes the rights of bulk consumers to access the transmission system, the Connectivity Regulations lacked specificity regarding the construction of dedicated transmission lines by such entities. By proposing the formation of SPVs or leveraging existing transmission licensees like PGCIL, the CERC bridged this regulatory gap without overstepping legislative boundaries.

Furthermore, the Commission emphasized the importance of economic and coordinated development of the inter-state transmission system, aligning with Section 38(2)(c). It balanced the rights of bulk consumers with the operational efficiencies of transmission utilities, ensuring that connectivity provisions did not compromise the integrity and efficiency of the transmission grid.

Impact

This judgment sets a precedent for future cases involving bulk consumers seeking connectivity to the ISTS. By outlining clear pathways for obtaining dedicated transmission lines, the CERC has provided a template for balancing regulatory compliance with industry needs. The decision facilitates the growth of renewable energy procurement by large consumers, aligning with India’s broader energy transition goals.

Additionally, the delineation between the responsibilities of SPVs and existing transmission licensees like PGCIL offers flexibility in implementation, potentially accelerating the integration of renewable energy sources into the grid. This could lead to more streamlined processes for other bulk consumers, enhancing the overall efficiency of the electricity transmission sector.

Complex Concepts Simplified

Bulk Consumer

A bulk consumer is defined under Regulation 2(c) of the Connectivity Regulations as any consumer with a load of 100 MW or above. In this context, RIL qualifies as a bulk consumer due to its requirement of procuring 500 MW of renewable power.

Inter-State Transmission System (ISTS)

The ISTS comprises high-voltage transmission lines that facilitate the transfer of electricity across state boundaries. Connectivity to the ISTS allows large consumers to procure power directly from the national grid, ensuring reliability and adherence to renewable energy mandates.

Dedicated Transmission Line (DTL)

A DTL is a transmission line reserved for a specific purpose or consumer. Unlike standard transmission lines that serve multiple consumers, a DTL ensures a dedicated supply, which is crucial for bulk consumers like RIL with significant power requirements.

Open Access

Open Access refers to the right of consumers and generators to transmit electricity across the ISTS, subject to regulatory fees and charges. It promotes competition and provides flexibility in sourcing electricity from various suppliers.

Conclusion

The CERC's decision in Reliance Industries Limited v. CTUIL And Others is a landmark judgment that clarifies the procedural avenues available to bulk consumers for obtaining connectivity to the ISTS. By providing structured options for the construction and ownership of dedicated transmission lines, the Commission has effectively addressed the regulatory ambiguity highlighted in previous cases like BALCO.

This judgment not only empowers large-scale consumers to fulfill their renewable energy obligations more efficiently but also promotes the sustainable and coordinated expansion of the national transmission infrastructure. As a result, it holds significant importance for the future of energy regulation in India, fostering a more resilient and adaptable electricity grid capable of meeting the country’s growing energy demands.