Introduction

The Power Grid Corporation of India Ltd. (PGCIL), acting as the Central Transmission Utility (CTU), submitted a comprehensive framework comprising a Transmission Service Agreement (TSA), Revenue Sharing Agreement (RSA), and Billing, Collection, and Disbursement Procedure in accordance with Chapters 5 and 6 of the Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 (“Sharing Regulations”). These submissions were made considering stakeholder feedback up to December 3, 2010.

The key parties involved in this framework include Designated ISTS Customers (DICs), ISTS Licensees, and non-ISTS Licensees whose assets are certified for interstate transmission by Regional Power Committees (RPCs).

The principal issues addressed pertain to the sharing of transmission charges and losses, billing mechanisms, disbursement procedures, and the legal enforceability of the agreements established under the new regulatory guidelines.

Summary of the Judgment

After a detailed examination of the Transmission Service Agreement, Revenue Sharing Agreement, and Billing, Collection, and Disbursement Procedure submitted by PGCIL, the Central Electricity Regulatory Commission (CERC) accorded approval to these documents. The approval signifies the establishment of a standardized framework for managing inter-state transmission services, ensuring equitable sharing of transmission charges and losses among stakeholders.

The Judgment directs the CTU to publicly disseminate these agreements via its website and mandates prompt execution of the Transmission Service Agreement and Revenue Sharing Agreement by the concerned parties.

Analysis

Precedents Cited

The Judgment primarily relies on the authority granted under the Electricity Act, 2003, specifically sections 178 and Part V, empowering CERC to issue regulations pertaining to inter-state transmission charges and losses. While no specific case law precedents are cited, the Judgment builds upon the regulatory framework established by previous CERC regulations, particularly the Sharing of Inter-State Transmission Charges and Losses Regulations, 2010.

Legal Reasoning

The Commission’s approval rests on the compliance of the submitted documents with the Sharing Regulations. The Transmission Service Agreement serves as the foundational contract governing inter-state transmission services, setting forth the obligations of DICs, ISTS Licensees, and ISTS Licensees’ successors. The Revenue Sharing Agreement outlines the methodology for disbursing collected transmission charges to the affected parties. Additionally, the Billing, Collection, and Disbursement Procedure provides a detailed mechanism for invoicing, payment processing, and reconciliation.

The legal reasoning emphasizes transparency, accountability, and fairness in the allocation of transmission charges and losses. By mandating public disclosure of the agreements and ensuring that new stakeholders enter into supplementary agreements aligned with the model agreements, the Commission aims to foster a consistent and enforceable regulatory environment.

Impact

The approved framework is poised to significantly impact the inter-state transmission landscape by:

• Standardizing Agreements: Ensuring uniformity in transmission service agreements across various stakeholders.
• Enhancing Transparency: Public disclosure of agreements promotes transparency and builds trust among stakeholders.
• Facilitating Efficient Billing and Collection: Streamlined procedures for billing and collection reduce disputes and improve financial flows.
• Promoting Fair Revenue Sharing: Equitable distribution of transmission charges and losses ensures that all parties are fairly compensated.
• Setting Precedents for Future Regulations: Establishing a robust framework that can serve as a template for future regulatory interventions in the energy sector.

Furthermore, the emphasis on dispute resolution mechanisms and the inclusion of Force Majeure clauses provide legal safeguards for stakeholders, mitigating potential conflicts and ensuring continuity of transmission services even in unforeseen circumstances.

Complex Concepts Simplified

Conclusion

The CERC’s approval of the Transmission Service Agreement, Revenue Sharing Agreement, and the associated Billing, Collection, and Disbursement Procedure marks a pivotal development in the regulation of inter-state electricity transmission in India. By instituting a clear, standardized, and transparent framework, the Commission ensures that transmission charges and losses are equitably shared among stakeholders, thereby fostering a stable and efficient transmission infrastructure.

This Judgment not only streamlines the operational and financial interactions between DICs, ISTS Licensees, and non-ISTS Licensees but also sets a robust legal precedent that enhances the enforceability of transmission agreements. As a result, it lays a solid foundation for future regulatory advancements and contributes significantly to the overarching goal of an integrated and reliable national electricity grid.

Stakeholders are now mandated to adhere to the approved frameworks, ensuring compliance and facilitating the seamless functioning of inter-state transmission services. The inclusion of dispute resolution mechanisms and Force Majeure provisions further fortifies the legal safeguards, promoting resilience and adaptability within the transmission ecosystem.