Introduction

The case of East Central Railway (ECR) v. Power Grid Corporation of India Limited (PGCIL) and Others was adjudicated by the Central Electricity Regulatory Commission (CERC) on February 5, 2020. The ECR filed a petition challenging the levy of transmission charges imposed by PGCIL under the Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 (Sharing Regulations, 2010) and the Bulk Power Transmission Agreement (BPTA) dated January 8, 2010.

The primary contention of ECR was that PGCIL continued to levy transmission charges for the entire allocated Long-Term Access (LTA) capacity despite ECR's inability to utilize the full capacity due to delays in commissioning units of the BRBCL generating station and delays in obtaining No Objection Certificates (NOCs) from State Transmission Utilities (STUs).

Summary of the Judgment

CERC evaluated the obligations under the BPTA and the Sharing Regulations, 2010. The Commission recognized that while PGCIL operationalized the full LTA capacity as per the original agreement, ECR was unable to utilize a significant portion of this capacity due to force majeure events, namely delays in the commissioning of power plant units and delays in obtaining necessary NOCs.

After thorough deliberation, CERC held that ECR was only liable for transmission charges corresponding to the actual LTA capacity utilized. The Court set aside the invoices levied by PGCIL for the unused capacity and directed a refund of the excess charges. Furthermore, the decision emphasized the importance of equitable charge levation in scenarios where force majeure events impact contractual obligations.

Analysis

Precedents Cited

The judgment references significant precedents, notably the Himachal Sorang Power Ltd. vs. CERC & Anr. case, where the Appellate Tribunal for Electricity (APTEL) clarified that force majeure situations under the BPTA relate strictly to the flow of power from the transmission system and do not extend to disputes with third parties such as state utilities. This precedent underscored that non-granting of NOCs by STUs cannot be classified as a force majeure event under BPTA.

Legal Reasoning

The Commission examined the contractual framework established by the BPTA and the statutory obligations under the Sharing Regulations, 2010. Key points in the legal reasoning include:

• Operationalization of LTA: The LTA was operationalized by PGCIL on July 26, 2017. However, ECR could not utilize the full capacity due to delays in commissioning BRBCL units and obtaining NOCs.
• Force Majeure Clause: While ECR claimed force majeure due to delays, the Commission noted that the delays were not entirely beyond ECR's control. The supplier's (BRBCL's) delays in commissioning were a significant factor, and regulatory delays in NOC issuance were already addressed in previous proceedings.
• Regulation 8(5) and 8(6) of Sharing Regulations, 2010: These clauses stipulate that transmission charges should correspond to the actual utilization of LTA. Therefore, charges for the unutilized capacity should not be borne by ECR but by the generator (BRBCL).
• Supplementary Agreement: The amendment to the BPTA in October 2018, which revised the transmission system requirements, was deemed binding. ECR had acknowledged this revised LTA, negating claims of discrepancy based on previous agreements.

Impact

This judgment sets a critical precedent in the regulation of transmission charges, particularly in situations where beneficiaries cannot utilize allocated LTA capacity due to delays beyond their control. Key impacts include:

• Equitable Charge Levation: Reinforces the principle that transmission charges must reflect actual usage, preventing undue financial burdens on beneficiaries.
• Clarity on Force Majeure: Narrows the scope of what constitutes force majeure under BPTA, limiting it to disruptions directly related to power flow rather than third-party contractual disputes.
• Contractual Obligations: Emphasizes the binding nature of supplementary agreements, ensuring that modifications to original contracts are honored and parties cannot circumvent obligations through later amendments.

Complex Concepts Simplified

Long-Term Access (LTA)

LTA refers to the allocation of transmission capacity granted to a beneficiary (in this case, ECR) for an extended period, allowing them to draw electricity from a specified source.

Bulk Power Transmission Agreement (BPTA)

The BPTA is a contractual agreement outlining the terms and conditions under which power is transmitted from a generating station to the consumer, detailing obligations related to transmission charges and capacity utilization.

Transmission Charges

These are fees levied by the transmission utility (PGCIL) for the use of its transmission network to transport electricity from generators to consumers.

Force Majeure

A contractual clause that frees parties from liability or obligation when an extraordinary event or circumstance beyond their control prevents one or both parties from fulfilling their contractual duties.

Conclusion

The judgment in East Central Railway v. PGCIL delineates the responsibilities of transmission beneficiaries concerning transmission charges. By affirming that ECR is only accountable for charges corresponding to the utilized LTA capacity, the CERC ensures fairness and adherence to regulatory frameworks. This decision underscores the necessity for transparent and equitable practices in power transmission agreements, especially when unforeseen delays impede contractual obligations.

The ruling not only provides relief to ECR by financial restitution for overcharged amounts but also reinforces the regulatory oversight required to balance the interests of both transmission utilities and power consumers. Future cases involving similar disputes will likely reference this judgment, shaping the landscape of transmission charge liabilities in India's power sector.