Strict Compliance with Regulation 3(12)(c) Second Proviso in Declaring Commercial Operation of Transmission Assets

Introduction

The case of Power Grid Corporation of India Limited v. Central Electricity Regulatory Commission adjudicated by the Appellate Tribunal for Electricity on January 18, 2018, centers around the determination of transmission tariffs for specific assets within the Transmission Schemes for enabling the import of surplus power in the Eastern Region. The primary contention arises from the interpretation and application of Regulation 3(12)(c) of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009, specifically its second proviso concerning the declaration of the Date of Commercial Operation (DOCO) for transmission assets. The Appellant, Power Grid Corporation of India Limited (PGCIL), challenged the Central Electricity Regulatory Commission's (CERC) refusal to determine tariffs for certain transmission assets, arguing that the conditions for DOCO had been met despite delays in associated transmission line commissioning.

Summary of the Judgment

The Appellate Tribunal upheld the CERC's decision to defer the determination of tariffs for the specified transmission assets until the associated 400 kV transmission lines were fully commissioned. PGCIL had argued that its assets—comprising line bays and switchable line reactors—were operational and should qualify for tariff determination under the second proviso of Regulation 3(12)(c), which permits earlier DOCO declarations under specific conditions. CERC, referencing the Tribunal's prior judgment in the Barh-Balia case and emphasizing strict adherence to regulatory provisions, concluded that the assets could not be considered commercially operational without the complete commissioning of the transmission lines they were associated with. Consequently, the Tribunal dismissed the appeals, reaffirming the CERC's stance.

Analysis

Precedents Cited

The Judgment extensively references the Tribunal's earlier decision in Appeal No. 123 of 2011, commonly known as the Barh-Balia Judgment. In this precedent, the Tribunal clarified the conditions under which transmission assets could achieve DOCO, emphasizing that successful charging, trial operation, and regular service are prerequisites. The Supreme Court's affirmation of this judgment in the case of Power Grid Corporation of India Limited v. NTPC Limited further solidified its applicability. The consistency in referencing these precedents underscores the judicial commitment to maintaining stringent standards for declaring commercial operation, thereby ensuring regulatory compliance and safeguarding consumer interests.

Legal Reasoning

The Tribunal's legal reasoning hinges on a strict interpretation of Regulation 3(12)(c) of the Tariff Regulations, 2009. It delineates that achieving DOCO necessitates not just the readiness of individual transmission assets but also the complete functionality of the interconnected transmission system. In PGCIL's case, although the line bays and reactors were operational, the delay in commissioning the associated Sterlite-executed transmission lines meant that the overall system was not in a state of regular service. The Tribunal emphasized that the second proviso of Regulation 3(12)(c) cannot be invoked to declare DOCO merely based on partial readiness, as this would contravene the principle of system completeness essential for effective transmission operations.

Impact

This Judgment reinforces the necessity for comprehensive system readiness before declaring transmission assets commercially operational. It sets a clear precedent that partial operational status, in the absence of associated infrastructure, is insufficient for tariff determination. Future cases involving tariff petitions will likely reference this judgment to argue for holistic system assessments rather than isolated asset evaluations. Moreover, it underscores the importance of regulatory adherence and the non-applicability of second provisos in contexts where foundational infrastructure is incomplete, thereby influencing regulatory practices and project management within the electricity transmission sector.

Complex Concepts Simplified

Date of Commercial Operation (DOCO)

DOCO refers to the specific date from which a transmission asset is considered officially operational and eligible for tariff determination. It signifies that the asset is not just physically installed but also functionally integrated into the transmission system, capable of delivering electricity effectively.

Regulation 3(12)(c) Second Proviso

This provision allows for the declaration of DOCO prior to the asset's full operational status under certain conditions, such as external factors beyond the control of the transmission licensee preventing immediate service. However, its applicability is contingent upon the fulfillment of all primary conditions: successful charging, trial operation, and readiness for regular service.

Transmission Schemes

Transmission schemes are structured plans outlining the development and implementation of transmission infrastructure to facilitate the efficient flow of electricity from generation sources to consumers. In this case, the schemes were designed to enable the import of surplus power in the Eastern Region.

Conclusion

The Judgment in Power Grid Corporation of India Limited v. Central Electricity Regulatory Commission serves as a pivotal reference for the interpretation of DOCO within the framework of Regulation 3(12)(c) of the Tariff Regulations, 2009. By reinforcing the necessity of complete system readiness, it ensures that tariff determinations are grounded in the functional efficacy of transmission assets, thereby protecting consumer interests and upholding regulatory standards. This decision not only clarifies the application of second provisos in tariff regulations but also guides future infrastructure projects towards comprehensive planning and synchronized commissioning, fostering a robust and reliable electricity transmission network.