Electricity tariffs determined under the Electricity Act are binding

Calcutta High Court Upholds Electricity Tariff Regulations in Eastern Coalfields Case Court Sets Aside Single Judge's Order, Reinforces Regulatory Commission's Authority on Tariff Determination

In a significant ruling, the Division Bench of the Calcutta High Court comprising Justices Debangsu Basak and Prasenjit Biswas set aside a previous Single Judge’s decision concerning electricity tariffs between Eastern Coalfields Limited (ECL) and DPSC Limited. The court reaffirmed that tariffs determined by the West Bengal Electricity Regulatory Commission (WBERC) under the Electricity Act, 2003, are binding and cannot be overridden unless explicitly mentioned in a valid commercial document.

The dispute arose over the electricity rates charged by DPSC Limited to ECL for power supplied from the Chinakuri Thermal Power Plant, a unit involved in a coal supply agreement. ECL contested that the rates charged were not determined by the Electricity Regulatory Commission and thus were not legally enforceable. The crux of the disagreement lay in the absence of a specified rate in their Memorandum of Understanding or any other commercial document, which led to ECL challenging the additional charges levied by DPSC for the period between October 2010 and March 2011.

The appellate court found that the existing Memorandum of Understanding and lease agreements did not specify any particular rates for electricity supply, thereby invalidating any deviation from the tariffs set by the Electricity Regulatory Commission. The court noted that the regulatory framework under the Electricity Act, 2003, and the West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulation, 2007, are pivotal in ensuring that electricity tariffs are uniformly applied unless a direct commercial relationship explicitly dictates otherwise.

The judgment emphasized that consumption of electricity by ECL must adhere to the tariffs fixed under the Act, dismissing any alternative rates as impermissible. The decision underscores the necessity for explicit documentation in commercial agreements involving electricity supply to ensure compliance with statutory tariff regulations.

The ruling has been hailed as a reinforcement of the regulatory commission's role in tariff determination, ensuring consistency and fairness in electricity pricing. The court’s decision highlights the importance of clear and explicit agreements in commercial transactions involving essential services like electricity.

Bottom Line:

Electricity tariffs determined under the Electricity Act, 2003 are binding, and no other rates are permissible unless specified by a valid commercial document in accordance with the Act.

Statutory provision(s): Electricity Act, 2003, West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulation, 2007

Eastern Coalfields Limited v. DPSC Limited, (Calcutta)(DB) : Law Finder Doc Id # 2765589