APHC010465652024 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI WRIT PETITION NO: 24693 of 2024 Bench [3483] Sarada Metals and Alloys Ltd. ...Petitioner Vs. A.P. Electricity Regulatory Commission ...Respondent ********** Advocate for Petitioner: Mr. P. Chidambaram, learned Senior Counsel appearing vice Mr. Sai Sanjay Suraneni Advocate for Respondent: Mr. V. R. N. Prashanth CORAM : THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI DATE : 22nd April, 2026. Per DHIRAJ SINGH THAKUR, CJ: The petitioner in the present Writ Petition challenges inter alia the validity and vires of Regulation 3.3 of the Andhra Pradesh Electricity Regulatory Commission Renewable Power Purchase Obligation (Compliance by purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2017 and 2022, issued by the Andhra Pradesh Electricity Regulatory Commission (for short, “the APERC”). 2. With a view to understand in the correct perspective the background in which the present controversy arises, it is necessary to give in brief the material facts: 2 HCJ & RCJ WP_24693_2024 The petitioner is engaged in the business of manufacturing and export of manganese – based Ferro Alloys which is a primary element of steel making. For this the petitioner claims to operate the Ferro Alloys Plant at Vizianagaram in Andhra Pradesh. The petitioner also claims to operate an 80 MW Captive Power Plant within the premises of the Ferro Alloy Plant. The petitioner further claims that it synchronized its Captive Power Plant on 03.02.2013 and therefore, fell within the ambit of Ministry of Power‟s directive dated 01.10.2019, reference whereto shall be made in the later paragraphs. 3. At this stage, it is also deemed apt to refer to the statutory provisions which are relevant for the decision in the instant case. The Electricity Act, 2003 (for short, “the Act of 2003”) was enacted with a view to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and also for taking measures conducive to the development of the electricity industry, rationalisation of electricity tariff and for constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and matters connected therewith. 4. Before the promulgation of the Act of 2003, the electricity supply in India was governed by three enactments namely the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998. 3 HCJ & RCJ WP_24693_2024 5. While the Indian Electricity Act, 1910 created the basic framework for electricity supply in India, the Electricity (Supply) Act, 1948 envisaged the creation of State Electricity Boards, on whom a duty was enjoined to arrange the supply of electricity. However, the performance of SEBs is said to have deteriorated on account of various factors and in that backdrop with a view to encourage private sector participation in generation, transmission and distribution and with the objective of distancing the regulatory responsibilities from the Government to the Regulatory Commissions and with a view to harmonise and rationalise the provisions of the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998, there was a need felt for self-contained comprehensive legislation which finally assumed the shape of the Electricity Act, 2003. 6. At this stage, it would be apt to refer to some of the provisions of the Act of 2003: While Section 2 of the Act pertains to definitions, Section 3 envisages that the Central Government shall from time to time prepare “the National Electricity Policy and Tariff Policy” in consultation with State Governments and the authority for development of the power systems. 7. Sub-section (2) of Section 3 envisages that the Central Government shall publish the National Electricity Policy and Tariff Policy from time to time and further, Section 3(3) of the Act confers the Central Government with the 4 HCJ & RCJ WP_24693_2024 power to review and revise the National Electricity Policy and the Tariff Policy, in consultation with the State Governments and the Authority. 8. Section 3(4) envisages preparation of National Electricity Plan in accordance with the National Electricity Policy and is required to be notified once in five years. 9. Section 9 of the Act deals with captive generation and envisages that a person may construct, maintain and operate a captive generating plant and dedicated transmission lines with a right inter alia to an open access for purposes of carrying electricity from its captive generation plant to the destination of its use which further is made subject to availability of adequate transmission facility. 10. Section 61 falling in Part VII of the Act deals with Tariff Regulations and envisages that the Appropriate Commission shall subject to the provisions of the Act, specify the terms and conditions for determination of tariff. It further envisages that the determination of tariff shall inter alia be guided by the National Electricity Policy and Tariff Policy. 11. According to Section 2(4), Appropriate Commission means the Central Regulatory Commission referred to in sub-section (1) of Section 76 or the State Regulatory Commission referred to in Section 82 or the Joint Commission referred to in Section 83, as the case may be. 5 HCJ & RCJ WP_24693_2024 12. Section 82 envisages constitution of Electricity Regulatory Commission which would be prefixed by the name of the respective States. The State Governments were enjoined to constitute the State Electricity Regulatory Commissions within six months from the appointed date, by notification. However, as per the proviso to Section 82, the State Electricity Regulatory Commission established by the State Governments under Section 17 of the Electricity Regulatory Commissions Act, 1988, and functioning immediately before the appointed date, would continue to be the State Commission for purposes of the Act of 2003. 13. The State Electricity Regulatory Commissions would be deemed to be a body corporate having perpetual succession and common seal. 14. Section 86 of the Act of 2003 envisages the functions to be discharged by the State Electricity Regulatory Commissions inter alia to determine the tariff for generation, supply, transmission and wheeling of electricity, within the State, facilitate intra-State transmission and wheeling of electricity, issue licences to persons seeking to act as transmission licensees, distribution licensees and electricity traders. Reference to Section 86(1)(e) is necessary, which reads as under: “86. (1)(e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee;” 6 HCJ & RCJ WP_24693_2024 15. Section 86(4) is also important and envisages as under: (4) In discharge of its functions, the State Commission shall be guided by the National Electricity Policy, National Electricity Plan and tariff policy published under section 3. 16. Section 181 of the Act of 2003 further envisages the framing of regulations by the State Commission. 17. The Central Government on 06.01.2006 notified the Tariff Policy which was further amended on 31.03.2008, 20.01.2011 and 08.07.2011. Subsequently, the Ministry of Power notified its revised Tariff Policy vide notification dated 28.01.2016, in accordance with the powers vested in it under Section 3 of the Electricity Act, 2003. 18. According to Clause 2.2 of the Tariff Policy the Central Electricity Regulatory Commission and State Electricity Regulatory Commissions were enjoined to be guided by the Tariff Policy in discharging their functions including framing of regulations. 19. Clause 4 of the Tariff Policy clearly envisaged inter alia that the objective of the policy was to promote generation of electricity from renewable sources. 20. Clause 6.4 further envisaged as under: “6.4 Renewable sources of energy generation including Co- generation from renewable energy sources: (1) Pursuant to provisions of section 86(1)(e) of the Act, the Appropriate Commission shall fix a minimum percentage of the total consumption of electricity in the area of a distribution 7 HCJ & RCJ WP_24693_2024 licensee for purchase of energy from renewable energy sources, taking into account availability of such resources and its impact on retail tariffs. Cost of purchase of renewable energy shall be taken into account while determining tariff by SERCs. Long term growth trajectory of Renewable Purchase Obligations (RPOs) will be prescribed by the Ministry of Power in consultation with MNRE.” 21. Pursuant to the notification of the Tariff Policy by way of publication in Gazette on 28.01.2016, the Government of India, Ministry of Power issued guidelines for long term growth trajectory of Renewable Purchase Obligations (RPOs) dated 22.07.2016. The following was notified as the growth trajectory for non-solar as well as solar, uniformly for all States and Union Territories for three years from 2016-17 to 2018 to 2019: Long term trajectory 2016-17 2017-18 2018-19 Non-solar 8.75% 9.50% 10.25% Solar 2.75% 4.75% 6.75% Total 11.50% 14.25% 17.00% 22. The obligation to purchase renewable energy was cast on obligated entities excluding consumption met from hydro sources of power which was to be calculated on total consumption of electricity by a particular obligated entity. 23. An obligated entity as per the APERC RPO Regulations, 2012, means an entity obligated to purchase renewable power under clause (3) of Regulations. 24. The Government of India, Ministry of Power, subsequently, by virtue of the notification dated 14.06.2018, issued the long term growth trajectory of 8 HCJ & RCJ WP_24693_2024 Renewable Purchase Obligations for Solar and Non-solar, uniformly for all the States and Union Territories for three years, i.e., 2019-20 to 2021-22 as under: Long term trajectory 2019-20 2020-21 2021-22 Non-solar 10.25% 10.25% 10.50% Solar 7.25% 8.75% 10.50% Total 17.50% 19.00% 21.00% 25. At this point, it is relevant to refer to the Clarification, dated 01.02.2019, issued by the Government of India, Ministry of Power, clarifying that the long term growth trajectory of Renewable Purchase Obligation of Solar and Non- solar for the period 2016-19 and 2019-22 as prescribed in the Ministry‟s notification, dated 22.07.2016, at the request of various stakeholders, had been examined in consultation with Ministry of New and Renewable Energy and it was therefore clarified that RPO of the Captive Power Plant may be pegged at the RPO level applicable in the year in which the Captive Power Plant was commissioned. For facility of reference, the clarification is reproduced hereunder: “I am directed to refer to the Ministry of Power's Order of even number dated 22ndJuly, 2016 and 14thJune, 2018 regarding long term growth trajectory of Renewable Purchase Obligation (RPO) for Solar and Non-solar for the period 2016-19 and 2019- 22 respectively. 2. The request of various stakeholders regarding capping of RPO for Captive Power Plants (CPP) has been examined in consultation with Ministry of New and Renewable Energy and it is clarified that RPO of the CPP may be pegged at the RPO level applicable in the year in which the CPP was commissioned. As and when the company adds to the capacity of the CPP it will have to provide for additional RPO as obligated in the year in which new capacity is commissioned. 9 HCJ & RCJ WP_24693_2024 There should not be an increase in RPO of CPP without any additional fossil fuel capacity being added. 3. This issues with the approval of Hon'ble MoS(I/C) for Power and NRE.” 26. Subsequently, another clarification, dated 01.10.2019, was issued by the Ministry of Power, which reads as under: “I am directed to refer to the Ministry of Power's Order of even number dated 22nd July, 2016 and 14th June, 2018 regarding long term growth trajectory of Renewable Purchase Obligation (RPO) for Solar and Non-solar for the period 2016-19 and 2019- 22 respectively. 2 A clarification was issued by Ministry of Power, vide letter dated 1 February, 2019 regarding capping of RPO for Captive Power Plants (CPP) (copy enclosed). 3 Based on the concern raised by various stakeholders and after due consultation with MNRE, GEA and CERC it is further clarified that i) For CPPs commissioned before 1.04.2016, RPO should be at the level as mandated by the appropriate Commission for the year 2015-16. For CPPs commissioned from 1.04.2016 onwards, the RPO level as mandated by the appropriate Commission or Ministry of Power, whichever is higher, for the year of commissioning of the CPP shall be applicable. ii) In case of any augmentation in the capacity, the RPO for augmented capacity shall be the RPO applicable for the year in which the CPP has been augmented. iii) In case, for meeting the RPO obligation, CPP has surplus power than its consumption requirement, such a CPP may sell its surplus power to the DISCOMS under the prevailing arrangements or in the power exchange. 10 HCJ & RCJ WP_24693_2024 This issues with the approval of Hon'ble MoS(I/C) for Power and NRE.” 27. On a reading of the above two clarifications, it becomes clear that while the clarification, dated 01.02.2019, pegged the RPO of a Captive Power Plant at the RPO level applicable in the year in which the Captive Power Plant was commissioned, as per the subsequent clarification, dated 01.10.2019, all Captive Power Plants commissioned before 01.04.2016, RPO was required to be at the level mandated by the Appropriate Commission for the year 2015-16 and for all Captive Power Plants commissioned from 01.04.2016 onwards, the RPO level as mandated by the Appropriate Commission or Ministry of Power, whichever was higher, for the year of commissioning would be applicable. 28. In exercise of powers conferred in Sections 61, 66, 86(1) (e) and 181 of the Electricity Act, 2003, the Andhra Pradesh Electricity Regulatory Commission framed the regulations called the Renewable Power Purchase Obligation (Compliance by Purchase of Renewable Energy/Renewable Energy Certificates) Regulations, 2012 (for short, “APERC RPO Regulations, 2012,”). 29. Regulation 3.3 of the aforementioned regulations provided as under: “3.3 Every consumer owning a captive generating plant of installed capacity of One (1) MW shall purchase Renewable Energy Certificates issued under the Central Electricity Regulatory Commission (Terms and Conditions for recognition and issue of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010 as amended from time to time, corresponding to a quantum of not less than 5% of its consumption of energy, during each of the years from 2012-13 to 2016-17 (each year commencing from 1stApril of the Calendar Year and ending 11 HCJ & RCJ WP_24693_2024 on 31stMarch of the subsequent Calendar Year) provided that the purchase of energy from renewable energy sources shall also be treated as fulfillment of the Renewable Power Purchase Obligation (RPPO) prescribed herein;” 30. Subsequently, the APERC notified Regulation No.1 of 2017 (APERC RPO Regulations, 2017). According to Clause 3.3 whereof, every consumer owning a captive generating plant of installed capacity at 1 MW and above and connected to the grid was required to purchase Renewable Energy Certificates issued under the Central Electricity Regulatory Commission (Terms and Conditions for recognition and issue of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010, as amended from time to time corresponding to a minimum quantity of electricity expressed as a percentage of its consumption of energy, during FY2017-18 to FY 2021- 22 as specified in TABLE-I under clause 3.1 of this Regulation, which envisaged as under: TABLE-I Year 2017-18 2018-19 2019-20 2020-21 2021-22 Non-solar 6% 7% 8% 9% 10% Solar 3% 4% 5% 6% 7% Total 9% 11% 13% 15% 17% Proviso to Regulation 3.3 further provided that, the purchase of energy from renewable energy sources would also be treated as fulfillment of Renewable Power Purchase Obligation. 31. 31. Subsequently, the APERC framed Regulation No.5 of 2022 (APERC RPO Regulations, 2022) and notified the same on 29.09.2022, which enjoined 12 HCJ & RCJ WP_24693_2024 a consumer owning a captive generating plant to purchase renewable energy as per the specifications below: Period From the date of publication of these Regulations in the official gazette to the end of FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 RPPO, i.e. the minimum quantity of renewable electricity to be purchased as a percentage of total consumption 18% 19% 20% 22% 24% 32. As per Clause 7.1 of the 2017 Regulations, framed by the APERC, if an obligated entity does not fulfill the Renewable Power Purchase Obligation as provided in Clause 3 thereof, during any year, the Commission was given the power to direct the obligated entity to deposit such amount as the Commission may determine on the basis of the shortfall in units of the Renewable Power Purchase Obligation. 33. Not only this, in terms of Clause 7.2 of the Regulation, in addition to the compliance of the directions under clause (7.1), a penalty can as well be imposed by the Commission to an extent to be decided by the Commission under Section 142 of the Electricity Act, 2003. 34. In the backdrop of the aforementioned legal provisions, a notice dated 27.12.2021, came to be served upon the petitioner intimating the petitioner 13 HCJ & RCJ WP_24693_2024 regarding non-compliance of Clause 3.2/3.3 of the RPPO in its capacity as an obligated entity for the period 2012-13 to 2018-19, it was therefore required to show-cause as to why it not be directed to deposit an amount of Rs.16,46,90,400/-. 35. An appropriate response, dated 07.04.2022, according to the petitioner, was submitted to the show-cause notice, which was considered by the APERC but the same came to be rejected on 30.05.2023 and an amount of Rs.16,24,90,400/- was determined as payable by the petitioner on account of its failure to meet the RPPO for the energy consumed. 36. An Original Petition bearing No.82 of 2023 came to be filed before the APERC in which the petitioner inter alia sought a declaration that the petitioner‟s RPPO liability be capped as per the Ministry of Power‟s clarification, dated 01.10.2019, for Captive Power Plants. 37. By virtue of the order dated 03.09.2024, the APERC dismissed the Original Petition by holding that it was vested with exclusive powers of regulating tariffs and all other aspects related thereto, and further that the National Electricity Policy, National Electricity Plan and the Tariff Policy published under Section 3 of the Act would only be a guiding factor. 38. It rejected the contention of the counsel for the petitioner that the clarificatory orders passed by the Ministry of Power were in any way binding on the Commission and that if at all it had only a guiding force. It held: 14 HCJ & RCJ WP_24693_2024 “…. No doubt, the clarificatory orders of the MoP sought to limit the CPPs' liability for RPPO; the same would certainly be a material consideration for this Commission while making its Regulations for the future. However, as the obligation is for the past periods, which is already governed by Regulations issued by this Commission, in due exercise of the statutory powers, in the opinion of this Commission, such Clarificatory Orders, despite having statutory flavor, cannot displace the Regulations already in force. In other words, to act on a Clarificatory Order of the MoP would be to negate the Regulations framed and notified by this Commission. Such a course is not desirable so long as the Regulations continue to be enforced for the Obligated Entities concerned.” 39. While placing reliance on Tata Power Company Limited (supra), it was held that the Tariff Policy was not per se binding on the Commission but would be one of the material considerations only. 40. Although the Electricity Act did provide for an appeal under Section 111 before the Appellate Tribunal for Electricity (APTEL), yet since the petitioner challenges the vires of the Regulations of 2017 & 2022, the present petition has been filed challenging the 3.3 RPPO Regulations of 2017 and 2022 as ultra vires to the Electricity Act, 2003. Apart from this, a direction is sought to APERC to amend Regulation 3.3 of the 2017 and 2022 Regulations to give effect to the Ministry of Power‟s directive, dated 01.10.2019, regarding long term growth trajectory of RPO Captive Power Plants, which envisaged a cap on RPO of Captive Power Plant commissioned before 01.04.2016 at the RPO prescribed by the APERC for F.Y. 2015-16, which was at 5% of the power consumed. 41. Mr. P. Chidambaram, learned Senior Counsel, would submit that the impugned regulations and, in particular, Regulation 3.3 of APERC RPPO 15 HCJ & RCJ WP_24693_2024 Regulations of 2017 and 2022, are ultra vires the Electricity Act, 2003 inasmuch as the regulations failed to give effect to the Ministry of Powers Directive, dated 01.10.2019, which mandates capping the RPO for Captive Power Plants commissioned before 01.04.2016 at 5%, which was applicable in the case of the petitioner herein. It was urged that the directive issued by the Ministry of Power was rooted in Clause 6.4.1 of the Tariff Policy, 2016, was therefore statutory in nature, and possessed the force of law and APERC being a delegate under the Electricity Act was statutorily bound to be guided by the Tariff Policy and the directives issued thereunder. 42. It was stated that Section 86(4) of the Electricity Act mandated that APERC shall be guided by the National Electricity Policy and the Tariff Policy and by disregarding the Ministry of Powers Directive, APERC had acted in contravention of these statutory provisions which rendered the impugned regulations ultra vires. 43. Reliance was finally placed upon the judgment of the Apex Court rendered in Reliance Infrastructure Ltd. v. State of Maharashtra and Tata Power Company Limited v. MERC &Ors. 44. The stand of the official respondent was that APERC was an autonomous body and further that under Section 86(1)(e) of the Act of 2003, APERC was empowered to specify Renewable Power Purchase Obligations for obligated entities within the State. It is also stated that it was an exercise of the powers so vested in the Commission that the regulations came to be 16 HCJ & RCJ WP_24693_2024 framed earlier in the year 2012, subsequently in 2017, and thereafter in the year 2022. It was also held that while Section 86(4) of the Electricity Act mandated the APERC to be “guided” by the National Electricity Policy and the Tariff Policy, it did not imply that every such directive issued by the Ministry of Power was automatically binding on the APERC. The term “guided”, it was urged, suggested an advisory role rather than a mandatory obligation to follow each such directive. 45. Apart from this, Mr. V. R. N. Prashanth, learned Counsel appearing for APERC, would submit that the clarification, dated 01.02.2019, and the clarification, dated 01.10.2019, cannot be considered to be a part of the National Tariff Policy, inasmuch as while the National Tariff Policy authorizes the Ministry of Power to provide the long term growth trajectory, it did not empower the Ministry of Power to cap the Renewal Power Purchase Obligations and further that the Electricity Regulatory Commissions have been given unbridled powers to fix the percentage of Renewal Power Purchase Obligations by taking into consideration various factors including the availability of renewable power sources with a view to strike harmonious balance, which safeguarded the interest of the end consumer also. 46. We are not convinced with the argument of learned counsel for the respondent that the Ministry of Power had no authority to cap the Renewable Power Purchase Obligation at all and that it could have only provide for a long term growth trajectory as in terms of National Tariff Policy and, in particular, in 17 HCJ & RCJ WP_24693_2024 terms of clause 6.4 of the said Tariff policy. It goes without saying that if the Ministry of Power could prescribe a long term growth trajectory of Renewable Power Purchase Obligations, it would also carry with it the power to regulate the said growth trajectory or even cap it at a particular level and for a specific period and in the case of specific group of Captive Power Plants. 47. At this stage, it may be apt to refer to some of the judgments, which have a direct bearing on the issues that arise in the present petition. In Reliance Infrastructure Ltd. v. State of Maharashtra1, the Apex Court was examining the validity of the tariff regulation, framed by the Maharashtra ERC, which was challenged as being opposed to the National Tariff Policy. In that context, the Apex Court, while examining the purport with the interpretation in the case of Reliance Infrastructure Ltd. of the phrase „shall be guided‟ as contained in Section 61 of the 2003 Act, held: “29. Section 181 empowers the State Commissions to make regulations consistent with the Act and the Rules to carry out the provisions of the Act. Among the matters for which the regulations may provide are “the terms and conditions for the determination of tariff under Section 61”. In specifying the terms and conditions for the determination of tariff, the appropriate Commission (as Section 61 provides) “shall be guided” by the factors which are set out in clauses (a) to (i). The expression “shall be guided” comprises of two elements: the “shall” and, the “guidance”. Clauses (a) to (i) provide guidance to the Commission in specifying the terms and conditions for the determination of tariff. The expression “shall” indicates that the factors which are specified in clauses (a) to (i) have to be borne in mind by the appropriate Commission. As guiding factors, they provide considerations which are material to the determination of tariffs by the appropriate Commission. 1(2019) 3 SCC 352 18 HCJ & RCJ WP_24693_2024 30. The National Tariff Policy has multi-faceted objectives. Significant among them is the need to ensure to consumers the availability of electricity at reasonable and competitive rates. The policy also seeks to ensure the financial viability of the sector and underlines the need to attract investments. A financially sustainable electricity sector is an important facet of the overall regulatory framework. The objectives of the policy emphasise the need to promote transparency, consistency and predictability in regulatory approaches across jurisdictions. The policy emphasises the need to minimise perceptions of regulatory risk. Finally, the policy recognises the need to promote competition, efficiency in operations and improvements in the quality of supply. In designing and formulating the regulatory framework for tariffs, the delegate of the legislature has to bring about a balance between the competing goals which the Tariff Policy incorporates. 31. As part of the process, the delegate has to bear in mind the interests of diverse stakeholders including consumers and producers. …The operating norms must be designed to promote efficiency and to ensure that the gains which accrue on account of efficient operations are shared with the consumers of electricity. The operating norms will, therefore, have due regard to the performance in the past as well as capacities for future achievement. These must be dovetailed with all relevant considerations, bearing on the requirements of the policy. 32. The Tariff Policy provides guidance to the appropriate Commission when it frames regulations. The power to frame regulations is legislative in nature. It is conferred upon the appropriate Commission. The Commission weighs numerous factors. Its discretion in carrying out a complex exercise cannot be constrained. The delegate of the legislature is therefore under a mandate to bring about a fair and equitable balance between competing considerations. Standing at the forefront of those considerations is above all the need to ensure efficiency and to protect the interests of consumers. …” 48. In Tata Power Co. Ltd. Transmission v. MERC & Ors.2, the Apex Court was considering, inter alia, the issue as to whether the National Tariff Policy(NTP) framed under Section 3 of the Act is binding on the State Regulatory Commissions. In that context, the Apex Court held that the 2(2023) 11 SCC 1 19 HCJ & RCJ WP_24693_2024 interpretation in the case of Reliance Infrastructure Ltd. of the phrase „shall be guided‟ as contained in Section 61 would be equally applicable to the said phrase as contained in Section 86(4) of the Act of 2003. It was held: “98. Section 181 of the Act stipulates that the State Commission(s) may by notification, make regulations consistent with the Act and the rules framed by the State Government under Section 180 of the Act to carry out the provisions of the Act. … 99. At this juncture, it is necessary to refer to Section 86 of the Act. Section 86 lists the functions of the State Commission. Section 86(a) states that the State Commission shall discharge the function of determining the tariff for transmission. Section 86(c) stipulates that the State Commissions shall facilitate intra-State transmission of electricity. Section 86(4) provides that in the discharge of its functions, which includes the determination of tariff for the transmission of electricity under clause (a), the State Commission shall be guided by the NEP, National Electricity Plan and NTP notified under Section 3 of the Act. 114. This Court in Reliance Infrastructure [Reliance Infrastructure Ltd. v. State of Maharashtra, (2019) 3 SCC 352] held that the principles prescribed in Section 61 are all material considerations that must guide the appropriate Commission while it prescribes the terms and conditions for determining the tariff. It was held that it was the responsibility of the Commission to ensure a delicate balance of the principles prescribed under Section 61. Thus, while NTP which is prescribed as one of the principles under Section 61 shall be a material consideration, it cannot be interpreted to mean that it is the “only” material consideration. This interpretation of “shall be guided” is equally applicable to the use of the phrase in Section 86(3). 121. While the determination and regulation of tariff falls within the exclusive domain of the Regulatory Commission, it is crucial to note that Sections 61 and 86 stipulate that the Commission shall be guided by NTP while specifying terms and conditions for determining tariff. The State Commission while exercising its power to make regulations under Section 181(2)(zd) on the terms and conditions for determination of tariff under Section 61 must conform to the provisions of the Act. Thus, while framing regulations under Section 20 HCJ & RCJ WP_24693_2024 181(2)(zd), the Commission must be guided by the principles mentioned in Section 61, which includes the NEP and NTP. 122. This Court in Reliance Infrastructure Ltd. v. State of Maharashtra, (2019) 3 SCC 352 has already held that NTP is one of the material considerations. NTP is one of the many guidelines that the Commission must necessarily consider while regulating tariff. The State and the Central Government only have an advisory role in the regulation of tariff. The Electricity Regulatory Commissions Act, 1998, which was consolidated with other statutes on electricity while enacting the Electricity Act, 2003, was enacted to distance the governments from the determination of tariffs. Further, the Act does not seek to centralise the power to regulate tariff with the Centre. One of the objectives of the Act was to provide the “States enough flexibility to develop their power sector in the manner they consider appropriate”. Thus, since the appropriate Commissions possess full autonomy in the determination and regulation of tariff, and the States have been provided flexibility to develop their power systems for intra-State transmission of electricity, the NTP 2016 shall be oneof the material considerations.…” 49. While the issue in Tata Power Co. Ltd. Transmission (supra) was not centered around the Renewable Power Purchase Obligations, yet the Apex Court did examine the phrase „shall be guided‟ as existing in Section 86(4) of the Act of 2003. The legal position which thus stands crystallized by the Hon‟ble Supreme Court leaves this Court in no doubt that framing of regulations with regard to the Power Purchase Obligations falls exclusively within the domain of the Commission, which however must consider the guidance as provided by the National Tariff Policy in terms of Section 86(4) of the Act. 21 HCJ & RCJ WP_24693_2024 50. It can also be seen that the guidance which is provided by the Central Government envisaged under Section 86(4) is a material consideration but not the only material consideration as was held in Tata Power Co. Ltd. Transmission (supra) and further that the role of the State and the Central Government was only advisory in nature and that the Electricity Regulatory Commissions had full autonomy and power in framing regulations which included the Regulations prescribing Renewable Power Purchase Obligations. 51. Mr. P. Chidambaram, learned Senior Counsel would, however, urge that while the clarifications dated 01.02.2019 and 01.10.2019 may not have any binding force, yet the Commission ought to have considered the same as to whether the regulations of RPPO of 2017 or for that matter, regulations of RPPO of 2022 required an amendment. 52. It was also urged that according to the stand taken by the APERC, it was nowhere reflected that the clarifications dated 01.02.2019 and 01.10.2019, were at all considered for purposes of deciding whether an appropriate amendment to the Regulations of 2017 or 2022 were warranted or not. 53. At the very outset, we can see that the Regulations impugned of 2017 were framed in the year 2017 when the clarification dated 01.02.2019 and the subsequent clarification dated 01.10.2019, were not in existence. The petitioner also did not challenge the said regulations on the grounds which are now sought to be urged before us and the petition came to be filed as late as 22 HCJ & RCJ WP_24693_2024 in October, 2024. By that time, even when the petitioner could have approached this Court for purposes of seeking appropriate relief from this Court in regard to the Regulations of 2017, yet it chose to remain silent. 54. We are of the opinion that as far as the challenge to the Regulations of 2017 is concerned, the same is belated. The regulations of 2017 are no longer in force and have worked itself out and, therefore, challenge to the same cannot be permitted at this stage. However, insofar as the Regulations of 2022 are concerned, APERC was in fact obliged to at least consider the clarification, dated 01.02.2019 as also the clarification, dated 01.10.2019, before framing the 2022 Regulations. We are quite in agreement with the argument of Mr. P. Chidambaram, learned Senior Counsel that even when the notification dated 01.02.2019, and the subsequent clarifications had no binding effect on the APERC, yet it could be considered to be a material factor, which ought to have been considered, among others, before framing the Regulations of 2022. 55. Be that as it may, we direct the State Electricity Regulatory Commission to consider the clarification dated 01.10.2019, and to decide whether any amendment was necessary in the light of the said clarification. If the guidance given by the aforementioned clarification is accepted, the necessary amendment would be incorporated by the Commission in the Regulations of 2022 and appropriate relief extended to the petitioner. Till such time as the matter is considered by the APERC in regard to the Regulations of 2022, no coercive action be taken for recovery of any amount, which would be beyond 23 HCJ & RCJ WP_24693_2024 the obligation of the petitioner as was fixed by clarification dated 01.10.2019, for the period the said clarification remained in force. 56. However, it is made clear that in the event the APERC decides not to amend the regulations for any good reason, the petitioner would be under an obligation to show strict compliance to Regulations of 2022. We further hold that the petitioner would be under an obligation to satisfy the demand raised by the Commission in regard to the period covered under the 2017 Regulations. 57. This Writ Petition is disposed of accordingly. No costs. Consequently, connected miscellaneous applications, if any, shall stand closed. DHIRAJ SINGH THAKUR, CJ. RAVI CHEEMALAPATI, J. SSN/AKN/KBS 24 HCJ & RCJ WP_24693_2024 HON’BLE MR.JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE & HON’BLE MR. JUSTICERAVI CHEEMALAPATI Writ Petition No: 24693 of 2024 DATE : 22.04.2026 SSN/AKN/KBS 97