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The Supreme Court of India has dismissed the appeals filed by Gujarat Urja Vikas Nigam Limited (GUVNL) against four wind energy companies—Green Infra Corporate Wind Private Limited, Vaayu (India) Power Corporation, Green Infra Wind Power Limited, and Tadas Wind Energy Private Limited. These appeals challenged the orders passed by the Appellate Tribunal for Electricity (APTEL), which upheld the Gujarat Electricity Regulatory Commission’s (GERC) decision in favor of the companies seeking individual tariff determination for their wind projects.
The case revolves around whether these companies were entitled to approach the GERC for tariff determination despite having signed Power Purchase Agreements (PPAs) with GUVNL at a fixed rate of ₹3.56 per kWh. The tariff was initially determined by GERC in 2010 for wind projects that availed the benefit of accelerated depreciation under the Income Tax Act. However, the four companies claimed they had not availed this benefit and were therefore eligible for a different tariff, as the GERC order allowed for case-specific petitions in such scenarios.
GUVNL argued that the PPAs were binding and that the companies could not later request a different tariff, asserting that such a change would contradict the agreed terms. The companies countered that GUVNL never obtained a written commitment from them regarding their depreciation choices and that the fixed tariff was meant only for those availing accelerated depreciation.
The Supreme Court emphasized that GUVNL, being a state entity, must act following state policies promoting renewable energy and cannot prioritize commercial interests like a private business. The Court highlighted the 2010 GERC order, which made it clear that ₹3.56 per kWh applied only to projects availing accelerated depreciation, and that projects not availing the benefit could seek separate tariff determinations.
Furthermore, the Court pointed out that under the Income Tax Act, the option to choose between normal and accelerated depreciation arises only at the time of filing tax returns, which typically happens after a project begins generating power. Therefore, GUVNL could not bind the companies to a specific tariff in advance of that choice.
The Court also distinguished this case from an earlier judgment involving EMCO Ltd., stating that the factual and contractual circumstances were different. It reaffirmed that regulatory commissions have the authority to determine tariffs, even post-PPA, if justified by policy and statutory provisions.
Concluding that GUVNL’s approach was unfair and against public interest, the Court upheld the decisions of GERC and APTEL, dismissing GUVNL’s appeals and vacating its earlier order dated February 3, 2023, which had stalled GERC’s final tariff determinations.
This judgment reinforces the legal principle that renewable energy policy goals, regulatory clarity, and statutory rights take precedence over rigid contract enforcement when it comes to public sector undertakings and energy infrastructure.
