Big Blow To Adani Power And Tata Power; SC Disallows Compensatory Tariff [Read Judgment]

In what brings the curtains down a decade long debate on whether power companies are entitled to charge a "compensatory tariff" from consumers, the apex court ruled against it.

A bench consisting of P.C Ghose and Rohinton Nariman, JJ set aside an order of the Appellate Tribunal for Electricity (APTEL) that had awarded compensatory tariff to Tata Power and Adani Power.

In consequence, the Central Electricity Regulatory Commission’s (CERC) finding in favour of the power companies in December last year is also set aside.

It began in 2010 when Tata Power and Adani Power claimed they are entitled to charge a tariff due to certain change in regulations in Indonesia made coal export expensive.

Both companies used to import coal from Indonesia for their multi million power projects in Gujarat.

APTEL had said that change in laws was a force majeure event and had asked CERC to fix tariff rate as per the agreements the power companies had with state distribution companies.

However, the apex court ruling says that had the force majeure event been in India, the companies might be entitled to an increased tariff.

The ruling must put to rest the debate whether a company that has won a competitive bid be entitled to change its contract subsequently for unforeseen reasons.

Read the Judgment here.