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The Karnataka High Court’s Verdict on Green Energy Rules
Context:
The Karnataka High Court struck down the central government’s green energy rules under the Electricity Act, 2003, emphasising that regulating open access is exclusively a State matter. The ruling underscores the limits of central authority in green energy policy without amending the Act.
Background of the case
- Petitioners
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- Brindavan Hydropower Pvt. Ltd. and 12 other hydropower companies.
- Concerns: Subsisting agreements for wheeling and banking with transmission and distribution companies were disrupted by the GEOA Rules.
- Respondents
- Central Government and Karnataka Electricity Regulatory Commission.
- Defen~ce: Framed GEOA Rules to promote renewable energy in line with global climate goals.
- Court’s Analysis: Emphasised adherence to legislative competence and statutory boundaries.
About the Case and Rules Passed by the Government
- The Green Energy Open Access (GEOA) Rules, 2022
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- Framed by: Central government.
- Objective: Promote renewable energy generation, purchase, and consumption.
- Key features:
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- Allowed consumers to purchase green energy from the open market.
- Focused on renewable energy sources, including waste-to-energy plants.
- State Regulations
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- Based on GEOA Rules, Karnataka issued its own regulations:
- Karnataka Regulatory Commission (Terms and Conditions for Green Energy Open Access) Regulations, 2022.
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- These rules enabled consumers to bypass traditional power distribution companies (e.g., BESCOM in Bengaluru) and directly access renewable energy providers.
Past Judgments on Similar Matters
Naresh Chandra Agrawal v. The Institute of Chartered Accountants of India
- Supreme Court Observation:
- Delegated authority cannot extend or alter the scope of a statute.
- Rules must remain ancillary to the provisions of the parent legislation.
Kerala State Electricity Board v. Jhabua Power Limited
- Supreme Court Ruling: State electricity commissions are guided, but not strictly bound, by central and state government directions.
- The High Court Verdict
- Struck down the GEOA Rules, 2022, and the Karnataka-specific regulations derived from them.
- Emphasised the lack of legislative competence of the Centre under the Electricity Act, 2003.
Reasons Behind Striking Down the Rules
- Exclusive Powers of State Commissions:
- Cited Sections 42(2) and 181 of the Electricity Act, 2003.
- Regulation of open access is exclusively under the purview of state electricity regulatory commissions.
- Misuse of Residuary Powers: The Centre invoked Section 176(2) for framing the rules, but the court ruled that residuary powers cannot override substantive provisions of the Act.
- Violation of the Statute: Asserted that the Centre’s rule-making exceeded its statutory limits under the Electricity Act.
Key Implications of the Verdict
- State Empowerment: Reaffirms the autonomy of state electricity regulatory commissions under the Electricity Act.
- Impact on Renewable Energy Goals: Potential delay in achieving net-zero targets due to lack of uniform national regulations.
- Need for Legislative Amendments: Highlights the necessity for Parliament to amend the Electricity Act if the Centre wishes to align it with international climate commitments.
The Electricity Act, 2003: Key Provisions
- State Commission’s Role
- Section 86(1)(e): Mandates State Commissions to promote renewable energy by:
- Ensuring grid connectivity for renewable sources.
- Specifying renewable purchase obligations for distribution licensees.
- Section 42(2): Grants State Commissions exclusive authority to regulate open access.
- Regulatory Power Under the Act
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- Section 181: Authorises State Commissions to frame regulations for matters like transmission, wheeling, and open access.
- Section 176(2): Empowers the Central Government to make rules, but only for matters explicitly provided in the Act.
The Centre’s Rule-Making and Justification
- Basis of GEOA Rules, 2022
- Invoked Article 253 of the Constitution: Argued that the rules were necessary to fulfill international commitments under the Paris Agreement.
- Residual Power (Section 176): Claimed authority to frame rules for implementing the Act’s objectives.
- Court’s Analysis
- Contravention of the Electricity Act:
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- Article 253 cannot override an existing statute unless the statute is amended.
- Residual powers cannot be used to introduce substantive provisions that alter the Act’s framework.
