Karnataka HC Orders Puts Green Energy Open Access In Limbo

Karnataka HC Orders Puts Green Energy Open Access In Limbo

A recent order from the Karnataka High Court has created ripples in the state’s renewable energy market. The court struck down the Central government regulations on Green Energy Open Access and the state regulations floated by the Karnataka Electricity Regulatory Commission (KERC). However, it directed the KERC to frame appropriate regulations for granting open access to green energy.

The order came to light after some mini hydel power producers approached the HC, seeking quashing of both the central as well as state regulations on green energy open access. The petitioners challenge the validity of the rules. These included the Centre’s Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules 2022 and the state regulation–KERC (Terms and Conditions for Green Energy Open Access) Regulations, 2022.

The case details

The petitioners had established mini hydel plants. The firms were liable for paying wheeling and banking charges on a water-year basis as per the previous state-level regulations on open access. After the Electricity Act of 2003, KERC came up with the KERC (Terms & Conditions for Open Access) Regulations, 2004. It was amended in 2006, 2014, 2015, 2017 and 2023. These regulations dealt with the issues of open access charges like transmission charges, wheeling charges, surcharges and others.

The petitioners, before the Karnataka HC challenged the central government rules of 2022 on the ground that the Central government did not have the legislative competence to frame the rules and did not have the power under the the provisions of the Act to issue a directive to the regulatory commissions and thereby act as a supervisory body to them. They pleaded before the HC that the Central government did not possess the powers to frame the Green Energy Open Access Rules and demanded striking down the same.

The petition said that the Central government by framing the rules took over the functions which had statutorily been reserved exclusively to the concerned commissions. By doing this, the hydro companies said that it made the Commission secondary and subservient, violating the statutory framework and basic objective. The companies were furious over the methodology of the calculation of open access charges with the new regulations. The earlier state regulations on open access had granted several benefits in wheeling and banking charges for renewable projects including mini hydel projects.

HC Final Order

The court in its final judgment said, “The impugned Rules as well as the Regulations framed by the Central Government and the KERC are struck down. The KERC is directed to frame appropriate Regulations if it so desires in the matter of granting of open access to green energy generators and consumers.”

It also said that during this exercise, the Commission would only be guided by the National Electricity Policy and the Tariff Policy framed by the Central Government, and should independently consider the interests of all the stakeholders before framing the Regulations.

“This direction will, however, not mean that the KERC will have to necessarily frame fresh Regulations and if it so desires, it can continue with the 2004 Regulations,” the order said.

What will happen during the vacuum period?

The Karnataka High Court order said that during the vacuum period, KERC can make an interim arrangement to ensure that the wheeling and banking facilities available by the petitioners are facilitated. The court also allowed the petitioners to pay the wheeling charges as per the older open-access regulations.

“The petitioners, under the orders of the KERC pursuant to which they had entered into Wheeling and Banking Agreements, were also required to pay wheeling charges at 5% till the KERC frames regulations for open access to the green energy generators pending framing regulations. The petitioners shall continue to pay wheeling charges at 5%,” the court ordered.

You can read the full judgment of the case here-karnataka-high-court-order-on-green-energy-open-access