Supreme Court of India
RAMAYANA ISPAT PVT. LTD. AND ANR.versusSTATE OF RAJASTHAN & ORS.
- Citation
- 2025 INSC 424
- Decided
- 31 March 2025
- Disposal
- Dismissed
- Bench
- VIKRAM NATH
Holding
RERC is constitutionally empowered to regulate intra‑state open access, and the 2016 Regulations, including the penalty regime, 24‑hour notice requirement, and Regulation 21, are valid, reasonable, and do not foreclose the right to open access.
Summary
The appellants, large industrial consumers and captive power generators, challenged the Rajasthan Electricity Regulatory Commission's (RERC) 2016 Open Access Regulations, alleging that they exceeded RERC's jurisdiction over inter‑state open access, imposed unreasonable penalties for drawal variations, required a 24‑hour advance notice that barred urgent procurement, and discriminated against captive generators. The Supreme Court examined the statutory scheme of the Electricity Act, 2003, focusing on sections that allocate powers between the Central Electricity Regulatory Commission (CERC) and State Commissions. It held that RERC retains authority to regulate intra‑state aspects of open access even when electricity originates from another state, and that the regulations' scheduling, penalty, and notice requirements are reasonable measures to ensure grid stability. The Court found no violation of the right to open access, nor any arbitrary or discriminatory treatment of captive generators. Consequently, the Court upheld the validity of the 2016 Regulations and dismissed the appeals.
Issues considered
- Whether the Rajasthan Electricity Regulatory Commission (RERC) has jurisdiction to regulate inter‑state open access under the Electricity Act, 2003.
- Whether the imposition of penalties for variations in drawal from contracted demand amounts to an unreasonable restriction on the right to open access under Section 42 of the Act.
- Whether Regulation 26(7) of the RERC (Terms and Conditions for Open Access) Regulations, 2016, requiring a 24‑hour advance notice, is ultra vires and creates an artificial barrier to open access.
- Whether Regulation 21 of the 2016 Regulations is arbitrary and discriminatory, discouraging captive power generation.
- Whether the appellants’ right to open access is foreclosed by the Regulations of 2016.
Legislation cited
- Electricity Act, 2003s. 181, s. 2(47), s. 32, s. 33, s. 42, s. 42(2), s. 42(3), s. 79(1)(c), s. 86, s. 86(1)(c), s. 9
- Rajasthan Electricity Regulatory Commission (Terms and Conditions for Open Access) Regulations, 2016s. Regulation 21, s. Regulation 26(7)
Subjects
Rajasthan Electricity Regulatory Commission (RERC)inter‑state open accesspenalties for drawal variationsSection 42 of Electricity Act, 2003Regulation 26(7) advance noticeRegulation 21 captive generationintra‑state regulationgrid stabilityopen access rights
Judgment
[2025] 4 S.C.R. 436 : 2025 INSC 424
Ramayana Ispat Pvt. Ltd. and Anr.
v.
State of Rajasthan & Ors.
(Civil Appeal No. 7964 of 2019)
01 April 2025
[Vikram Nath* and Prasanna B. Varale, JJ.]
Issue for Consideration
i) Whether the Rajasthan Electricity Regulatory Commission
(RERC) has the jurisdiction to regulate inter-state open access
under the Electricity Act, 2003; ii) Whether the imposition of
penalties for variations in drawal from contracted demand amounts
to an unreasonable restriction on the right to open access under
Section 42 of the Act of 2003; iii) Whether Regulation 26(7)
of Rajasthan Electricity Regulatory Commission (Terms and
Conditions for Open Access) Regulations, 2016 is ultra vires
for requiring an advance notice of 24 hours a day prior, thereby
preventing urgent procurement and creating an artificial barrier
to open access as protected by the Act of 2003; iv) Whether
Regulation 21 is arbitrary and discriminatory, thereby discouraging
captive power generation by creating unreasonable distinction
between captive power plants (CPPs) and state distribution
companies; v) Whether the appellants’ right to open access is
foreclosed by the Regulations of 2016.
Headnotes†
Electricity Act, 2003 – Rajasthan Electricity Regulatory
Commission (Terms and Conditions for Open Access)
Regulations, 2016 – Whether the Rajasthan Electricity
Regulatory Commission (RERC) has the jurisdiction to regulate
inter-state open access under the Electricity Act, 2003:
Held: 1. s.79(1)(c) of the Act of 2003, defines the regulatory
authority of the CERC over inter-state transmission of electricity –
However, this provision does not strip State Commissions, including
RERC, of their jurisdiction over intra-state aspects of open
access – s.42(2) of the Act of 2003 expressly empowers State
Commissions to regulate open access within their respective states,
* Author
[2025] 4 S.C.R. 437
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
ensuring fair and non-discriminatory access to transmission and
distribution networks within the state – Further, s.42(3) of the Act
of 2003 provides that whenever a consumer, with premises within
the area of supply of a distribution licensee, requires supply of
electricity from a generating company other than such distribution
licensee, such transmission and supply shall be in accordance
with the regulations made by the State Commission. [Para 45]
2. The key determinant is not the source of power but its delivery,
end-user, and consumption within Rajasthan's intra-state grid – The
Act of 2003 provides a framework for demarcating responsibilities
between CERC and State Commissions, ensuring that intra-state
aspects of electricity regulation remain within the purview of State
Commissions – The claim that only CERC has the authority to
regulate inter-state open access cannot be accepted in light of
the legislative intent behind the Act of 2003 – Therefore, RERC
retains jurisdiction over intra-state transactions even if the power
originates from another state. [Para 47]
3. Further, s.2(47) of the Act of 2003 defines open access as non-
discriminatory access to transmission and distribution systems,
encompassing both interstate and intra-state transactions – The
respondents argue that the statute does not differentiate between
them for regulatory purposes, meaning that State Commissions
naturally retain authority over open access within their jurisdictions –
This interpretation aligns with s.42, which explicitly grants State
Commissions the power to regulate open access for consumers
in their states. [Para 48]
4. s.181 of the Act of 2003 empowers State Commissions to frame
regulations necessary for implementing the provisions of the Act of
2003 – By granting State Commissions the authority to introduce
and regulate open access, the legislature has clearly vested
regulatory oversight with RERC in Rajasthan – The omission of
any reference to CERC’s jurisdiction over open access consumers
in s.42 of the Act is indicative of the legislature’s intent to keep
such matters under State Commissions’ oversight, ensuring that
electricity consumers and distribution networks within a state remain
subject to state-level regulation. [Para 49]
5. Thus, the respondents’ argument is well-founded in statutory
provisions, legislative intent, and the structural framework of the
Act of 2003 – RERC’s authority to regulate intra-state aspects of
open access transactions, even when electricity is sourced from
438 [2025] 4 S.C.R.
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another state, aligns with the Act’s objectives and ensures effective
regulatory oversight. [Para 50]
Electricity Act, 2003 – Rajasthan Electricity Regulatory
Commission (Terms and Conditions for Open Access)
Regulations, 2016 – Whether the imposition of penalties for
variations in drawal from contracted demand amounts to an
unreasonable restriction on the right to open access u/s.42
of the Act of 2003:
Held: The electricity grid operates on principles of frequency
stability and demand-supply balance – Any deviation from scheduled
drawal or injection can lead to grid instability, potentially affecting all
consumers – The impugned regulations, therefore, serve a critical
function in preventing such disruptions by enforcing discipline
among generators and consumers alike – The penalties imposed
are a deterrent mechanism to prevent strategic gaming of the
system and to ensure that all stakeholders adhere to scheduling
norms – The State Commission’s role is to balance the rights of
individual market participants with the broader objective of ensuring
an efficient, reliable, and stable power supply to all consumers in
the State. [Para 54]
Electricity Act, 2003 – Rajasthan Electricity Regulatory
Commission (Terms and Conditions for Open Access)
Regulations, 2016 – Whether Regulation 26(7) of Rajasthan
Electricity Regulatory Commission (Terms and Conditions for
Open Access) Regulations, 2016 is ultra vires for requiring an
advance notice of 24 hours a day prior, thereby preventing
urgent procurement and creating an artificial barrier to open
access as protected by the Act of 2003:
Held: 1. The requirement of prior notice is a reasonable procedural
safeguard that aligns with the objectives of the Act of 2003,
particularly those laid out in Section 42, which envisages a
structured approach to open access – The 24-hour notice period
ensures that both transmission and distribution licensees, as well
as load despatch centres, have adequate time to adjust their
schedules and prevent system disturbances – Moreover, it prevents
misuse by entities that may attempt to take advantage of realtime
price fluctuations, thereby engaging in speculative trading rather
than genuine demand based procurement – Further, the option
of purchasing power from the real-time market and day-ahead
[2025] 4 S.C.R. 439
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
market in need of urgent procurement is always available, and is
not prevented by the impugned regulations. [Para 57]
2. Furthermore, the regulation does not create an insurmountable
barrier to open access but rather seeks to bring order and
predictability to its implementation – The requirement is uniformly
applicable to all consumers, ensuring that no undue advantage
is given to any particular category – Considering the technical
and regulatory imperatives involved, the 24-hour advance notice
condition under Regulation 26(7) cannot be considered ultra vires,
as it falls within the regulatory domain of the State Commission
to establish fair, transparent, and non-disruptive mechanisms for
open access. [Para 58]
Electricity Act, 2003 – Rajasthan Electricity Regulatory
Commission (Terms and Conditions for Open Access)
Regulations, 2016 – Whether Regulation 21 is arbitrary and
discriminatory, thereby discouraging captive power generation
by creating unreasonable distinction between captive power
plants (CPPs) and state distribution companies:
Held: 1. The distinction between captive power generators and state
DISCOMs is not arbitrary but arises from the structural differences
in their roles and obligations – While captive generators primarily
generate electricity for self-consumption, distribution companies
serve a wider consumer base, requiring them to adhere to broader
regulatory commitments, including universal supply obligations – As
such, differential treatment based on the nature of their functions
is legally justified and does not amount to unfair discrimination –
Moreover, Regulation 21 does not impose undue restrictions on
captive generators but ensures that their operations align with
grid discipline, preventing any adverse impact on the larger power
ecosystem. [Para 61]
2. Additionally, the principle of non-discrimination under the Act
of 2003 does not mandate identical treatment for all entities but
rather requires a rational basis for any differentiation – In this
case, the regulatory conditions imposed on captive generators
are aimed at ensuring a level playing field and preventing misuse
of open access provisions – The regulatory framework ensures
that captive generators contribute fairly to system stability without
imposing additional burdens on distribution licensees and other
grid participants – Thus, Regulation 21 is neither arbitrary nor
440 [2025] 4 S.C.R.
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discriminatory but rather a necessary and proportionate measure
to balance the interests of various stakeholders in the electricity
sector. [Para 62]
Electricity Act, 2003 – Rajasthan Electricity Regulatory
Commission (Terms and Conditions for Open Access)
Regulations, 2016 – Whether the appellants’ right to open
access is foreclosed by the Regulations of 2016:
Held: 1. A careful analysis of the Regulations of 2016 indicates that
they primarily aim at maintaining the reliability of the electricity grid,
ensuring fair pricing, and preventing speculative misuse of open
access provisions – The requirement of advance notice for short-term
open access, penalties for deviations from contracted demand, and
specific conditions for captive power generators are all designed
to create a structured and predictable electricity market – These
provisions do not prevent eligible consumers from availing open
access but instead ensure that they do so within a framework that
safeguards the interests of all stakeholders, including distribution
licensees and other consumers – Moreover, Section 181 of the
Act of 2003 empowers State Commissions to frame regulations
necessary for implementing statutory provisions, thereby validating
the regulatory measures introduced by RERC. [Para 64]
2. Furthermore, the Act of 2003, envisages a balance between the
rights of open access consumers and the operational concerns of
the power sector – The Regulations of 2016, while imposing certain
conditions, do not outright deny open access but ensure that its
implementation is equitable and does not jeopardize grid discipline –
Open access remains available to consumers who comply with
regulatory prerequisites, including scheduling obligations and
financial commitments – Thus, the appellants’ assertion that their
right to open access is foreclosed is misplaced – The Regulations
of 2016 are consistent with the legislative intent of the Act of 2003,
ensuring that open access is exercised in a manner that does
not compromise system stability, fairness, or economic viability –
Therefore, the regulatory framework does not foreclose open
access but rather operationalizes it within reasonable constraints
essential for sustaining the electricity sector. [Para 65]
Case Law Cited
Energy Watchdog v. Central Electricity Regulatory Commission
[2017] 3 SCR 153 : (2017) 14 SCC 80; Reliance Infrastructure v.
[2025] 4 S.C.R. 441
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
State of Maharashtra [2019] 1 SCR 886 : (2019) 3 SCC 352;
Hindustan Zinc v. RERC [2015] 7 SCR 1104 : (2015) 12 SCC
611 – referred to.
List of Acts
Electricity Act, 2003; Rajasthan Electricity Regulatory Commission
(Terms and Conditions for Open Access) Regulations, 2016.
List of Keywords
Rajasthan Electricity Regulatory Commission (RERC); Inter-state
open access; Imposition of penalties; Variations in drawal from
contracted demand amounts; Section 42 of Electricity Act, 2003;
Regulation 26(7) of Rajasthan Electricity Regulatory Commission
(Terms and Conditions for Open Access) Regulations, 2016;
Advance notice of 24 hours; Regulation 21 of Rajasthan
Electricity Regulatory Commission (Terms and Conditions for
Open Access) Regulations, 2016; Jurisdiction to regulate inter-
state open access; Intra-state aspects of electricity regulation;
Right to open access; Consumer; Distribution licensee; Inter-
State transmission system; Captive generation; State Load
Despatch Centre; Duties of distribution licensee and open
access; Functions of Central Commission; Functions of State
Commission; Powers of Central Commission to make regulations;
Powers of State Commissions to make regulations; Unscheduled
Interchange Pricing.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7964 of 2019
From the Judgment and Order dated 06.09.2016 of the High Court
of Rajasthan at Jaipur in DBCWP No. 4402 of 2016
With
C.A Nos. 7966 and 7965 of 2019
Appearances for Parties
Advs. for the Appellants:
Manu Seshadri, Sahil Manganani, Ms. Aakriti Gupta, Siddhant
Singh, Nikunj Dayal, Kumar Mihir, Athul Joseph, Gunjan Sharma.
442 [2025] 4 S.C.R.
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Advs. for the Respondents:
Shiv Mangal Sharma, A.A.G., Milind Kumar, Zoheb Hossain,
Dr. Rupesh Singh, Guru Prasad Singh, Anshul Suri, Satya Veer
Singh, Ms. Pratibha Jain, Ms. Christi Jain, Pallav Mongia, Anubhav
Mishra, Amritesh Krishna.
Judgment / Order of the Supreme Court
Judgment
Vikram Nath, J.
1. The present appeals challenge two separate orders passed by
the High Court of Rajasthan—one by the Jodhpur Bench dated
29.08.2016 and the other by the Jaipur Bench dated 06.09.2016.
The appeals arise from challenges to the validity of the Rajasthan
Electricity Regulatory Commission (Terms and Conditions for Open
Access) Regulations, 20161 framed by the Rajasthan Electricity
Regulatory Commission2 in the exercise of its powers under Section
42 read with Section 181 of the Electricity Act, 2003.3 The primary
grievance of the writ petitioners, appellants herein, before the High
Court, and now the appellants before this Court, relates to the
restrictions and conditions imposed by the Regulations of 2016 on
the exercise of open access for captive power plants4 and other
large consumers of electricity.
2. The brief background of the facts giving rise to the challenge before
us are that the writ petitioners before the High Court are engaged
in industrial production and have substantial power consumption
requirements. The facts, as taken by the High Court from one of
the writ petitions filed by Hindustan Zinc Limited, respondent No.6 in
Civil Appeal No. 7966 of 2019, for convenience, are that Hindustan
Zinc Limited is a public limited company incorporated under the
Companies Act, 1956, and is engaged in the business of mining,
smelting, and production of non-ferrous metals, including lead and
zinc. The company operates multiple units at Chanderia, Dariba,
1 Regulations of 2016.
2 RERC.
3 Act of 2003.
4 CPPs.
[2025] 4 S.C.R. 443
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
and Zawar, which are supported by CPPs. In addition to captive
power generation, the company also has agreements with Ajmer
Vidhyut Vitran Nigam Limited (respondent No.3 in Civil Appeal No.
7964 of 2019, respondent No.2 in Civil Appeal No. 7965 of 2019,
and respondent No.3 in Civil Appeal no. 7966 of 2019) for the supply
of power to meet its contractual demand. Under these agreements,
Hindustan Zinc Limited is entitled to draw electricity up to 70 MW
from the distribution licensee at its Dariba Zinc Smelter Unit at any
time, as per its operational requirements.
3. Prior to the introduction of the Regulations of 2016, the appellants
were availing open access under the Rajasthan Electricity Regulatory
Commission (Terms and Conditions for Open Access) Regulations,
2004,5 which permitted them to draw power from both, their captive
generation and open access sources, without any reduction in the
contracted demand from the distribution licensee. The open access
facility under the Regulations of 2004 allowed the appellants to
schedule their power requirements on a day-ahead basis for each
15-minute block, with the flexibility to meet shortfalls through their
contracted demand from the distribution licensee.
4. RERC issued a draft of the proposed Regulations of 2016 through
a public notice dated 06.07.2015 and invited comments and
suggestions. Hindustan Zinc Limited, along with other stakeholders,
submitted detailed objections, highlighting that certain provisions of
the draft regulations were inconsistent with the objectives of the Act
of 2003 and the principle of promoting open access. The Commission
notified the Regulations of 2016 on 27.01.2016.
5. The key change introduced by the Regulations of 2016 was the
imposition of limitations on the simultaneous drawal of power
through open access and contracted demand from the distribution
licensee. Under the new regime, if a consumer opted to procure
power through open access, the contracted demand from the
distribution licensee would be reduced by the quantum of power
scheduled through open access. Additionally, the Regulations of
2016 imposed penalties for over-drawal and under-drawal from the
contracted demand.
5 Regulations of 2004.
444 [2025] 4 S.C.R.
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6. The appellants before the Jodhpur Bench of the High Court challenged
several specific provisions of the Regulations of 2016 on the ground
that they were arbitrary, unreasonable, and contrary to the statutory
scheme of the Act of 2003. The primary contention was that the
Regulations of 2016 sought to undermine the statutory right of open
access guaranteed under Section 42 of the Act of 2003 by imposing
unreasonable restrictions on the simultaneous use of open access
and contracted demand. The appellants further contended that the
imposition of penalties for variations in drawal, even when caused
by unforeseen breakdowns or operational exigencies, was unjust
and discriminatory. The appellants argued that the Regulations of
2016, by reducing the contracted demand by the quantum of power
scheduled through open access, effectively penalized consumers for
exercising their statutory right to open access. It was submitted that
the statutory framework under the Act of 2003 envisaged open access
as a means to promote competition and efficiency in the electricity
market, and the Regulations of 2016 were contrary to this objective.
7. The appellants before the Jaipur Bench of the High Court were inter-
state consumers, unlike the appellants before the Jodhpur Bench, who
were intra-state consumers drawing power from their captive plants
within the State of Rajasthan. The challenge before the Jaipur Bench
specifically related to Regulations 26(6) and 26(7) of the Regulations
of 2016, which the appellants contended imposed restrictions on
inter-state open access, thereby exceeding the Commission’s
jurisdiction under the Act of 2003. The appellants argued that the
Regulations of 2016 amounted to an extra-territorial application
of the RERC’s regulatory power, which was beyond the statutory
mandate conferred under the Act of 2003. It was contended that the
Act of 2003 empowered the State Commissions to regulate intra-
state open access but not inter-state open access, which falls within
the jurisdiction of the Central Electricity Regulatory Commission.6
Therefore, the appellants contended that the impugned regulations
were ultra vires the Act of 2003 and liable to be struck down.
8. The Jodhpur Bench in the judgment dated 29.08.2016 upheld the
validity of the Regulations of 2016, holding that the Commission
was empowered to regulate open access to ensure grid stability and
6 CERC
[2025] 4 S.C.R. 445
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
efficient load distribution. The High Court observed that the impugned
regulations have been notified with the objective to ensure that the
consumers do not indulge in any gaming activities on the grid, and
thus the rationale behind the Regulations of 2016 is to further the
objectives of the Act of 2003 while ensuring that the interests of
consumers as well as distribution licensees are balanced. Further,
rejecting the appellants’ claim that the regulations are violative of
their rights protected under Part III of the Constitution of India,
the High Court observed that they had failed to establish that the
Regulations of 2016 violate their Fundamental Rights, or the RERC
lacked competence to frame these regulations or that they are
manifestly arbitrary or unreasonable; and thus merely because the
Regulations of 2016 are claimed to cause certain inconvenience or
hardship to the appellants, they cannot be held to be illegal or ultra
vires the Act of 2003.
9. The Jaipur Bench also upheld the validity of the Regulations of
2016 and dismissed the writ petition of the appellants herein in C.A.
7964 of 2019 herein, holding that their challenge and the issues in
their petition before the High Court were squarely covered by the
judgment of the Jodhpur Bench.
10. The appellants in all the three appeals before us are challenging the
findings of the High Court on the grounds that the Jodhpur Bench failed
to appreciate that the Regulations of 2016 are discriminatory against
the CPPs as they impose unreasonable and excessive restrictions
upon them for availing open access, contrary to the objectives of
the Act of 2003. Further, the appellants challenging the order of the
Jaipur Bench further contend that the Bench failed to consider that
RERC lacked jurisdiction to regulate inter-state open access, which
falls within the exclusive domain of the CERC under the Act of 2003.
11. The issues for consideration before this Court are as follows:
i. Whether the RERC has the jurisdiction to regulate inter-state
open access under the Act of 2003?
ii. Whether the imposition of penalties for variations in drawal from
contracted demand amounts to an unreasonable restriction on
the right to open access under Section 42 of the Act of 2003?
iii. Whether Regulation 26(7) is ultra vires for requiring an advance
notice of 24 hours a day prior, thereby preventing urgent
446 [2025] 4 S.C.R.
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procurement and creating an artificial barrier to open access
as protected by the Act of 2003?
iv. Whether Regulation 21 is arbitrary and discriminatory, thereby
discouraging captive power generation by creating unreasonable
distinction between CPPs and state distribution companies?
v. Whether the appellants’ right to open access is foreclosed by
the Regulations of 2016?
12. We have heard the learned counsels for the parties at great length.
ARGUMENTS OF THE APPELLANTS
13. The appellants have raised a comprehensive challenge to the validity
of the Regulations of 2016. The challenge is primarily directed against
regulations concerning the levy of additional surcharge, scheduling
requirement, and penalties for deviations. In Civil Appeal No. 7964 of
2019, appellants have also contested the jurisdiction of the RERC to
regulate inter-state open access, arguing that such jurisdiction falls
exclusively within the domain of the CERC under the Act of 2003.
14. The appellants in Civil Appeal No. 7964 of 2019 have contended
that the RERC lacked jurisdiction to regulate inter-state open access
through Regulations of 2016. The appellants submitted that under the
scheme of the Act of 2003, the authority to regulate inter-state open
access lies exclusively with the CERC. It is the case of the appellants
challenging the jurisdiction of the RERC with respect to regulating
inter-state open access that the Regulation 26(7) essentially forecloses
the appellants from purchasing powers as it imposes conditions on
inter-state open access. The appellant argued that these conditions,
such as requiring a 24-hour scheduling period, advance intimation of
power usage, and a minimum consumption threshold of 75% of the
scheduled quantum, exceed the jurisdiction of the State Commission
and infringe upon the powers vested in the CERC.
15. The appellants referred to Section 2(36) of the Act of 2003, which
defines “inter-state transmission” as:
“(36) “ inter-State transmission system” includes –
(i) any system for the conveyance of electricity by means
of main transmission line from the territory of one
State to another State;
[2025] 4 S.C.R. 447
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
(ii) the conveyance of electricity across the territory of
an intervening State as well as conveyance within
the State which is incidental to such inter-State
transmission of electricity;
(iii) the transmission of electricity within the territory of a
State on a system built, owned, operated, maintained
or controlled by a Central Transmission Utility.”
In light of the above definition, the appellants argued that merely
because the transmission lines in the state of Rajasthan are used to
convey electricity it does not cease to be an inter-state transaction
as the usage of the said lines is only incidental to the conveyance
of electricity using inter-state open access.
16. Appellants contended that inter-state open access is a matter falling
within the exclusive domain of the CERC under Section 79(1)(c) of
the Act of 2003. The Act of 2003 clearly demarcates the jurisdiction
between CERC and State Commissions. It was argued that the power
of the State Commission, RERC in this case, under Section 86(1)(c)
is confined to regulating intra-state open access, and therefore, any
attempt to regulate inter-state open access by the RERC is ultra vires
the Act of 2003. The appellants highlighted that the petitioners in
Civil Appeal No. 7965 of 2019 and Civil Appeal No. 7966 of 2019 are
intra-state consumers of captive power from their captive generating
plants located within Rajasthan. However, the appellants in Civil
Appeal No. 7964 of 2019 are inter-state consumers, purchasing power
from sources located outside Rajasthan. Therefore, the challenge to
Regulation 26(7) by the appellants in Civil Appeal No. 7964 of 2019
is on a different footing, as it concerns the extra-territorial application
of the Regulations of 2016 to inter-state transactions, which is beyond
the legislative competence of the RERC.
17. The appellants while referring to Section 79(1)(c) of the Act of 2003,
submitted that it explicitly provides that the CERC shall regulate
the transmission of electricity and determine tariffs for inter-state
transmission of electricity. Section 2(36) of the Act of 2003 defines
“inter-state transmission” to mean the conveyance of electricity
from one state to another. Therefore, any open access transaction
involving the transmission of electricity across state boundaries would
qualify as an inter-state transaction, which falls exclusively within
the regulatory domain of the CERC. The appellants submitted that
448 [2025] 4 S.C.R.
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Section 86(1)(c) of the Act of 2003 empowers the State Commissions
to facilitate intra-state open access only. The power to regulate intra-
state open access does not include the authority to regulate inter-
state open access transactions. The regulatory scheme under the
Act of 2003 establishes a clear division of jurisdiction between the
CERC and the State Commissions, with the CERC having exclusive
authority over inter-state transactions and the State Commissions
having authority over intra-state transactions.
18. It was the argument of the appellants that any surcharge or regulatory
requirement imposed by the RERC on such inter-state transactions
is ultra vires the Act of 2003 and amounts to an extra-territorial
application of state law. The appellants further submitted that the
findings of the Jodhpur Bench of the High Court, which upheld the
validity of Regulations of 2016 with respect to intra-state consumers,
cannot be applied to inter-state consumers. The challenge before the
Jaipur Bench of the High Court concerned inter-state consumers,
whose transactions are governed by the regulatory framework
established by the CERC, not the RERC, and thus would not be
covered by the judgment of the Jodhpur Bench.
19. Further, the appellants submitted that the jurisdiction of the RERC
is circumscribed by Section 86(1)(a) of the Act of 2003, in terms of
which the State Commission shall determine the tariff for generation,
supply, transmission and wheeling of electricity, wholesale, bulk or
retail “within the state”. Thus, the RERC’s powers with respect to
open access are only within the state and not beyond it. Whereas,
the CERC has been empowered under Section 79(1)(c) to regulate
inter-state transmission of electricity.
20. Appellants also made a reference to Section 42 of the Act of 2003
which provides that the RERC in exercise of its powers under this
provision may impose cross subsidy surcharge; wheeling charges;
additional surcharge on wheeling, if any, to meet fixed cost of the
distribution licensee arising out of its obligation to supply. Thus, the
RERC is within its power to factor operational costs only. Reference
was also made to the definition of “open access” provided under
Section 2(47), which reads as follows:
“(47) “open access” means the non-discriminatory
provision for the use of transmission lines or distribution
system or associated facilities with such lines or system
[2025] 4 S.C.R. 449
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
by any licensee or consumer or a person engaged in
generation in accordance with the regulations specified
by the Appropriate Commission.”
21. Appellants thus submitted that Section 42 of the Act of 2003 only
refers to the State Commissions whereas the definition of open access
contained in Section 2(47) refers to the Appropriate Commission which
includes the CERC. Therefore, the power of the State Commissions
does not extend to regulating inter-state open access transactions
which power has been conferred upon the Central Commission.
A conjoint reading of Sections 42 and 86(1)(a) of the Act of 2003
makes it clear that the regulations of the State Commissions only
apply within the state. In the case of inter-state transmission of
electricity, the governing regulation is the CERC (Connectivity and
General Network Access to the ‘inter-state’ Transmission System)
Regulations, 2022.7 All inter-state transactions (including collective
transactions) on the power exchange are necessarily inter-state
transactions and governed by the CERC GNA Regulations. In the
event of transmission of inter-state power from outside the state
into Rajasthan, it is not the RERC Regulations of 2016 which apply
within the state but the CERC GNA Regulations.
22. The appellants relied upon the decision of this Court in Energy
Watchdog v. Central Electricity Regulatory Commission,8 wherein
it was held that the authority to regulate inter-state transmission
and inter-state open access vests exclusively with the CERC. The
appellants argued that the ratio of this judgment squarely applies
to the present case, rendering the impugned regulation beyond the
competence of the RERC. The appellants relied upon the following
findings of this Court in Energy Watchdog (Supra):
“...24. The scheme that emerges from these sections is
that whenever there is inter State generation or supply of
electricity, it is the Central involved, and whenever there
is intra-State generation or supply of electricity, the State
Government or the State Commission is involved. This is
the precise scheme of the entire Act, including Sections
79 and 86. It will be seen that Section 79(1) itself in
7 CERC GNA Regulations.
8 (2017) 14 SCC 80.
450 [2025] 4 S.C.R.
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clauses (c), (d) and (e) speaks of inter-State transmission
and inter-State operations. This is to be contrasted
with Section 86 which deals with functions of the State
Commission which uses the expression “within the State”
in clauses (a), (b) and (d), and “intra-State” in clause (c).
This being the case, it is clear that the PPA, which deals
with generation and supply of electricity, will either have
to be governed by the State Commission or the Central
Commission. The State Commission’s jurisdiction is only
where generation and supply takes place within the State.
On the other hand, the moment generation and sale takes
place in more than one State, the Central Commission
becomes the appropriate Commission under the Act. What
is important to remember is that if we were to accept the
argument on behalf of the appellant, and we were to hold
in the Adani case that there is no composite scheme for
generation and sale, as argued by the appellant, it would
be clear that neither Commission would have jurisdiction,
something which would lead to absurdity. Since generation
and sale of electricity is in more than one State obviously
Section 86 does not get attracted. This being the case, we
are constrained to observe that the expression “composite
scheme” does not mean anything more than a scheme for
generation and sale of electricity in more than one State.”
23. Thus, the appellants submitted that by curtailing the purchase power
on the exchange by imposing conditions on inter-state open access
transactions taking place outside the state of Rajasthan, Regulation
26(7) is ex-facie contrary to the objectives of Act of 2003 and the
National Tariff Policy, and thus RERC has encroached upon the
jurisdiction of the CERC in framing these arbitrary regulations. By
imposing these conditions in excess of its territorial jurisdiction, the
RERC has essentially banned the purchase of power under real
time contracts, intraday contracts, and contingency contracts and
thereby ensured that industrial consumers such as the appellants
have no option but to purchase power from the Distribution Licensee
(Jaipur Vidyut Vitran Nigam), contrary to the objectives of promoting
competition such that consumers can avail quality and cheaper
power from different sources on the power exchange via the inter-
state open access mechanism. It was submitted that the impugned
[2025] 4 S.C.R. 451
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
regulation, by interfering with inter-state scheduling, exceeds the
regulatory authority of the RERC and violates the statutory framework
established under the Act of 2003.
24. In Civil Appeal Nos. 7965 and 7966 of 2019, the challenge is to the
vires of the regulation by the captive generators supplying power
within the state of Rajasthan. Appellants have challenged the
Regulations of 2016 on the grounds that the Regulations of 2016
are discriminatory against the CPPs as they put illegal fetters upon
them for availing open access which is a statutory right of the such
power generators under Section 9 of the Act of 2003.
25. The appellant submitted that Regulation 21 of the Regulations
of 2016 is arbitrary and discriminatory against CPPs. Section
9 of the Act of 2003 recognizes the right of industries to set up
captive generation plants and ensures non-discriminatory access
to transmission and distribution networks. However, Regulation 21
creates an unreasonable distinction between captive generators and
state distribution companies,9 discouraging captive power generation.
The appellants contend that the pricing mechanism imposed under
Regulation 21 unfairly penalizes captive generators while providing
undue advantages to state DISCOMs. Under the regulation, any
under-injection by an open access consumer is settled at higher
rates, whereas over-injection is compensated at lower rates. Further,
Regulation 21 also provides that any energy injected by the power plant
but not utilised by its captive units is not paid for at all to the captive
unit/drawer/buyer. Such a pricing mechanism creates a disincentive
for captive generators to sell their surplus power through open access
and effectively forces them to rely on state utilities. The appellants
further argued that the discriminatory treatment of captive generators
under Regulation 21 is inconsistent with the intent of the Act of 2003,
which promotes competition and self-sufficiency in power generation.
By creating an uneven playing field, the regulation hampers industrial
consumers’ ability to optimize their power procurement strategies and
forces them into an unfair dependence on state utilities.
26. The appellants have challenged Regulation 21 on the ground that
by imposition of heavy penalty in case of under-injection by CPPs
as provided in Regulation 21 and at the same time exemption of the
9 DISCOMs.
452 [2025] 4 S.C.R.
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State Generators and other generators supplying power to DISCOMS
on long term basis (by virtue of Regulation 5 and Regulation 6), the
Regulations of 2016 have created a discriminatory regime detrimental
to the interest of CPPs which is totally against the spirit of the proviso
to Section 9(1) of the Act of 2003.
27. It is the argument of the appellants that these regulations discourage
open access by providing extremely stringent provisions for normal
and practically uncontrollable deviations from schedule and are
thereby creating artificial barriers on CPPs and consumers availing
open access by making the supply from open access non feasible
and economically unviable by forcing the captive generators and
consumers to incur very steep payments as well as enriching the
DISCOMs at the expense of the open access consumers.
28. Appellants further highlighted that the National Electricity Policy 200510
realises the enormous potential of CPPs and envisages encouraging
generation from such plants for the overall development of the
power market in the country. A conjoint reading of the provisions of
the Act of 2003 and NEP of 2005 establishes that it is the explicit
intention of the legislature that the CPPs should be encouraged and
developed as a source of decentralised power generators. Therefore,
any regulation putting CPPs at a position disadvantageous vis-a-vis
other generator in the matter of providing open access or regulating
supply of power from them is in violation of and ultra vires to the
provisions of Act of 2003 and the NEP of 2005.
ARGUMENTS OF THE RESPONDENTS
29. The respondents, including the RERC and the distribution licensees
have strongly defended the validity of the Regulations of 2016,
contending that the same have been framed well within the jurisdiction
of the RERC as conferred under the Act of 2003 and are essential for
maintaining grid discipline, ensuring fair competition, and safeguarding
the financial viability of the electricity DISCOMs. Further, it has also
been vehemently submitted that open access cannot be absolutely
free, untrammelled, un-controlled or unrestricted. The submissions
of all the respondents defending the validity of the Regulations of
2016 have been reproduced below.
10 NEP of 2005.
[2025] 4 S.C.R. 453
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
30. At the outset, it is submitted that the regulation of electricity is
an intricate and highly specialized domain requiring expertise in
technical, economic, and legal considerations. The Act of 2003,
entrusts regulatory commissions with the responsibility of ensuring
an efficient, reliable, and economically viable electricity sector while
balancing the interests of generators, consumers, and DISCOMs.
Electricity, being a form of energy that cannot be stored in its raw
form, necessitates continuous real-time management to maintain
grid stability. Any mismatch between demand and supply can lead to
severe disruptions, including grid failure, thereby causing widespread
economic and social ramifications. To prevent such contingencies,
electricity regulatory commissions, including RERC, are mandated
to frame and enforce operating norms that promote efficiency and
discipline among participants in the electricity sector. The primary
objective of these norms is to ensure that the benefits derived from
improved operational efficiency are passed on to consumers while
simultaneously maintaining grid stability.
31. The respondents submitted that RERC possesses regulatory
authority over certain aspects of open access transactions, even
where electricity is procured from outside the state of Rajasthan
but delivered within Rajasthan. The jurisdiction of CERC is defined
under Section 79(1) of the Act of 2003 Act, granting it regulatory
powers over inter-state transmission of electricity. However, this does
not preclude State Commissions, including RERC, from exercising
jurisdiction over intra-state aspects of open access. Section 42(2) of
the Act of 2003 specifically empowers State Commissions to regulate
intra-state open access, ensuring fair access to transmission and
distribution networks within the state. While the appellant argues
that only CERC has the power to regulate inter-state open access,
this contention is misplaced. RERC retains regulatory oversight over
intra-state transactions, even if the power originates from another
state but is ultimately transmitted within Rajasthan’s intra-state grid.
Thus, while CERC has jurisdiction over inter-state transmission, RERC
retains regulatory authority over the intra-state aspects of open access
transactions, even if the power source is located outside the state
but the power is delivered within the State through the intra-state
grid. This is in consonance with the framework of the Act of 2003,
which provides for a clear demarcation of responsibilities between
central and state regulators without unduly restricting state regulatory
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authority. Further, Section 42 of the Act of 2003 expressly empowers
the State Commissions to introduce and regulate open access within
the state. Nowhere in the parent Act has the legislature conferred the
power to regulate open access to the Central Government or CERC
for consumers falling under the purview of Section 42.
32. It is thus the submission of the respondents that the appellant’s
assertion that only CERC has the power to regulate inter-state open
access is misleading. While CERC indeed has jurisdiction over
inter-state transmission under Section 79(1) of the Act of 2003,
RERC retains regulatory authority over the intra-state aspects
of open access transactions, even if the power is sourced from
outside the state. Further, it has been contended that as rightly
pointed out by the appellants, Section 2(47) of the Act of 2003
defines open-access as non-discriminatory access to transmission
or distribution system; but this encompasses in its ambit both,
inter-state as well as intra-state transactions, without creating
any distinction between them for regulatory purposes. Therefore,
it is a natural consequence that State Commissions will retain
the power to regulate open access within their jurisdictions, even
if it involves powers sourced from another state. Hence, from
the plain reading of Section 2(47) with Section 42 of the Act of
2003, it is clear that the statute treats open access uniformly,
regardless of the source and the legislature did not intend to create
any unnecessary distinction. Hence, the power to regulate open
access, as per Section 42, rests with the RERC, especially since
the consumer, as defined under Section 2(15) of the Act of 2003,
is the one who consumes electricity via the distribution licensee,
which operates within the state. Section 2(15) defines a “consumer”
as any person who is supplied electricity by a licensee or whose
premises are connected to a distribution system. Since distribution
licensees operate within specific states, the regulation of open
access for consumers naturally falls within the jurisdiction of the
respective State Commission. Since open access transactions
ultimately facilitate the supply of electricity to consumers through the
distribution network of a state licensee, their regulation necessarily
falls within the purview of the concerned State Commission. This
reinforces the position that State Commissions, rather than CERC,
have jurisdiction over open access transactions where power is
consumed within the state, irrespective of its source.
[2025] 4 S.C.R. 455
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
33. Section 181 of the Act of 2003 grants State Commissions the power
to frame regulations to implement the provisions of the Act of 2003.
This includes the power to introduce and regulate open access,
determine applicable charges, and establish conditions for access
to intra-state transmission and distribution networks. The ability of
State Commissions to make rules regarding open access further
affirms that RERC, in the exercise of its statutory functions, can
formulate regulations governing open access transactions within
Rajasthan. Moreover, Section 181 of the Act of 2003 reinforces the
independent authority of State Commissions by specifying their role
in electricity regulation at the state level. This provision upholds the
principle of decentralization in electricity governance and affirms
the legislative intent to vest regulatory control over intra-state
electricity transactions with State Commissions, including RERC.
While, Section 181 of the Act of 2003 specifically grants the State
Commissions the authority to make regulations concerning the
classes of consumers falling under Section 42 of the Act of 2003,
Section 178 of the Act of 2003 grants the CERC broad powers to
make regulations on a wide range of subjects while intentionally
withholding powers related to Section 42 of the Act. In furtherance
of this, Section 79 of the Act of 2003, which outlines the functions
of the CERC, does not confer any responsibility upon the Central
Commission regarding he regulation of consumer classes. The
absence of any such provision is evident of the legislature’s intent
to not extend the CERC’s role in regulating the supply of power to
end consumers from distribution licensee, either through intra-state
transmission or inter-state transmission. Therefore, inter-state open
access falls within the purview of the State Commissions, RERC
herein, for regulatory purposes.
34. The respondents further submitted that Regulation 26(7) of
the Regulations of 2016, which mandates a one-day advance
scheduling requirement for 24-hour power procurement, serves a
legitimate regulatory purpose. This is a reasonable and necessary
provision and is only applicable in the case of ‘short-term inter-state
open access’. This requirement ensures grid stability, facilitates
proper load forecasting, and prevents last-minute fluctuations that
could destabilize the electricity network. The advance scheduling
requirement is neither arbitrary nor unreasonable but is in line with
best practices for efficient power system management.
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35. The contention that this requirement forecloses urgent procurement is
misplaced. The regulations provide alternative mechanisms, including
short-term market purchases, that allow participants to address
urgent electricity shortages. Respondents submitted that the real-time
market and day-ahead market operated under the guidelines of the
CERC still allow purchase of power for urgent needs. However, the
scheduling requirement is only applicable to procurement through
open access within the state of Rajasthan in order to integrate the
demanded power securely. Thus, such a requirement is a rational
measure to ensure that the grid operates in a stable and reliable
manner without the risk of sudden fluctuations, and thus is in no way
ultra vires the provisions of the Act of 2003 or against the objectives
of open access. The argument that the scheduling requirement
creates an artificial barrier to open access is completely misplaced,
as the intention is to ensure a stable and moderated open access,
thereby protecting the reliability of the grid. This in no way forecloses
the access to urgent procurement, which is available through other
sources, but only ensures that open access consumers follow grid
discipline, which is imperative to prevent any imbalances. Therefore,
the imposition of a structured scheduling mechanism is necessary
for maintaining an efficient and stable grid.
36. It has been further submitted by the respondents that the consistent
under-utilization of contract demand by such consumers can lead
to financial losses for the distribution licensees. This is because the
fixed costs associated with maintaining the infrastructure necessary
to support higher demand must still be covered, irrespective of
the actual consumption levels. By allowing only consumers who
demonstrate genuine demand to access open access, the regulatory
framework seeks to create a more equitable and efficient system.
This furthers the aim of the Act of 2003 while ensuring transparency
and accountability among consumers of open access.
37. The respondents contend that the Regulations of 2016 do not
arbitrarily foreclose the petitioner’s right to open access, which was
previously available under the Regulations of 2004. The Regulations
of 2016 are an evolved framework aimed at aligning open access
policies with the current realities of electricity distribution and
transmission. The modifications introduced in the new regulations,
including changes in scheduling requirement, charges, and penalties,
are intended to address inefficiencies and ensure a level playing field
[2025] 4 S.C.R. 457
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
for all stakeholders. These changes are well within the regulatory
domain of RERC and do not constitute an unlawful revocation of
rights granted under the previous framework.
38. The appellants argued that its transactions qualify as ‘collective
transactions’ under the CERC GNA Regulations, thereby falling
outside RERC’s regulatory jurisdiction. The respondents counter this
argument by asserting that collective transactions, as defined under
the applicable regulations, pertain to centralized power exchanges
and structured market transactions. The appellants’ transactions,
however, involve bilateral arrangements and open access usage
within Rajasthan’s network. Therefore, they do not automatically
fall under the exclusive purview of CERC. The respondents submit
that RERC’s jurisdiction remains intact concerning aspects of the
transactions that involve intra-state transmission and distribution.
39. The respondents next submitted that Regulation 21 of the Regulations
of 2016, which imposes penalties for under-injection of power by
captive power plants, is a necessary regulatory measure designed
to ensure grid discipline. The contention that Regulation 21 is
discriminatory against CPPs is unfounded, as the provision applies
equally to all entities responsible for power injection into the grid. The
rationale behind this regulation is to prevent deviation from scheduled
generation, which can disrupt grid stability. Captive generators, unlike
state generators under long-term power purchase agreements11,
have greater flexibility in their operations, necessitating stricter
scheduling norms to maintain system integrity. The imposition of
penalties is intended to discourage any kind of gaming or foul play
and ensure that all participants bear the cost of grid imbalances, as
deviation charges are necessary to discourage under-injection and
over-drawal, to ensure grid stability. The imposition of penalties for
under-injection by CPPs is an essential regulatory measure aimed
at ensuring predictability in electricity scheduling and preventing
deviations that could jeopardize grid stability. The respondents further
emphasize that Regulation 21 does not violate the rights of captive
consumers under Section 9(1) of the Act of 2003. The proviso to
Section 9(1) merely recognizes the right of captive consumers to
establish and operate generation plants for self-use. However, this
11 PPAs.
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right is not absolute and is subject to regulatory oversight to ensure
that the operation of CPPs does not disrupt grid stability or create
imbalances in electricity supply. The regulatory measures imposed
under the Regulations of 2016 are well within the powers conferred
upon RERC under the Act of 2003, and are consistent with the
broader objectives of the statute.
40. It is a settled principle of law that courts should exercise judicial
restraint when reviewing the validity of regulations framed by expert
regulatory bodies. The respondents argued that this Court has
consistently recognized that regulatory commissions are vested with
specialized knowledge and expertise, and their decisions should
not be lightly interfered with unless they are manifestly arbitrary,
unreasonable, or in direct contravention of statutory provisions. In
Reliance Infrastructure v. State of Maharashtra,12 this Court held
that regulatory decisions should be accorded deference unless it is
demonstrated that they are wholly irrational, ultra vires the parent
statute, or violate Fundamental Rights. Similarly, in Hindustan Zinc
v. RERC,13 this Court reaffirmed the well-established presumption
of constitutionality that extends to subordinate legislation, including
regulations framed under statutory authority. The respondents
submitted that unless a regulation is shown to lack legislative
competence, be inconsistent with the provisions of the parent
statute, exceed the authority conferred upon the regulatory body,
or be manifestly arbitrary and unreasonable, it must be presumed
to be valid. The burden lies on the party challenging the regulation
to establish its invalidity, and in the present case, the appellant has
failed to discharge this burden.
41. The respondents lastly asserted that the Regulations of 2016
as a whole are justified, necessary, and within the regulatory
mandate of RERC. The evolution of open access regulations is
a dynamic process, requiring periodic modifications to address
emerging challenges in electricity distribution and transmission.
The Regulations of 2016 aim to enhance grid reliability, ensure
economic efficiency, and promote non-discriminatory access to the
power network. Further, regulatory measures such as scheduling
12 (2019) 3 SCC 352, Para 38.
13 (2015) 12 SCC 611, Para 32.
[2025] 4 S.C.R. 459
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
requirements, charges, and penalties are established to prevent
market manipulation, ensure fair competition, and protect consumer
interests. The respondents, therefore, submit that the appellants
have failed to establish any legal infirmity in the Regulations of
2016 warranting interference by this Court. The respondents further
submitted that the Regulations of 2016 are framed in alignment
with national policies and regulatory precedents across various
states. The objective of open access is to promote competition and
consumer choice while ensuring grid stability and financial viability
of distribution licensees. The levy of surcharges and charges under
the regulations serves this dual purpose. It is further argued that
the appellants’ interpretation of the Act of 2003, disregards the
financial impact on state utilities and the broader policy intent. The
respondents emphasized that regulations framed by RERC are
based on detailed public consultations and impact assessments,
taking into account the interests of all stakeholders. The regulations
are neither arbitrary nor excessive but are necessary for ensuring
an equitable and sustainable electricity sector.
ANALYSIS
42. Before delving into the issues before us, the relevant provisions
referred to are reproduced below:
42.1. THE ELECTRICITY ACT, 2003
“Section 2. Definitions: - In this Act, unless the context
otherwise requires –
xxx xxx xxx
(15) “consumer” means any person who is supplied with
electricity for his own use by a licensee or the Government
or by any other person engaged in the business of
supplying electricity to the public under this Act or any
other law for the time being in force and includes any
person whose premises are for the time being connected
for the purpose of receiving electricity with the works of
a licensee, the Government or such other person, as the
case may be;
xxx xxx xxx
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(17) “distribution licensee” means a licensee authorised to
operate and maintain a distribution system for supplying
electricity to the consumers in his area of supply;
xxx xxx xxx
(36) “inter-State transmission system” includes -
(i) any system for the conveyance of electricity by means
of main transmission line from the territory of one State
to another State;
(ii) the conveyance of electricity across the territory of
an intervening State as well as conveyance within the
State which is incidental to such inter-State transmission
of electricity;
(iii) the transmission of electricity within the territory of a
State on a system built, owned, operated, maintained or
controlled by a Central Transmission Utility.
xxx xxx xxx
(47) “open access” means the non-discriminatory provision
for the use of transmission lines or distribution system
or associated facilities with such lines or system by any
licensee or consumer or a person engaged in generation
in accordance with the regulations specified by the
Appropriate Commission;
xxx xxx xxx
Section 9. Captive generation:
(1) Notwithstanding anything contained in this Act, a person
may construct, maintain or operate a captive generating
plant and dedicated transmission lines:
Provided that the supply of electricity from the captive
generating plant through the grid shall be regulated in the
same manner as the generating station of a generating
company.
[Provided further that no licence shall be required under
this Act for supply of electricity generated from a captive
[2025] 4 S.C.R. 461
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
generating plant to any licencee in accordance with the
provisions of this Act and the rules and regulations made
thereunder and to any consumer subject to the regulations
made under sub- section (2) of section 42.]
(2) Every person, who has constructed a captive generating
plant and maintains and operates such plant, shall have the
right to open access for the purposes of carrying electricity
from his captive generating plant to the destination of his
use:
Provided that such open access shall be subject to
availability of adequate transmission facility and such
availability of transmission facility shall be determined by
the Central Transmission Utility or the State Transmission
Utility, as the case may be:
Provided further that any dispute regarding the availability
of transmission facility shall be adjudicated upon by the
Appropriate Commission.
xxx xxx xxx
Section 32. Functions of State Load Despatch
Centres: -
(1) The State Load Despatch Centre shall be the apex
body to ensure integrated operation of the power system
in a State.
(2) The State Load Despatch Centre shall -
(a) be responsible for optimum scheduling and
despatch of electricity within a State, in accordance
with the contracts entered into with the licensees or
the generating companies operating in that State;
(b) monitor grid operations;
(c) keep accounts of the quantity of electricity
transmitted through the State grid;
(d) exercise supervision and control over the intra-
State transmission system; and
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(e) be responsible for carrying out real time operations
for grid control and despatch of electricity within the
State through secure and economic operation of the
State grid in accordance with the Grid Standards and
the State Grid Code.
(3) The State Load Despatch Centre may levy and collect
such fee and charges from the generating companies and
licensees engaged in intra-State transmission of electricity
as may be specified by the State Commission.
Section 33. Compliance of directions: -
(1) The State Load Despatch Centre in a State may
give such directions and exercise such supervision and
control as may be required for ensuring the integrated grid
operations and for achieving the maximum economy and
efficiency in the operation of power system in that State.
(2) Every licensee, generating company, generating
station, sub-station and any other person connected with
the operation of the power system shall comply with the
directions issued by the State Load Depatch Centre under
sub-section (1).
(3) The State Load Despatch Centre shall comply with the
directions of the Regional Load Despatch Centre.
(4) If any dispute arises with reference to the quality of
electricity or safe, secure and integrated operation of the
State grid or in relation to any direction given under sub-
section (1), it shall be referred to the State Commission
for decision:
Provided that pending the decision of the State Commission,
the directions of the State Load Despatch Centre shall be
complied with by the licensee or generating company.
(5) If any licensee, generating company or any other
person fails to comply with the directions issued under
sub-section(1), he shall be liable to a penalty not exceeding
rupees five lacs.
xxx xxx xxx
[2025] 4 S.C.R. 463
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
Section 42. Duties of distribution licensee and open
access: -
(1) It shall be the duty of a distribution licensee to develop
and maintain an efficient, co-ordinated and economical
distribution system in his area of supply and to supply
electricity in accordance with the provisions contained in
this Act.
(2) The State Commission shall introduce open access in
such phases and subject to such conditions, (including the
cross subsidies, and other operational constraints) as may
be specified within one year of the appointed date by it
and in specifying the extent of open access in successive
phases and in determining the charges for wheeling, it
shall have due regard to all relevant factors including
such cross subsidies, and other operational constraints:
Provided that [such open access shall be allowed on
payment of a surcharge] in addition to the charges for
wheeling as may be determined by the State Commission:
Provided further that such surcharge shall be utilised to
meet the requirements of current level of cross subsidy
within the area of supply of the distribution licensee:
Provided also that such surcharge and cross subsidies
shall be progressively reduced in the manner as may be
specified by the State Commission:
Provided also that such surcharge shall not be leviable
in case open access is provided to a person who has
established a captive generating plant for carrying the
electricity to the destination of his own use:
[Provided also that the State Commission shall, not later
than five years from the date of commencement of the
Electricity (Amendment) Act, 2003, by regulations, provide
such open access to all consumers who require a supply of
electricity where the maximum power to be made available
at any time exceeds one megawatt.]
(3) Where any person, whose premises are situated
within the area of supply of a distribution licensee,
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(not being a local authority engaged in the business
of distribution of electricity before the appointed date)
requires a supply of electricity from a generating company
or any licensee other than such distribution licensee,
such person may, by notice, require the distribution
licensee for wheeling such electricity in accordance
with regulations made by the State Commission and
the duties of the distribution licensee with respect to
such supply shall be of a common carrier providing
non-discriminatory open access .
(4) Where the State Commission permits a consumer
or class of consumers to receive supply of electricity
from a person other than the distribution licensee of his
area of supply, such consumer shall be liable to pay
an additional surcharge on the charges of wheeling, as
may be specified by the State Commission, to meet the
fixed cost of such distribution licensee arising out of his
obligation to supply.
(5) Every distribution licensee shall, within six months from
the appointed date or date of grant of licence, whichever
is earlier, establish a forum for redressal of grievances of
the consumers in accordance with the guidelines as may
be specified by the State Commission.
(6) Any consumer, who is aggrieved by non-redressal
of his grievances under sub-section (5), may make a
representation for the redressal of his grievance to an
authority to be known as Ombudsman to be appointed
or designated by the State Commission.
(7) The Ombudsman shall settle the grievance of the
consumer within such time and in such manner as may
be specified by the State Commission.
(8) The provisions of sub-sections (5), (6) and (7) shall
be without prejudice to right which the consumer may
have apart from the rights conferred upon him by those
sub-sections.
xxx xxx xxx
[2025] 4 S.C.R. 465
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
Section 79. Functions of Central Commission: -
(1) The Central Commission shall discharge the following
functions, namely:-
(a) to regulate the tariff of generating companies
owned or controlled by the Central Government;
(b) to regulate the tariff of generating companies
other than those owned or controlled by the Central
Government specified in clause (a), if such generating
companies enter into or otherwise have a composite
scheme for generation and sale of electricity in more
than one State;
(c) to regulate the inter-State transmission of
electricity;
(d) to determine tariff for inter-State transmission of
electricity;
(e) to issue licenses to persons to function as
transmission licensee and electricity trader with
respect to their inter-State operations;
(f) to adjudicate upon disputes involving generating
companies or transmission licensee in regard to
matters connected with clauses (a) to (d) above and
to refer any dispute for arbitration;
(g) to levy fees for the purposes of this Act;
(h) to specify Grid Code having regard to Grid
Standards;
(i) to specify and enforce the standards with respect
to quality, continuity and reliability of service by
licensees;
(j) to fix the trading margin in the inter-State trading
of electricity, if considered, necessary;
(k) to discharge such other functions as may be
assigned under this Act.
(2) The Central Commission shall advise the Central
Government on all or any of the following matters, namely :-
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(i) formulation of National electricity Policy and tariff
policy;
(ii) promotion of competition, efficiency and economy
in activities of the electricity industry;
(iii) promotion of investment in electricity industry;
(iv) any other matter referred to the Central
Commission by that Government.
(3) The Central Commission shall ensure transparency
while exercising its powers and discharging its functions.
(4) In discharge of its functions, the Central Commission
shall be guided by the National Electricity Policy,
National Electricity Plan and tariff policy published under
section 3.
xxx xxx xxx
Section 86. Functions of State Commission: -
(1) The State Commission shall discharge the following
functions, namely: -
(a) determine the tariff for generation, supply,
transmission and wheeling of electricity, wholesale,
bulk or retail, as the case may be, within the State:
Provided that where open access has been permitted
to a category of consumers under section 42, the
State Commission shall determine only the wheeling
charges and surcharge thereon, if any, for the said
category of consumers;
(b) regulate electricity purchase and procurement
process of distribution licensees including the price at
which electricity shall be procured from the generating
companies or licensees or from other sources through
agreements for purchase of power for distribution and
supply within the State;
(c) facilitate intra-State transmission and wheeling
of electricity;
[2025] 4 S.C.R. 467
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
(d) issue licences to persons seeking to act as
transmission licensees, distribution licensees and
electricity traders with respect to their operations
within the State;
(e) promote co-generation 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;
(f) adjudicate upon the disputes between the
licensees, and generating companies and to refer
any dispute for arbitration;
(g) levy fee for the purposes of this Act;
(h) specify State Grid Code consistent with the Grid
Code specified under clause (h) of sub-section (1)
of section 79;
(i) specify or enforce standards with respect to quality,
continuity and reliability of service by licensees;
(j) fix the trading margin in the intra-State trading of
electricity, if considered, necessary; and
(k) discharge such other functions as may be assigned
to it under this Act.
(2) The State Commission shall advise the State
Government on all or any of the following matters, namely:-.
(i) promotion of competition, efficiency and economy
in activities of the electricity industry;
(ii) promotion of investment in electricity industry;
(iii) reorganization and restructuring of electricity
industry in the State;
(iv) matters concerning generation, transmission,
distribution and trading of electricity or any other
matter referred to the State Commission by that
Government.
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(3) The State Commission shall ensure transparency while
exercising its powers and discharging its functions.
(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.
xxx xxx xxx
Section 178. Powers of Central Commission to make
regulations: -
(1) The Central Commission may, by notification make
regulations consistent with this Act and the rules generally
to carry out the provisions of this Act.
(2) In particular and without prejudice to the generality of
the power contained in sub-section (1), such regulations
may provide for all or any of following matters, namely: -
(a) period to be specified under the first proviso to
section 14;
(b) the form and the manner of the application under
sub-section (1) of section 15;
(c) the manner and particulars of notice under sub-
section (2) of section 15;
(d) the conditions of licence under section 16;
(e) the manner and particulars of notice under clause
(a) of sub- section (2) of section 18;
(f) publication of alterations or amendments to be
made in the licence under clause(c) of sub-section
(2) of section 18;
(g) Grid Code under sub-section (2) of section 28;
(h) levy and collection of fees and charge from
generating companies or transmission utilities or
licensees under sub-section (4) of section 28;
(i) rates, charges and terms and conditions in respect
of intervening transmission facilities under proviso
to section 36;
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Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
(j) payment of the transmission charges and a
surcharge under-sub- clause (ii) of clause (d) of sub-
section (2) of section 38;
(k) reduction of surcharge and cross subsidies under
second proviso to sub-clause (ii) of clause (d) of
sub-section (2) of section 38;
(l) payment of transmission charges and a surcharge
under sub-clause (ii) of clause(c) of section 40;
(m) reduction of surcharge and cross subsidies under
the second proviso to sub-clause (ii) of clause (c) of
section 40;
(n) proportion of revenues from other business to be
utilised for reducing the transmission and wheeling
charges under proviso to section 41;
(o) duties of electricity trader under sub-section (2)
of section 52;
(p) standards of performance of a licensee or class
of licensees under sub-section (1) of section 57;
(q) the period within which information to be furnished
by the licensee under sub-section (1) of section 59;
[(r) the manner of reduction of cross subsidies under
clause (g) of section 61;]
(s) the terms and conditions for the determination of
tariff under section 61;
(t) details to be furnished by licensee or generating
company under sub-section (2) of section 62;
(u) the procedures for calculating the expected
revenue from tariff and charges under sub-section
(5) of section 62;
(v) the manner of making an application before the
Central Commission and the fee payable therefor
under sub-section (1) of section 64;
(w) the manner of publication of application under
sub-section (2) of section 64;
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(x) issue of tariff order with modifications or conditions
under sub-section (3) of section 64;
(y) the manner by which development of market in
power including trading specified under section 66;
(z) the powers and duties of the Secretary of the
Central Commission under sub-section (1) of section
91;
(za) the terms and conditions of service of the
Secretary, officers and other employees of Central
Commission under sub-section (3) of section 91;
(zb) the rules of procedure for transaction of business
under sub- section (1) of section 92;
(zc) minimum information to be maintained by a
licensee or the generating company and the manner of
such information to be maintained under sub-section
(8) of section 128;
(zd) the manner of service and publication of notice
under section 130;
(ze) any other matter which is to be, or may be,
specified by regulations.
(3) All regulations made by the Central Commission under
this Act shall be subject to the conditions of previous
publication.
xxx xxx xxx
Section 181. Powers of State Commissions to make
regulations: -
(1) The State Commissions may, by notification, make
regulations consistent with this Act and the rules generally
to carry out the provisions of this Act.
(2) In particular and without prejudice to the generality of
the power contained in sub-section (1), such regulations
may provide for all or any of the following matters, namely: -
[2025] 4 S.C.R. 471
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
(a) period to be specified under the first proviso of
section 14;
(b) the form and the manner of application under
sub-section (1) of section 15;
(c) the manner and particulars of application for
licence to be published under sub-section (2) of
section 15;
(d) the conditions of licence section 16;
(e) the manner and particulars of notice under
clause(a) of sub-section (2) of section 18;
(f) publication of the alterations or amendments to be
made in the licence under clause (c) of sub-section
(2) of section 18;
(g) levy and collection of fees and charges from
generating companies or licensees under sub-section
(3) of section 32;
(h) rates, charges and the term and conditions in
respect of intervening transmission facilities under
proviso to section 36;
(i) payment of the transmission charges and a
surcharge under sub-clause (ii) of clause(d) of sub-
section (2) of section 39;
(j) reduction of surcharge and cross subsidies under
second proviso to sub-clause (ii) of clause (d) of
sub-section (2) of section 39;
(k) manner and utilisation of payment and surcharge
under the fourth proviso to sub-clause(ii) of clause
(d) of sub-section (2) of section 39;
(l) payment of the transmission charges and a
surcharge under sub-clause(ii) of clause (c) of
section 40;
(m) reduction of surcharge and cross subsidies
under second proviso to sub-clause (ii) of clause
(c) of section 40;
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(n) the manner of payment of surcharge under the
fourth proviso to sub-clause (ii) of clause (c) of
section 40;
(o) proportion of revenues from other business to be
utilised for reducing the transmission and wheeling
charges under proviso to section 41;
(p) reduction of surcharge and cross-subsidies under
the third proviso to sub-section (2) of section 42;
(q) payment of additional charges on charges of
wheeling under sub-section (4) of section 42;
(r) guidelines under sub-section (5) of section 42;
(s) the time and manner for settlement of grievances
under sub-section (7) of section 42;
(t) the period to be specified by the State Commission
for the purposes specified under sub-section (1) of
section 43;
(u) methods and principles by which charges for
electricity shall be fixed under sub-section (2) of
section 45;
(v) reasonable security payable to the distribution
licensee under sub-section (1) of section 47;
(w) payment of interest on security under sub-section
(4) of section 47;
(x) electricity supply code under section 50;
(y) the proportion of revenues from other business
to be utilised for reducing wheeling charges under
proviso to section 51;
(z) duties of electricity trader under sub-section (2)
of section 52;
(za) standards of performance of a licensee or a
class of licensees under sub-section (1) of section 57;
(zb) the period within which information to be furnished
by the licensee under sub-section (1) of section 59;
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Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
[(zc) the manner of reduction of cross-subsidies under
clause (g) of section 61;]
(zd) the terms and conditions for the determination
of tariff under section 61;
(ze) details to be furnished by licensee or generating
company under sub-section (2) of section 62;
(zf) the methodologies and procedures for calculating
the expected revenue from tariff and charges under
sub-section (5) of section 62;
(zg) the manner of making an application before the
State Commission and the fee payable therefor under
sub-section (1) of section 64;
(zh) issue of tariff order with modifications or
conditions under sub-section(3) of section 64;
(zi) the manner by which development of market in
power including trading specified under section 66;
(zj) the powers and duties of the Secretary of the
State Commission under sub-section (1) of section 91;
(zk) the terms and conditions of service of the
secretary, officers and other employees of the State
Commission under sub-section (2) of section 91;
(zl) rules of procedure for transaction of business
under sub-section (1) of section 92;
(zm) minimum information to be maintained by a
licensee or the generating company and the manner of
such information to be maintained under sub-section
(8) of section 128;
(zn) the manner of service and publication of notice
under section 130;
(zo) the form of preferring the appeal and the manner
in which such form shall be verified and the fee
for preferring the appeal under sub-section (1) of
section 127;
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(zp) any other matter which is to be, or may be,
specified.
(3) All regulations made by the State Commission under this
Act shall be subject to the condition of previous publication.”
42.2. Rajasthan Electricity Regulatory Commission
(Terms and Conditions for Open Access)
Regulations, 2016:
“xxx xxx xxx
R.5. Special Provisions for existing Distribution
Licensees: The Distribution Licensees, using intra-State
transmission system and the distribution system in the State
under an existing agreement or arrangement on the date
of coming into force of the RERC (Terms and Conditions
for Open Access) Regulations, 2004, shall be entitled to
continue to avail open access to such transmission and
distribution system on the same terms and conditions for
the term of the existing agreement or arrangement on
payment of transmission charges and wheeling charges
as may be determined by the Commission.
R.6. Provisions for existing consumers and generating
companies: The existing consumer or an existing
generating company other than the licensees availing open
access under government policy or under agreements
entered on the date of coming into force of RERC (Terms
and Conditions for Open Access) Regulations, 2004 may
continue to avail open access on terms and conditions laid
down under these Regulations to the extent they are not
covered by any policy directive by the State Government
to the Commission.
xxx xxx xxx
R.21. Unscheduled Interchange Pricing
The payment settlement for mismatch between the
schedule and the actual drawal/injection in both intra-State
and inter-State transactions by customers connected to
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Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
transmission/distribution network of the State licensees
shall be governed by the pricing mechanism as specified
below:
(i) Any under-injection with respect to the schedule
approved by the SLDC by an open access customer
shall be settled at higher of the applicable deviation
rates as notified in CERC Deviation Settlement
Mechanism Regulations 2014 amended from time to
time or energy charge at the rate of Temporary Tariff
applicable for HT (NDS) category as determined by
the Commission from time to time;
(ii) Any over-injection upto 5% in a time block of 15
minutes and averaging upto 1% over a day with
respect to the schedule approved by the SLDC by
an open access customer shall be compensated at
the deviation charge rate at frequency of 50 Hz. or
applicable deviation charge rate (as notified in CERC
Deviation Settlement Mechanism Regulations 2014
amended from time to time) whichever is less;
(iii) Any underdrawl with respect to the schedule
approved by the SLDC by an open access consumer
shall not be compensated and this underdrawl shall
be considered to be attributable to the consumer;
(iv) Any over drawl with respect to the schedule
approved by the SLDC by an open access customer
who is not a consumer of Distribution Licensee of
his area of supply shall be settled at higher of the
applicable deviation rates (as notified in CERC
Deviation Settlement Mechanism Regulations 2014
amended from time to time) or energy charge at rate
of Temporary Tariff applicable for HT (NDS) category
as determined by the Commission from time to time;
(v) Any over drawl with respect to the schedule
approved by the SLDC, by an open access customer
who is also a consumer of Distribution Licensee of
his area of supply, shall be considered as the drawal
from Discom and the open access consumer shall
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be required to pay charges for the excess capacity
utilized computed in the manner specified in regulation
26 for the entire month equal to the same percentage
of the fixed and energy charges by which percentage
the excess demand has actually been availed during
the month on the rates specified in the tariff orders
in force. However, the excess capacity utilized up to
5% of capacity allocation occurring to the extent of
two time blocks of 15 minutes each during a month
shall be exempted.
xxx xxx xxx
R.26. Compliance and Grid Discipline
(1) The open access customer shall abide by the Indian
Electricity Grid Code, the State Grid Code and instructions
given by State Transmission Utility and State Load Dispatch
Centre as applicable from time to time.
(2) The open access customer shall also comply with
the requirements of the CEA (Technical Standards for
Connectivity to the Grid) Regulations, 2007 as amended
from time to time.
(3) The open access consumer shall restrict the sum of his
total drawal from all sources including open access and
Distribution Licensee up to the total sanctioned contract
demand with the Distribution Licensee.
Provided that open access may be allowed over and above
the contract demand to a consumer who sources power
both by captive generation and Discom to the extent of
captive power supply subject to availability of transmission
and/or distribution system as the case may be.
Provided further that long term open access may be
allowed over and above the contract demand to the extent
of sanctioned open access capacity.
(4) The consumer shall be levied fixed charge based on
the maximum demand recorded in the ABT meter as per
tariff applicable from time to time.
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Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
Provided that if the open access is allowed over and above
the contract demand in terms of proviso to sub regulation
(3) above, the fixed charges shall be levied based on the
total demand recorded in the ABT meter less open access
demand scheduled in terms of proviso of sub regulation
(3) above.
(5) The long term/ medium term open access customer
shall provide the injection schedule at the generator end
and drawal schedule at the supply end to SLDC, RDPPC,
supplier end Distribution Licensee and to the consumer end
Distribution Licensee before 10.00 AM of the day preceding
the day of scheduling. The Injection schedule shall have the
open access consumer and supplier identification. Where
open access is provided to more than one open access
consumer, supplier shall provide a break up of injection
schedule as applicable to each open access consumer
considering that the adjustment of energy in such case
shall be as per Regulation 25.
(6) The short term open access customer shall provide the
injection/drawal schedule for intra-State transactions every
day to the SLDC, RDPPC and the Distribution Licensee
before 10:00 AM of the day preceding the day of drawal/
injection as per the open access capacity sanctioned.
(7) The power purchase under short term inter-State open
access including transactions through power exchange
shall be subject to the following:
(i) The consumer shall schedule power from open
access for complete 24 hours of the day.
(ii) The consumer shall intimate in writing the block
wise maximum power to be scheduled from inter-
State open access each day to the SLDC, RDPPC
and Distribution Licensee before 10:00AM of the day
preceding the day of drawal.
(iii) The schedule so given shall be uniform at least
for a period of eight hours and the minimum schedule
during the day shall at any time not be less than 75%
of the maximum schedule of the day.
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(iv) The schedule so given shall be used to calculate
the block wise maximum admissible drawal from the
Discom.
(v) If actual schedule approved in inter-State
transactions is less, then the admissible drawal shall
be reduced to that extent.
(8) If the actual drawal in a block is higher than the
admissible drawal, then the percentage excess drawal
shall be calculated on the admissible drawal and the
highest percentage of such excess drawal of all blocks
during a month shall be considered as excess capacity
(demand) utilized during that month and shall be billed as
per regulation 21(v).
(9) Annual maintenance outage, other maintenance outage
and forced outage shall be subject to the provisions of the
State Grid Code. Intimation of the forced outage shall be
sent to SLDC and to the Distribution Licensees, within 30
minutes of the outage and shall incorporate the estimated
outage/rectification time. Restoration of unit under outage
shall be conveyed to SLDC at least 30 minutes prior to
its synchronization with the State Grid.
(10) Wherever required, unity power factor shall be
considered for the purpose of unit conversion from
MVA/kVA to MW/kW or vice versa.”
43. Upon a judicious and careful consideration of the rival submissions
made by the parties and perusal of the statutory provisions under
the Act of 2003 and the Regulations of 2016, we are of the view that
the contentions raised by the appellants, both inter-state as well as
intra-state captive generators, cannot be agreed with in light of the
objectives of the Act of 2003 which the Regulations of 2016 seek
to achieve.
I. Whether the RERC had the jurisdiction to regulate
inter-state open access under the Act of 2003?
44. The primary contention of the appellants regarding the jurisdiction
of the RERC to regulate inter-state open access is without any
merit. The Act of 2003 establishes a clear distinction between the
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regulatory functions of the CERC and State Commissions. While
inter-state transmission falls within the domain of the CERC under
Section 79(1)(c), the power of the State Commission to regulate
intra-state transmission and distribution under Section 86(1)(c) is
well established. Furthermore, the appellants’ argument that the
Regulations of 2016 have an extraterritorial effect is misplaced. The
Regulations of 2016 do not seek to regulate inter-state transmission
per se but rather ensures that transactions impacting the Rajasthan
grid remain under the oversight of the State Commission.
45. Section 79(1)(c) of the Act of 2003, defines the regulatory authority
of the CERC over inter-state transmission of electricity. However,
this provision does not strip State Commissions, including RERC,
of their jurisdiction over intra-state aspects of open access. Section
42(2) of the Act of 2003 expressly empowers State Commissions
to regulate open access within their respective states, ensuring
fair and non-discriminatory access to transmission and distribution
networks within the state. Further, Section 42(3) of the Act of 2003
provides that whenever a consumer, with premises within the area
of supply of a distribution licensee, requires supply of electricity from
a generating company other than such distribution licensee, such
transmission and supply shall be in accordance with the regulations
made by the State Commission.
46. The respondents have, in their submissions, drawn a relevant and
appropriate parallel with the regulation of National Highways in the
country, which also run across state borders. It has been rightly
analogised by the RERC that even though National Highways falls
under Entry 23 of List I of the Seventh Schedule of the Constitution
of India and is a central subject, nevertheless when it passes through
the respective states it is subject to tolls under the respective state
laws as per Entry 59 of List II of the Seventh Schedule. Therefore,
when ‘Electricity’ which is a subject matter of Entry 38, List III is
wheeled from outside the state and distributed within the state, the
regulations governing such distribution within the state cannot, by
any stretch, be termed to be suffering from any excess of jurisdiction.
47. The key determinant is not the source of power but its delivery, end-
user, and consumption within Rajasthan’s intra-state grid. The Act of
2003 provides a framework for demarcating responsibilities between
CERC and State Commissions, ensuring that intra-state aspects of
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electricity regulation remain within the purview of State Commissions.
The appellants’ interpretation would render Section 42 redundant
and contradict the legislative intent behind decentralizing regulatory
authority to the State Commissions. Thus, the claim that only CERC
has the authority to regulate inter-state open access cannot be
accepted in light of the legislative intent behind the Act of 2003.
Therefore, RERC retains jurisdiction over intra-state transactions
even if the power originates from another state.
48. Further, Section 2(47) of the Act of 2003 defines open access as
non-discriminatory access to transmission and distribution systems,
encompassing both inter-state and intra-state transactions. The
respondents argue that the statute does not differentiate between
them for regulatory purposes, meaning that State Commissions
naturally retain authority over open access within their jurisdictions.
This interpretation aligns with Section 42, which explicitly grants State
Commissions the power to regulate open access for consumers in
their states. Additionally, Section 2(15) of the Act of 2003 defines a
“consumer” as any person who receives electricity from a licensee
or whose premises are connected to a distribution system. Since
distribution licensees operate within state boundaries, the regulation
of open access for consumers falls squarely within the State
Commission’s jurisdiction. Section 2(17) further strengthens this
position by defining a “distribution licensee” as an entity authorized
to distribute electricity within a specific area, reinforcing the role of
State Commissions in regulating transactions that ultimately facilitate
electricity supply to consumers within the state.
49. Section 181 of the Act of 2003 empowers State Commissions to
frame regulations necessary for implementing the provisions of
the Act of 2003. This includes establishing conditions for open
access, determining charges, and ensuring fair access to intra-
state transmission and distribution networks. By granting State
Commissions the authority to introduce and regulate open access,
the legislature has clearly vested regulatory oversight with RERC
in Rajasthan. The omission of any reference to CERC’s jurisdiction
over open access consumers in Section 42 of the Act further
reinforces the respondents’ argument. Section 79, which delineates
CERC’s functions, does not extend its authority to the regulation of
end consumers or the supply of power via distribution licensees.
This omission is indicative of the legislature’s intent to keep such
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matters under State Commissions’ oversight, ensuring that electricity
consumers and distribution networks within a state remain subject
to state-level regulation.
50. Thus, the respondents’ argument is well-founded in statutory
provisions, legislative intent, and the structural framework of the
Act of 2003. RERC’s authority to regulate intra-state aspects of
open access transactions, even when electricity is sourced from
another state, aligns with the Act’s objectives and ensures effective
regulatory oversight.
II. Whether the imposition of penalties for variations in drawal
from contracted demand amounts to an unreasonable
restriction on the right to open access under Section 42
of the Act of 2003?
51. The imposition of penalties for variations in drawal from contracted
demand is a regulatory measure designed to ensure grid stability and
prevent commercial gaming in the electricity market. The respondents
contend that such penalties are neither arbitrary nor unreasonable
but are a necessary mechanism to maintain the reliability of the
grid. The Act of 2003 guarantees non-discriminatory open access to
consumers but does not exempt them from complying with regulatory
conditions essential for the effective functioning of the electricity
network. Regulation of drawal variations is crucial for balancing power
supply and demand, particularly in the context of the grid’s technical
constraints and the need to prevent unscheduled fluctuations that
may disrupt the system.
52. Further, the penalty mechanism is not an unreasonable restriction
but rather a measure to ensure that consumers adhere to their
contractual obligations, preventing undue burden on the system and
other stakeholders. Uncontrolled variations can lead to deviations
that may cause frequency imbalances, affecting overall grid security.
Section 32 and Section 33 of the Act of 2003 empower SLDCs to
ensure the smooth operation of the power system, which includes
imposing necessary safeguards against unregulated deviations. The
penalties, therefore, serve a larger public interest by deterring erratic
consumption patterns and aligning open access with grid discipline.
53. Additionally, the regulations apply uniformly to all open access
consumers, ensuring that there is no arbitrary targeting or
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discrimination. The principle of open access is not absolute and must
be exercised in a manner that does not compromise the operational
integrity of the power sector. Therefore, the imposition of penalties
for variations in drawal is a justifiable regulatory measure that aligns
with the objectives of the Act of 2003 and does not amount to an
unreasonable restriction on open access.
54. The electricity grid operates on principles of frequency stability
and demand-supply balance. Any deviation from scheduled drawal
or injection can lead to grid instability, potentially affecting all
consumers. The impugned regulations, therefore, serve a critical
function in preventing such disruptions by enforcing discipline
among generators and consumers alike. The penalties imposed are
a deterrent mechanism to prevent strategic gaming of the system
and to ensure that all stakeholders adhere to scheduling norms. The
State Commission’s role is to balance the rights of individual market
participants with the broader objective of ensuring an efficient, reliable,
and stable power supply to all consumers in the State.
III. Whether Regulation 26(7) is ultra vires for requiring an
advance notice of 24 hours, thereby preventing urgent
procurement and creating an artificial barrier to open access
as protected by the Act of 2003?
55. The Act of 2003 was enacted with the objective of promoting
competition, efficiency, and consumer interest while ensuring the
stability of the electricity grid. The RERC’s regulations align with
these objectives by:
i. Ensuring predictability and reliability in power supply through
scheduling norms,
ii. Preventing market distortions by imposing penalties for
deviations that can destabilize grid operations, and
iii. Curtailing gaming practices where open access consumers,
particularly captive power generators, might manipulate the
grid to gain an undue advantage.
56. Regulation 26(7), which mandates a 24-hour advance notice for
availing short-term inter-state open access, serves a critical function
in maintaining grid stability and ensuring proper scheduling of power.
The respondents argue that this requirement is not ultra vires but is
[2025] 4 S.C.R. 483
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
in consonance with the broader regulatory framework governing open
access transactions. The power system operates on a structured
scheduling mechanism, and unregulated short-term access without
prior notice could lead to disruptions, frequency imbalances, and
operational inefficiencies. The Act of 2003 does not provide an
absolute right to open access but subjects it to conditions necessary
for the reliability and efficiency of power distribution.
57. The requirement of prior notice is a reasonable procedural safeguard
that aligns with the objectives of the Act of 2003, particularly those
laid out in Section 42, which envisages a structured approach
to open access. The 24-hour notice period ensures that both
transmission and distribution licensees, as well as load despatch
centres, have adequate time to adjust their schedules and prevent
system disturbances. Moreover, it prevents misuse by entities that
may attempt to take advantage of real-time price fluctuations, thereby
engaging in speculative trading rather than genuine demand-based
procurement. Further, the option of purchasing power from the real-
time market and day-ahead market in need of urgent procurement is
always available, and is not prevented by the impugned regulations.
58. Furthermore, the regulation does not create an insurmountable barrier
to open access but rather seeks to bring order and predictability
to its implementation. The requirement is uniformly applicable
to all consumers, ensuring that no undue advantage is given to
any particular category. Considering the technical and regulatory
imperatives involved, the 24-hour advance notice condition under
Regulation 26(7) cannot be considered ultra vires, as it falls within
the regulatory domain of the State Commission to establish fair,
transparent, and non-disruptive mechanisms for open access.
IV. Whether the Regulation 21 is arbitrary and discriminatory,
thereby discouraging captive power generation by creating
unreasonable distinction between captive generators and
state distribution companies?
59. The appellants’ argument that the regulations unfairly burden
CPPs is misplaced. The impugned regulations apply uniformly to
all power generators availing open access, whether captive or non-
captive. Section 9 of the Act of 2003 recognizes the rights of captive
generators but does not exempt them from compliance with open
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access regulations framed under Section 42 of the Act of 2003. The
regulatory measures—such as scheduling, penalties for deviations,
and drawal limits—are imposed in furtherance of the larger goal of
grid discipline and market stability. There is no evidence to suggest
that captive generators are being singled out or subjected to harsher
conditions compared to other generators.
60. Regulation 21, which governs aspects of scheduling, penalties, and
compliance for captive power generators, has been challenged on the
ground that it creates an unreasonable distinction between captive
generators and state DISCOMs, allegedly discouraging captive
generation. However, the respondents argue that the regulation is
neither arbitrary nor discriminatory but rather a necessary framework
to ensure that all power generators operate under fair and transparent
rules. The Act of 2003, through Sections 9 and 42, recognizes the rights
of captive power generators while also subjecting them to regulatory
oversight to prevent system inefficiencies and inequitable advantages.
61. The distinction between captive power generators and state DISCOMs
is not arbitrary but arises from the structural differences in their roles
and obligations. While captive generators primarily generate electricity
for self-consumption, distribution companies serve a wider consumer
base, requiring them to adhere to broader regulatory commitments,
including universal supply obligations. As such, differential treatment
based on the nature of their functions is legally justified and does
not amount to unfair discrimination. Moreover, Regulation 21 does
not impose undue restrictions on captive generators but ensures that
their operations align with grid discipline, preventing any adverse
impact on the larger power ecosystem.
62. Additionally, the principle of non-discrimination under the Act of 2003
does not mandate identical treatment for all entities but rather requires
a rational basis for any differentiation. In this case, the regulatory
conditions imposed on captive generators are aimed at ensuring a
level playing field and preventing misuse of open access provisions.
The regulatory framework ensures that captive generators contribute
fairly to system stability without imposing additional burdens on
distribution licensees and other grid participants. Thus, Regulation
21 is neither arbitrary nor discriminatory but rather a necessary and
proportionate measure to balance the interests of various stakeholders
in the electricity sector.
[2025] 4 S.C.R. 485
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
V. Whether the appellants’ right of open access is foreclosed
by the Regulations of 2016?
63. The appellants argue that the Regulations of 2016 impose
unreasonable restrictions on captive power generators, effectively
foreclosing their right to open access as guaranteed under Section
9 of the Act of 2003. However, the respondents contend that the
Regulations of 2016 do not foreclose open access but rather
prescribe conditions necessary for its fair and efficient implementation.
Section 42 of the Act provides for non-discriminatory open access
but also subjects it to regulations framed by the State Commission
to ensure grid security, operational discipline, and non-disruptive
power transactions. The restrictions imposed by the Regulations of
2016 are thus regulatory safeguards rather than prohibitive barriers.
64. A careful analysis of the Regulations of 2016 indicates that they
primarily aim at maintaining the reliability of the electricity grid,
ensuring fair pricing, and preventing speculative misuse of open
access provisions. The requirement of advance notice for short-term
open access, penalties for deviations from contracted demand, and
specific conditions for captive power generators are all designed
to create a structured and predictable electricity market. These
provisions do not prevent eligible consumers from availing open
access but instead ensure that they do so within a framework that
safeguards the interests of all stakeholders, including distribution
licensees and other consumers. Moreover, Section 181 of the Act of
2003 empowers State Commissions to frame regulations necessary
for implementing statutory provisions, thereby validating the regulatory
measures introduced by RERC.
65. Furthermore, the Act of 2003, envisages a balance between the
rights of open access consumers and the operational concerns of
the power sector. The Regulations of 2016, while imposing certain
conditions, do not outright deny open access but ensure that its
implementation is equitable and does not jeopardize grid discipline.
Open access remains available to consumers who comply with
regulatory prerequisites, including scheduling obligations and
financial commitments. Thus, the appellants’ assertion that their
right to open access is foreclosed is misplaced. The Regulations
of 2016 are consistent with the legislative intent of the Act of 2003,
ensuring that open access is exercised in a manner that does not
486 [2025] 4 S.C.R.
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compromise system stability, fairness, or economic viability. Therefore,
the regulatory framework does not foreclose open access but rather
operationalizes it within reasonable constraints essential for sustaining
the electricity sector.
CONCLUSION
66. The statutory scheme under the Act of 2003 mandates that regulations
framed by State Commissions must serve the larger public interest.
The respondents have successfully established that the impugned
regulations serve this purpose by ensuring equitable treatment of all
market participants while safeguarding the integrity of the power grid.
67. The RERC derives its authority from the Act of 2003, which vests in
it the power to frame regulations governing open access, scheduling,
and penalties. Section 86(1)(c) of the Act of 2003 specifically
empowers State Commissions to facilitate intra-state transmission
and wheeling of electricity. Furthermore, Section 181 empowers the
Commission to make regulations consistent with the Act of 2003
and its objectives. The impugned regulations have been framed in
exercise of these statutory powers. The requirement for scheduling,
imposition of penalties, and limits on drawal are not arbitrary but are
measures falling within the regulatory ambit of the Commission to
ensure grid stability and fair competition. The Act of 2003 envisions
a structured and fair mechanism for open access while ensuring that
market participants do not engage in practices detrimental to the
larger consumer base. Moreover, under Section 42 of the Act of 2003,
the State Commission has the mandate to regulate open access in
distribution and specify the charges and conditions applicable. The
respondents have demonstrated that these conditions are necessary
for maintaining discipline in power scheduling and ensuring that
open access consumers do not gain an unfair advantage over other
consumers by evading scheduling norms or penalties.
68. The Jodhpur Bench in common order dated 29.08.2016, which has
been challenged before us in Civil Appeals No. 7965 of 2019 and
7966 of 2019, has rightly upheld the validity of the Regulations of
2016 holding that any inconvenience caused or even some hardship
faced by the captive power generators shall not make the regulations
illegal. The High Court also rightly pointed out that the appellants have
failed to establish that the impugned regulations are in contravention
[2025] 4 S.C.R. 487
Ramayana Ispat Pvt. Ltd. and Anr. v. State of Rajasthan & Ors.
of their rights protected under Part-III or any other provision of the
Constitution of India or that the regulations have been enacted without
having the competence to do so or they are manifestly arbitrary or
unreasonable. It has been rightly held by the High Court that the
Regulations of 2016 are in consonance with the objects of the Act of
2003 and have been framed as per the competence available under
Section 181 read with Section 42 of the Act of 2003.
69. The Jaipur Bench in its order dated 06.09.2016, which has been
challenged before us in Civil Appeal No. 7964 of 2019, has rightly
held that the issues before it, were squarely covered by the order
of Jodhpur Bench.
70. In light of the above discussion, the appeals are dismissed, and the
orders of the High Court are upheld.
Result of the case: Appeals dismissed.
†
Headnotes prepared by: Ankit Gyan
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