Judicial Jolt: Supreme Court Overrules JSW Energy in Free Power Dispute

Image Source: The Economic Times

The Supreme Court, in a landmark judgment, has set aside a Himachal Pradesh High Court order that had limited JSW Hydro Energy's obligation to supply free power to 13 percent. The apex court has reinstated the original contractual agreement, requiring JSW to supply 18 percent of power produced free of cost to the Himachal Pradesh government.

Legal Turnaround: Contract Takes Precedence Over Regulation The dispute was over JSW Hydro's contract request to align its obligations with the Central Electricity Regulatory Commission's (CERC) 2019 tariff regulations limiting free power to 13 percent. The Supreme Court, however, explained:

CERC regulations cannot supersede contractual commitments entered into under implementation agreements of hydropower

The obligation to supply 18 percent free power is royalty, and not tariff in nature

The High Court overstepped its jurisdiction by enforcing regulatory provisions meant for CERC

Operational Impact: Strategic and Financial Consequences JSW Hydro, a unit of JSW Energy, has two hydroelectric power facilities with total capacity of 1,391 MW in Himachal Pradesh. The ruling involves:

Renewable supply of 18 percent free power till 2051

Approximate incremental annual cost of ₹150 crore to JSW Energy

Strengthened precedent for state governments enforcing royalty-based power arrangements

Regulatory Clarity: Sectoral Discipline Ensured The ruling supports the precedence of expert regulatory forums like CERC and APTEL in tariff issues. It also deters forum shopping and ensures the sanctity of long-term implementation pacts.

Sources: CNBC-TV18, Bar & Bench, ThePrint, Rediff Money, Devdiscourse