The case of Jaipur Vidyut Vitran Nigam Ltd. & Ors. vs. MB Power (Madhya Pradesh) Limited & Ors. revolved around a dispute concerning the procurement and tariff rates for power purchase agreements (PPAs). The Supreme Court of India overturned a decision by the Rajasthan High Court that had directed a state entity to enter into a power purchase agreement. This case highlighted the regulatory powers of the State Electricity Regulatory Commission in regulating electricity procurement and emphasized the importance of aligning tariffs with market prices to protect consumer interests.
Key points from the case include:
- Background and Proceedings: Rajasthan Rajya Vidyut Prasaran Nigam Limited (RVPN) sought approval from the Rajasthan Electricity Regulatory Commission for procuring 1000 MW of power through competitive bidding. Agreements were made with the lowest bidders for 1000 MW, but the Government of Rajasthan later approved only 500 MW. This led to legal challenges from dissatisfied bidders.
- Legal Battles: Dissatisfied bidders appealed to the Appellate Tribunal for Electricity (APTEL), which initially ruled in favor of increasing the quantum back to 1000 MW. However, the Supreme Court emphasized that the original quantum offered in the bidding process should be considered, and any increase through negotiation was not permissible.
- Market Price Alignment: The Supreme Court also dealt with the issue of whether tariffs offered by L-4 and L-5 bidders were aligned with market prices, eventually affirming the State Commission’s authority to reject bids that were not in line with market realities to protect consumer interests.
- Supreme Court’s Decision: The Supreme Court criticized the Rajasthan High Court’s intervention, stating it was not justified and highlighted the State Commission’s authority to regulate electricity procurement processes and evaluate bids for alignment with market prices. The apex court’s ruling underscored the importance of transparency, market-aligned tariff adoption, and regulatory powers in electricity procurement.
This case serves as a significant precedent, emphasizing the need for transparency in the bidding process and the regulatory authority’s role in protecting consumer interests by ensuring tariffs are aligned with market prices.