Supreme Court held that TANGEDCO must pay fixed charges for electricity supplied before full commissioning. The Court ruled that power generated from a cycle gas turbine after achieving COD is firm power and cannot be treated as infirm.
New Delhi: The Supreme Court held that electricity supplied from a gas turbine operating in open cycle mode before the commissioning of the combined cycle cannot automatically be treated as infirm power if the unit had already achieved commercial operation under the applicable tariff regulations.
The Court ruled that Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) must pay fixed charges to Penna Electricity Limited for the power supplied during the relevant period.
The judgment was delivered by a Bench of Justices J.B. Pardiwala and K.V. Viswanathan .
The Supreme Court noted that the amended Power Purchase Agreement (PPA) dated 25 August 2004 was executed after the enforcement of the Electricity Act, 2003, but was never placed before the State Electricity Regulatory Commission for approval as required under Section 86(1)(b) of the Act.
The Court observed that the amended PPA involved changes in location, fuel, technology, and tariff, and therefore could not be treated as a mere continuation of the earlier 1998 agreement.
Approving the reasoning of the Appellate Tribunal for Electricity (APTEL), the Court reproduced its findings stating,
“The amended Power Purchase Agreement dated 25.8.2004 was virtually a new Power Purchase Agreement executed between the parties.”
Refusing to interfere with the impugned ruling, the judgment authored by Justice K.V. Viswanathan highlighted that the supplier could not be deprived of its legitimate dues after continuously supplying electricity.
The Court observed,
“The respondent, having supplied continuous power, cannot be denied the annual fixed charges for the relevant period, and if it were done so, they will permanently lose that amount, which will be unjust and contrary to law.”
The Court found a clear conflict between the PPA and the applicable tariff regulations.
Rejecting TANGEDCO’s argument, the Court held that power supplied during the relevant period was firm power
The Court recorded that Penna Electricity Limited had successfully synchronized the gas turbine with the grid on 29 October 2005, completed commissioning procedures, reached base load, and supplied power continuously at 30 MW.
The Court held,
“Applying the Regulations, we have no doubt in our mind that it is firm power and that for the said period, as rightly held by the fora below, the respondent was entitled to fixed charges.”
The Court further emphasised that denying fixed charges despite continuous supply would be unjust and contrary to law.
Referring to Section 61(d) of the Electricity Act, 2003, the Court underlined that tariff determination must ensure reasonable recovery of costs.
The Court observed,
“The respondent, having supplied continuous power, cannot be denied the annual fixed charges for the relevant period, and if it were done so, they will permanently lose that amount, which will be unjust and contrary to law.”
The argument that payment of fixed charges would burden consumers was rejected.
Since the amended Power Purchase Agreement had not been approved by the Tamil Nadu Electricity Regulatory Commission, the Supreme Court held that it could not prevail over the statutory tariff framework.
Interpreting the applicable regulations, the Court concluded that the gas turbine unit attained its Commercial Operation Date on 29 October 2005, when it was synchronized with the grid, and consequently, electricity supplied after that date could not be treated as “infirm” power.
Emphasising this conclusion, the Court observed,
“Applying the Regulations, we have no doubt in our mind that it is firm power and that for the said period, as rightly held by the fora below, the respondent was entitled to fixed charges.”
The Court further found no reason to disturb the concurrent findings of the regulatory authorities, stating,
“For all these reasons, we find no good ground to interfere with the impugned judgment. The judgment passed by the TNERC directing that fixed charges shall be payable for the relevant period as affirmed by the APTEL in the impugned judgment dated 10.07.2013 in Appeal No. 112 of 2012 calls for no interference and the said directions are affirmed.”
Accordingly, the appeal was dismissed.
Case Title: Tamil Nadu Generation and Distribution Corporation Ltd. v. M/s Penna Electricity Limited (2025 INSC 1439)
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