New Delhi | August 5, 2025
In a significant ruling reinforcing the regulatory framework of India’s electricity sector, the Supreme Court has dismissed appeals filed by Gujarat Urja Vikas Nigam Ltd. (GUVNL), holding that tariffs in power purchase arrangements are not subject to private negotiation but must be determined strictly in accordance with the law.
The verdict settles a long-running dispute between GUVNL and several renewable energy producers regarding the applicable tariff rate under Power Purchase Agreements (PPAs). The apex court emphasized that tariff fixation is a statutory function of the State Electricity Regulatory Commission, and discoms (distribution companies) cannot sidestep this mandate by invoking the terms of a commercial agreement.
The core issue revolved around whether GUVNL could compel wind energy developers to accept a uniform tariff of ₹3.56 per unit set for those who had availed accelerated depreciation (AD) under tax lawsev en if they had not opted for such benefits.
The developers had earlier approached the Gujarat Electricity Regulatory Commission (GERC) seeking individual tariff determination. The Commission ruled in their favour, recognizing that non-AD beneficiaries were entitled to a higher tariff. GUVNL challenged the decision before the Appellate Tribunal for Electricity (APTEL), which upheld the GERC’s orders.
Unwilling to yield, GUVNL escalated the matter to the Supreme Court, arguing that once the PPA was signed, its terms were binding and left no room for tariff variation.
A bench of Justice Sanjay Kumar and Justice Satish Chandra Sharma categorically rejected GUVNL’s stance, stating:
“Electricity tariff is not a matter of free bargain in a commercial sense. It is governed by statute and determined by an expert regulatory body.”
The Court further criticized GUVNL for acting contrary to public utility norms, remarking that a state-owned discom cannot behave like a private merchant when its mandate is to serve the broader public interest under regulatory supervision.
In sharp words, the Court stated that the role of the Commission under the Electricity Act, 2003, cannot be undermined by corporate convenience or internal contractual terms. It concluded that any agreement on tariff that is not aligned with statutory procedures is unenforceable in law.
• Case Title: Gujarat Urja Vikas Nigam Ltd. v. Green Infra Wind Power Projects & Ors.
