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Section 63: Determination of tariff by bidding process

Electricity Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Competent Court / Tribunal
Act 2003
Section 62 All 185 Sections of Electricity Act Section 64

Legal Commentary & Landmark Judgments: Section 63

Section 63 of the Act mandates that the Appropriate Commission shall adopt the tariff if such tariff has been determined through a transparent process of bidding in accordance with guidelines issued by the Central Government.

  • Mandatory Adoption of Competitively Bid Tariffs: Obligates the Commission to adopt competitively bid tariffs without second-guessing capital costs, provided the bidding process adhered to Central Government standard bidding guidelines.
  • Limited Regulatory Oversight to Process Integrity: Restricts the Commission's inquiry to verifying transparency, non-discrimination, and procedural compliance of the reverse auction bidding process.
  • Inapplicability of Cost-Plus Section 62 Norms: Insulates competitive bidding tariffs from traditional cost-plus auditing, anchoring tariff sanctity to the terms of the competitively bid Power Purchase Agreement (PPA).
Key Landmark Precedents:
  • Energy Watchdog v. CERC (2017) 14 SCC 80: Landmark ruling: Supreme Court held that in Section 63 competitively bid contracts, regulatory commissions cannot exercise general regulatory powers to grant compensatory tariffs for changes in foreign fuel prices unless expressly covered under the PPA force majeure or change-in-law clauses.
  • Gujarat Urja Vikas Nigam Ltd. v. EMCO Ltd. (2016) 11 SCC 182: Supreme Court affirmed that once a tariff is adopted under Section 63, the parties are strictly bound by the contract terms and cannot seek equitable upward revisions.
  • Adani Power Ltd. v. GERC (2019) 19 SCC 9: Affirmed that change-in-law relief in Section 63 PPAs is strictly restorative, designed to put the affected party in the same economic position as if the change in law had not occurred.
Courtroom Practice & Strategic Litigation Guidance:

In Section 63 tariff adoption petitions, place the bid evaluation committee's certified report on record showing adherence to Ministry of Power standard bidding guidelines; this compels the Commission to adopt the tariff without cost-breakup inquiries.

Section 62 All 185 Sections of Electricity Act Section 64