SC: Power regulators cannot probe franchisees under Section 128 of Electricity Act

The Supreme Court has held that electricity regulators cannot directly investigate power distribution franchisees under Section 128 of the Electricity Act, 2003. It clarified that such franchisees fall outside the direct jurisdiction of regulatory commissions and can only be overseen through the licensed distribution companies that appoint them.

A bench comprising Justices J B Pardiwala and R Mahadevan allowed an appeal filed by Torrent Power Limited. The company had challenged a July 2016 order of the Appellate Tribunal for Electricity (APTEL), which had upheld an investigation ordered by the Uttar Pradesh Electricity Regulatory Commission (UPERC) into Torrent’s operations in Agra as a distribution franchisee.

Torrent had been appointed as a franchisee under agreements signed in 2009 and 2010 with Uttar Pradesh Power Corporation Limited (UPPCL) and Dakshinanchal Vidyut Vitran Nigam Limited (DVVNL) for urban distribution in Agra.

The Supreme Court noted that Section 128 of the Electricity Act applies only to licensees and generating companies, not franchisees. It also observed that UPERC acted beyond its legal authority in ordering the probe, and APTEL failed to identify this overreach.

The court emphasised that regulatory commissions, being statutory bodies, cannot assume powers not explicitly granted by the Electricity Act. It further noted that the petition seeking the investigation lacked supporting evidence of any tariff violations by Torrent Power, and that an expert committee report from January 2017 did not present findings on such violations.

The bench held that the conditions required to justify an investigation under Section 128 were not met, and therefore, the UPERC order and the APTEL decision could not be sustained. The court also confirmed that electricity regulators are not empowered to entertain matters solely on the grounds of public interest.