Appellate Tribunal Overturns JSERC’s RPO Exemption, Reinforces Strict Compliance With Renewable Energy Regulations

The Appellate Tribunal for Electricity recently delivered a judgment in Appeal No. 382 of 2017, which was filed by the Green Energy Association against the Jharkhand State Electricity Regulatory Commission (JSERC) and Tata Steel Limited (TSL). The appeal challenged an order issued by JSERC on February 28, 2017, in Case No. 09 of 2015, which had exempted TSL from its Renewable Purchase Obligation (RPO) for the financial years 2011-12, 2012-13, and 2013-14. The tribunal ruled in favor of the appellant and set aside JSERC’s order.

Green Energy Association, an organization representing renewable energy companies, argued that the exemption granted to Tata Steel violated the Jharkhand RPO Regulations, 2010. These regulations mandate that all obligated entities, including captive power consumers, must meet their renewable energy purchase targets or pay a penalty. Tata Steel had sought an exemption because its captive cogeneration facilities had already met the RPO requirement. However, the appellant contended that co-generation from fossil fuel sources could not be considered a substitute for renewable energy compliance.

The tribunal noted that JSERC’s decision relied on previous judgments and precedents that were no longer valid. Specifically, the tribunal highlighted that a full bench decision in Lloyd Metal and Energy Limited vs. MERC (2013) had overturned earlier rulings that allowed non-renewable cogeneration to be counted towards RPO compliance. The tribunal reiterated that Section 86(1)(e) of the Electricity Act, 2003, was designed to promote electricity generation from renewable sources and that co-generation from fossil fuel-based plants did not qualify.

JSERC’s exemption to Tata Steel was also challenged on procedural grounds. The tribunal observed that Tata Steel had not demonstrated any difficulty in procuring Renewable Energy Certificates (RECs), which have been available in the market since June 2012. Under Regulation 10 of the RPO Regulations, if an entity fails to meet its RPO obligation, it must deposit a determined amount into a separate fund to facilitate REC purchases. Tata Steel had not fulfilled this requirement, and JSERC’s decision to waive the obligation was found to be contrary to the law.

Tata Steel defended its position by arguing that JSERC had granted similar exemptions to other entities, such as SAIL’s Bokaro Steel Plant. However, the tribunal dismissed this argument, stating that any prior decisions that were inconsistent with legal provisions could not be used as justification. Additionally, the tribunal rejected Tata Steel’s attempt to challenge the maintainability of the appeal, affirming that the Green Energy Association had a legitimate interest in the case.

In its final ruling, the tribunal directed JSERC to reassess Tata Steel’s non-compliance and determine the penalty amount within one month. Tata Steel was ordered to deposit the required amount within a month thereafter, which would then be used to purchase RECs on its behalf. The tribunal made it clear that compliance with RPO obligations could not be offset by fossil fuel-based cogeneration.

This judgment reinforces the legal position that RPO compliance must be fulfilled strictly through renewable energy sources. It also underscores the importance of regulatory consistency and adherence to statutory obligations, ensuring that entities obligated under RPO regulations cannot claim exemptions based on outdated or overturned legal interpretations.