Supreme Court rules that electricity generated from a gas turbine in open cycle mode and continuously supplied qualifies as "firm power" entitled to fixed charges, not "infirm power" limited to variable charges.
If a power generating company supplies electricity continuously from a gas turbine unit since October 2005, but the combined cycle plant (with steam turbine) only becomes operational in July 2006, is the power supplied considered "infirm power" (eligible only for variable charges) or "firm power" (eligible for fixed charges)?
The power is "firm power" and qualifies for fixed charges from October 2005.
The Supreme Court has ruled that when a gas turbine unit is synchronized with the grid and supplies electricity continuously, it has achieved Commercial Operation Date (COD) as per Electricity Act 2003 regulations. The power generated qualifies as "firm power" entitled to fixed charges, regardless of when the combined cycle plant becomes operational.
Original PPA Signed between Tamil Nadu Electricity Board and DLF Power for diesel engine based generation
Amended PPA Executed changing technology to combined cycle gas turbine with tariff of Rs. 2.2798 per unit
Gas Turbine Synchronized with grid and began continuous power supply at 30 MW under open cycle operation
Combined Cycle Operational with both gas turbine and steam turbine working together
APTEL Judgment upheld TNERC decision that power supplied during relevant period was firm power
Supreme Court Final Ruling confirmed entitlement to fixed charges for continuous power supply from gas turbine
| Legal Principle | What It Means | Application in This Case |
|---|---|---|
| Commercial Operation Date (COD) | Date unit achieves synchronization and can deliver continuous power | 29.10.2005 was COD for gas turbine unit, not 01.07.2006 for combined cycle |
| Firm Power vs Infirm Power | Firm power qualifies for fixed charges, infirm only for variable charges | Continuous supply from 29.10.2005 was firm power entitled to fixed charges |
| PPA Alignment Requirement | Power Purchase Agreements must align with Electricity Act regulations | Unapproved PPA not binding, regulations prevail over contradictory PPA terms |
| Section 61(d) Electricity Act | Recovery of cost of electricity in reasonable manner must be ensured | Denying fixed charges for continuous supply violates reasonable cost recovery |
The date declared by generator after demonstrating maximum continuous rating through successful trial run after notice to beneficiaries. For generating station, COD of last unit.
Electricity supplied on continuous basis after achieving COD. Entitles generator to both fixed charges (for capacity) and variable charges (for energy).
Electricity produced prior to COD of unit. Generator only entitled to variable charges covering fuel cost, not fixed charges.
Contract between electricity generator and purchaser detailing terms of power sale including tariff, payment terms, and operational conditions.
Open cycle: Gas turbine alone generates power. Combined cycle: Uses waste heat from gas turbine to run steam turbine for additional power generation.
"The mandate under Section 61(d) of the 2003 Act is that in the determination of tariff recovery of the cost of electricity in a reasonable manner is to be ensured. 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."
This judgment establishes that technical compliance with regulations prevails over contractual interpretations in power supply agreements. It protects power generators from arbitrary classification of their output and ensures fair compensation for continuous electricity supply, promoting investment in power infrastructure.
This content is for informational purposes only and does not constitute legal advice. Consult a qualified legal professional for specific legal guidance. The information provided is based on judicial interpretation and may be subject to changes in law.
Making Supreme Court judgments accessible and actionable for every Indian citizen navigating legal challenges.
This analysis decodes a complex electricity regulation dispute to help power generators and distributors understand their rights and obligations under the Electricity Act 2003 framework.