New Delhi — The Supreme Court order of 13 May in the case between the Hindustan Zinc vs Rajasthan Electricity Regulatory Commission on the applicability of Renewable Purchase Obligation (RPO) regulations has ruled that RPO on captive consumer is justified and interpreted it in the context of Article 51A (g) of the Constitution that cast a fundamental duty on the citizen to protect and improve the natural environment, and the mandate of Article 21 that guarantee right to live with healthy life.

It means that owning a captive power plant does not absolve a company of its obligation to purchase part of its power consumption from green sources, such as wind and solar. The judgement implies that the various companies who have not been buying green power by taking shelter under a legal ambivalence, now face enforcement of their obligations.

The Section 86 (1) (e) of the Electricity Act (EA) 2003 provides for Renewable Purchase Obligation (RPO) on consumption of energy and the RPOs are determined by respective State Electricity Regulatory Commissions. The applicability of RPOs is on the Distribution Companies (Discoms) Captive Power Plants (CPP) and also on Open Access (OA) consumers.

In August 2012, the Rajasthan High Court had dismissed an appeal by Hindustan Zinc Ltd., Ambuja Cements Ltd, Grasim Industries Ltd and 14 other companies that challenged RPO regulations enacted by the Rajasthan Electricity Regulatory Commission (RERC) for put RPOs on Captive Power Plants. The key Captive Power Plants and Open Access users had contested that RERC did not have the authority to pass the order of RPO and impose surcharge (penalty) as CPP and OA were completely de-licensed activities under the Electricity Act 2003.

Further that EA 2003 only allows RPO on the ‘total consumption in the area of the distribution licensee’ and therefore intends to apply RPO on distribution licensees only. The Hindustan Zinc had appealed in the Supreme Court against the High Court.

The apex court order is a positive development and will help in enhancing RPO compliance and further contribute to renewable energy growth in the country.

The Supreme Court’s order brings clarity to the point as to whether or not companies that have captive power plants are covered by the law that mandates green power purchase.

Some other companies had impleaded themselves in the case, filing counter affidavit with the Supreme Court — Ultratech Cements, Mangalam Cements, Binani Cements, Trinetra Cements, Shree Cement, Rajasthan Textile Mills Association, DCM Shriram Consolidated Ltd, JK Tyre Industries and Lucid Coloids Ltd.

“All other interlocutory applications for impleadment/intervention/stay/directions are disposed off,” the order says.

The Supreme Court of India
The Supreme Court of India