Supreme Court Sides with Wind Energy Firms in Tariff Case Against GUVNL.


04-August-2025 Civil Appeals >> Civil & Consumer Law  

The Supreme Court of India has dismissed appeals filed by Gujarat Urja Vikas Nigam Limited (GUVNL), ruling in favor of four wind energy companies in a dispute over electricity tariffs. The case, Civil Appeal Nos. 14098-14101 of 2015, was decided on August 4, 2025, by The Honourable Mr. Justice Sanjay Kumar and The Honourable Mr. Justice Satish Chandra Sharma.

The core issue was whether the four respondent companies—Green Infra Corporate Wind Private Limited, Vaayu (India) Power Corporation Private Limited, Green Infra Wind Power Limited, and Tadas Wind Energy Private Limited—were entitled to approach the Gujarat Electricity Regulatory Commission (GERC) for a separate tariff determination. This was based on their decision not to claim accelerated depreciation benefits, as opposed to being bound by the tariff fixed in their Power Purchase Agreements (PPAs) with GUVNL.

 

 

Background of the Case:

In 2010, the GERC issued Order No. 1, which set a tariff for power procurement from wind energy projects. This order applied for a three-year control period and considered two scenarios for tariff calculation based on depreciation. The GERC determined a tariff of Rs. 3.56 per kWh for projects that availed accelerated depreciation under the Income-Tax Act, 1961. However, it also explicitly stated that projects not availing this benefit could submit petitions on a "case-to-case basis" for separate tariff determination.

The four respondent companies signed PPAs with GUVNL, which included a clause specifying the fixed rate of Rs. 3.56 per kWh, the tariff applicable to projects that claimed accelerated depreciation. Despite signing these agreements, the companies later petitioned the GERC to determine a project-specific tariff, asserting that they had not availed the accelerated depreciation benefit. GUVNL opposed this, arguing that the companies were bound by the signed PPAs and that GUVNL would not have entered into the agreements had the projects opted for a case-specific tariff.

Court's Reasoning and Judgment:

The Supreme Court rejected GUVNL's argument, emphasizing its role as a state instrumentality rather than a purely commercial entity. The court noted that GUVNL is bound to further state policy objectives, which include the promotion of electricity generation from renewable sources. The court also highlighted that under the Income-Tax Act of 1961, a power producer has the statutory right to choose between accelerated and normal depreciation at the time of filing their income tax return for the year they began power generation. This right, the court stated, could not be "truncated or cutshort" by GUVNL through a PPA executed before this choice was legally required.

The court found that GUVNL never secured written commitments from the companies that they would only avail accelerated depreciation. Therefore, GUVNL could not use its dominant position to bind the companies to an inapplicable tariff for the entire project life. The court concluded that since the four companies did not avail the accelerated depreciation benefit, the tariff meant for projects that did was "wholly inapplicable" to them. The court upheld the orders of both the GERC and the Appellate Tribunal for Electricity (APTEL), which had previously ruled in favor of the wind energy companies.

The appeals were dismissed, and an order from February 3, 2023, that had deferred proceedings before the GERC was vacated, allowing the commission to proceed with its final orders on tariff determination.


Section 61, ELECTRICITY ACT - 2003  

Section 62, ELECTRICITY ACT - 2003  

Section 86, ELECTRICITY ACT - 2003  

ELECTRICITY ACT, 2003  

Income Tax Act, 1961