M/s Devi Energies Pvt. Ltd. vs Arunachal Pradesh State Electricity Regulatory Commission on 5 October 2026

J U D G M E N T

PER HON’BLE MR. VIRENDER BHAT, JUDICIAL MEMBER

1. The challenge in this appeal is to the order dated 20.12.2019 passed by the 1st respondent Arunachal Pradesh State Electricity Regulatory Commission (hereinafter referred to as “the Commission”) in petition no.TP- 07 of 2018 thereby approving the Aggregate Revenue Requirement (ARR) and transmission charges for 132kV transmission system of the appellant for

power evacuation from appellant’s 24MW Dikshi Small Hydro Electric Project for the Financial Year (FY) 2019-20, 2020-21 and 20212-22.

2. The appellant is a transmission licensee having been granted the license under Section 14 of the Electricity Act, 2003 by the Commission for carrying on the business of transmission of electrical energy through 132kV transmission line from Diksha sub-station to 132kV Tenga sub-station, S/C 132kV Tenga Switching Station to Nechipu LILO connection, D/C located in West Kameng District of Arunachal Pradesh.

3. A Memorandum of Agreement (MoA) dated 17.03.2011 was signed by the appellant with the Government of Arunachal Pradesh for implementation of the above transmission project on BOOT basis. The appellant received Letter of Comfort dated on 22.02.2016 from the Chief Engineer for transmission connectivity to connect to the existing 132kV line at an intermediate location close to transmission line alignment for the project. In order to connect to the Balipara-Khupi 132kV line the appellant had to undertake following transmission system, which is the subject matter of the instant appeal: - 132 kV Single Circuit Line 10.5 KM 132 kV Double Circuit Line 21.5 KM

Number of Bays at 132 kV Switching Substation Tenga 4 Nos.

4. The appellant got the estimated cost of the project evaluated by the Power Grid Corporation of India Limited (PGCIL) on 11.04.2017 on the basis of cost of transmission system at the price levels prevailing in December, 2016. Thereafter work contract was given by the appellant to M/s PK Thungon Builders Pvt. Ltd on 06.06.2016 for a part of the 132kV line for value of Rs.26.69 crores. Thereafter an agreement dated 01.07.2017 was executed between the appellant and M/s PK Thungon Builders Pvt. Ltd. for supply of balance material for the transmission line and Switching Station for an amount of Rs.23.63 crores.

5. The appellant was granted transmission license with respect to the said transmission system on 12.07.2018.

6. A Power Purchase Agreement (PPA) was signed between the appellant and the 2nd respondent i.e. the Department of Power, Government of Arunachal Pradesh on 16.10.2018 for sale of power from the power project of the appellant through the said transmission line with the following clauses relating to the transmission connectivity: - “4.0 EVACUATION OF POWER AND METERING:

4.1 The entire Power from Dikshi HEP shall be delivered at Interconnection Point and will be transmitted through Dikshi- Tenga-Nechipu 132 KV transmission line connected to existing Balipara- Khuppi 132 KV line near Nechipu (LILO Connection). The Generating Company shall be responsible for developing the evacuation system for the Project and shall subject to the provisions of the MoA signed between the Generating Company and the Government of Arunachal Pradesh.

4.2 The DoPAP shall pay the Transmission Charges as determined by APSERC to the Generating Company /Transmission Licensee for the Transmission System beyond the Interconnection Point upto LILO Connection till such time the ownership of such Transmission Lines/System remains with the Company/Transmission Licensee. Generating Company/Transmission Licensee”

7. Thereafter, the appellant filed the tariff petition bearing no.TP-07 of 2018 before the Commission seeking approval of ARR and transmission charges for the said transmission system for the FYs 2019-20, 2020-21, and

2021-22 as per Arunachal Pradesh State Electricity Regulatory Commission (Multi-Year Tariff Regulations) Regulations, 2018. The petition has been disposed of by the Commission vide impugned order dated 20.12.2019 thereby approving the capital cost of the transmission project as Rs.50.7 crores and the total IDC as Rs.9.05 crores.

8. Aggrieved by certain findings of the Commission in the impugned order, the instant appeal has been preferred by the appellant.

9. We have heard Ms. Swapna Seshadri, learned counsel for the appellant and Ms. Archana Maharaj, learned counsel for the respondent Commission. We have also perused the impugned order of the Commission and have gone through the written submissions filed by the learned counsels.

10. The learned counsel for the appellant submitted that the Commission has adopted a pick and choose method in the impugned order by restricting the cost of civil works of the project to Rs.50.70 crores as against the appellant’s claimed expenditure of Rs.63.58 crores. She further submitted that the Commission has erred in restricting the IDC to Rs.9.05 crores as against the appellant’s claim of Rs.11.36 crores, despite holding that the appellant is not liable to be penalized for time overrun.

11. The learned counsel pointed out that the Commission has restricted the cost of civil works by comparing the contract rates, rates as per the Detailed Project Report (DPR) of PGCIL and the actual cost incurred by the appellant, thereupon adopting the lower of the three, which is arbitrary and without any basis. She would argue that the Commission has failed to apply the principle of prudence check on the cost incurred towards civil works by the appellant and has simply taken different cost parameters for reference and adopted the lowest of them, which is absolutely contrary to the methodology envisaged under Regulation 4.3 of the APSERC (Multi Year Tariff) Regulations, 2018 and does not fall within the ambit of “prudence check” as envisaged under the regulatory framework. She submitted that the project cost as per the DPR of PGCIL was arrived at by considering the cost of transmission system with the price levels prevailing in December, 2016 and which would naturally have been on lower side in comparison to the price levels prevailing in the subsequent years. It is also her submission on the comparison of costs incurred by the appellant that the costs specified by PGCIL in its DPR is also arbitrary for the reason that PGCIL is a public sector enterprise engaged largely in the business of transmission, enjoys economies of large scale and volume across the country. She pointed out that the restrictions in the costs of civil works have also resulted in reduced

IDC despite the entire time overruns that have been condoned by the Commission.

12. Even though, the contentions/submissions advanced on behalf of the appellant were sought to be refuted by the learned counsel for the respondent Commission, yet, after advancing arguments for some time, the learned counsel, upon instructions, stated that the case may be remanded back to the Commission for reconsideration. In the written submissions filed on behalf of the Commission also, in Paragraph 27, in addition to the prayer for dismissal of the appeal, it has been prayed that any such order as this Tribunal deems fit and proper in the facts and circumstances of the case may be passed.

13. Having regard to the submissions of the appellant’s counsel, as noted hereinabove, and in view of such clear-cut statement on behalf of the Commission during the hearing of the appeal and considering the above noted prayer made in the written submissions, we find it appropriate to remand the matter back to the Commission for fresh consideration on the issues raised in this appeal by the appellant, as noted hereinabove.

14. Accordingly, we hereby, set aside the impugned order of the Commission to the extent assailed in this appeal and remand the matter back

to the Commission for fresh consideration on the issues noted hereinabove, after affording reasonable opportunity of hearing to the parties. The Commission shall endeavor to conclude such exercise within three months from today.

15. The appeal stands allowed, albeit to the extent mentioned hereinabove. All pending IAs, if any, also stand disposed of.

Pronounced in the open court on this the 05th day of October, 2026.

(Virender Bhat)

(Seema Gupta)

Judicial Member

Officiating Chairperson

REPORTABLE / NON-REPORTABLE

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