Supreme Court delivers setback for JSW Hydro Energy in Himachal power project dispute

In what comes as a setback for JSW Energy subsidiary JSW Hydro Energy, the Supreme Court (SC) has ruled against the company in a tussle with Himachal Pradesh government over the supply of 18% free power to the state. JSW Hydro Energy had claimed that, as per CERC Tariff Regulations, it was required to supply no more than 13% as free power.JSW Hydro Energy is a subsidiary of JSW Neo Energy, which in turn is a subsidiary of JSW Energy. JSW Hydro operates two power projects in Himachal Pradesh – Karcham Wangtoo Hydro Electric Project and Baspa II Hydro Electric Project. The two projects have a combined capacity of 1391 MW.

Himachal Pradesh had issued a notice to JSW Hydro asking it to begin supply of 18% of the power generated to the state free of cost from September 2023. JSW Hydro had challenged the Himachal Pradesh government’s notice before the Himachal Pradesh High Court.

JSW Hydro had cited a 2022 decision by the sector regulator, the Central Electricity Regulatory Commission (CERC). In the ruling, CERC had held that the maximum free energy supply to the home State must be taken as 13%, under the tariff regulations. JSW Hydro had further stated that any provision in the previously signed Power Supply Agreement (PSA) will be overridden to comply with the CERC tariff rules that prescribe a cap on free power supply at 13%The HC had ruled in favour of the JSW Hydro and directed the Himachal Pradesh government to comply with the CERC prescribed ceiling of 13%.

But, the SC has now overturned the decision of the Himachal Pradesh HC, finding that the CERC regulations do not prohibit Himachal Pradesh from seeking free power higher than 13%. The apex court further held that the PSA was not overridden by the CERC tariff regulations. This SC order now paves the way for Himachal Pradesh to seek higher power output for free, as per the 2023 notice.