Electricity Act – Local Authorities Competent to Seek Tariff Adoption for Waste-to-Energy Projects under Section 63
Case Name: Municipal Corporation of Delhi v. Gagan Narang & Others
Citation: Civil Appeal Nos. 7463–7464 of 2023; 2025 INSC 2
Date of Judgment: 2 January 2025
Bench: Justice B.R. Gavai and Justice K.V. Viswanathan (DB)
Held: The Supreme Court held that a local authority such as the Municipal Corporation of Delhi (MCD), entrusted under the Solid Waste Management Rules, 2016 with the statutory duty to establish waste-to-energy projects, is competent to file an application under Section 63 of the Electricity Act, 2003 for adoption of tariff. It ruled that the Appellate Tribunal for Electricity (APTEL) erred in restricting the scope of Section 63 only to distribution licensees or generating companies. The Court emphasized that Section 63 must be read harmoniously with Section 86(1)(b), empowering State Commissions to regulate procurement of electricity, and that such an interpretation furthers public interest and environmental obligations.
Summary: The MCD initiated a tariff-based bidding process for a 28 MW waste-to-energy project at Narela Bawana, Delhi, involving 3000 tonnes per day of municipal solid waste. The bidding was conducted transparently, and JITF Urban Infrastructure Ltd. emerged as the lowest bidder with a tariff of ₹7.38 per KWh. The Delhi Electricity Regulatory Commission (DERC) approved the bidding process and adopted the tariff on 6 and 7 March 2023, directing the Distribution Licensees to finalize the PPA. Appeals were filed before APTEL, which by judgment dated 31 August 2023 set aside DERC’s orders, holding that only Discoms or generating companies could invoke Section 63.
Before the Supreme Court, MCD argued that it acted in discharge of its statutory duties under Rule 15 of the SWM Rules, 2016 and that Section 63 does not restrict applicants to Discoms or generators. The respondents contended that APTEL’s view was correct and that tariff adoption fell within the exclusive domain of Discoms. The Court analyzed Section 63 in light of Section 86(1)(b), Rule 6.4 of the National Tariff Policy, 2016, and Rule 15 of the SWM Rules. It concluded that the legislature intended no such restriction as imposed by APTEL, and that reading Section 63 in isolation would undermine the broad regulatory powers of State Commissions. The Court also noted that MCD’s role in setting up WTE projects was mandated under environmental law, and that its participation in tariff proceedings was consistent with statutory obligations.
Decision: The Supreme Court allowed the appeals, quashed APTEL’s judgment dated 31 August 2023, and restored the DERC’s orders dated 6 and 7 March 2023 approving the bidding process and adopting the tariff of ₹7.38 per KWh. It held that MCD’s application under Section 63 of the Electricity Act was valid, and reaffirmed the State Commission’s wide powers to regulate electricity procurement in furtherance of public interest.