Introduction:

The Himachal Pradesh High Court has delivered a significant judgment clarifying the jurisdictional boundaries between state and central agencies regarding the Renewable Energy Certificate (REC) mechanism. The Court held that the Directorate of Energy, the designated state agency, does not possess the authority to reject an application for accreditation under the REC scheme, as such a decision falls within the exclusive domain of the Central Agency designated by the Central Electricity Regulatory Commission (CERC). Justice Ajay Mohan Goel made this observation in the case of M/s Greenko Astha Projects (India) Hydro Power Pvt. Limited v/s Directorate of Energy, State Agency, Himachal Pradesh (CWP No. 5752 of 2020). The petitioner, M/s Greenko Astha Projects (India) Hydro Power Pvt. Ltd. (represented by Senior Advocate Mr. Rajnish Maniktala and Mr. Dinkar Bhaskar), operates a hydroelectric project in the Chamba district that became commercially operative in 2004. The dispute arose when the petitioner’s application for REC accreditation, filed after the CERC introduced the regulatory framework in 2010, was rejected by the state agency on the ground of existing power purchase agreements (PPAs). The High Court’s ruling stressed that the state agency exceeded its statutory mandate by adjudicating eligibility, a function reserved solely for the central regulator.

Arguments on behalf of the Petitioner (M/s Greenko Astha Projects (India) Hydro Power Pvt. Limited):

The petitioner, the hydro power producer, challenged the rejection of its accreditation application primarily on jurisdictional grounds.

• Lack of Jurisdiction by State Agency: The core contention was that the state authority, the Directorate of Energy, did not have the authority to determine the eligibility of the generating company or to issue Renewable Energy Certificates (RECs). The petitioner argued that this power lies exclusively with the Central Agency as mandated by the relevant CERC regulations.
• Procedural Role of State Agency: The petitioner submitted that, according to Regulations 2, 3, and 5 of the 2010 CERC Regulations (specifically, the terms and conditions for the issuance of a renewable energy certificate for Renewable Energy Generation Regulations, 2010), the state agency’s role was strictly limited to procedural verification of applications and forwarding them to the central body, not adjudicating eligibility.
• Invalid Grounds for Rejection: The rejection based on the existing PPA and Clause 5(1)(c) of the 2010 Regulations was argued to be an overreach of jurisdiction, as only the Central Agency is competent to interpret and apply such eligibility criteria.

Arguments on behalf of the Respondent (Directorate of Energy, State Agency, Himachal Pradesh):

The Respondent, the Directorate of Energy (represented by Additional Advocate General Mr. Pushpinder Jaswal and Mr. Rajat Chauhan), defended its rejection order, claiming it was based on the CERC regulations.

• Ineligibility under CERC Regulations: The Directorate of Energy rejected the application on the grounds that the petitioner had an existing PPA, which, under the interpretation of Clause 5(1)(c) of the 2010 Regulations, rendered the project ineligible for the REC mechanism. The REC scheme is generally intended to benefit renewable generators who have not committed their power through traditional PPAs.
• Implied Power: While not explicitly detailed, the Respondent’s action implicitly suggested a view that as the “State Agency” designated to receive and process applications, it had an inherent power to screen out applications that were prima facie ineligible under the governing central regulations, thus preventing unnecessary submission to the Central Agency.

Court’s Judgement and Rationale:

Justice Ajay Mohan Goel’s judgment focused on the clear demarcation of powers established by the CERC regulations, setting aside the rejection order.

1. Exclusive Jurisdiction of the Central Agency:

The Court delivered a definitive finding on jurisdiction, holding that the State Agency exceeded its jurisdiction in rejecting the accreditation request. The judgment explicitly stated that the responsibility for determining eligibility rests solely with the Central Agency.

The Court remarked:

“Whether or not a generating company engaged in generation of electricity from renewable energy sources is eligible to apply for registration… has to be decided by the Central Agency and not by the State Agency.”

The Court reinforced this by citing the definition of a “Certificate” within the regulations:

“ ‘Certificate’ means the renewable energy certificate issued by the Central Agency in accordance with the procedures laid down by it and under the provisions specified in said Regulations.”

This clearly indicated that the power to decide eligibility, which is a prerequisite for issuing the certificate, is a function of the Central Agency alone.

2. Misapplication of CERC Regulation 5(1):

The Court found that the Directorate of Energy had wrongly relied on Regulation 5(1) of the 2010 Regulations to justify its rejection. The bench clarified that this particular provision outlines the Central Agency’s role in determining eligibility and issuing RECs, not the State Agency’s role. The State Agency’s function is strictly procedural, involving verification and forwarding, as contended by the petitioner. By interpreting and applying the ineligibility clause, the State Agency usurped the adjudicatory function reserved for the Central Agency.

3. Final Direction:

Based on the finding that the rejection order was passed without jurisdiction, the High Court set aside the order of the Directorate of Energy. The Court then directed the Directorate of Energy to reconsider the application of the petitioner in accordance with the accreditation procedure, effectively instructing the State Agency to perform its procedural duty by processing and forwarding the application to the Central Agency for the substantive decision on eligibility.