APTEL Upholds DERC Tariff Orders on Plant Availability, Remands Income Tax True-Up for IPGCL and PPCL to State Commission
APTEL dismissed BSES distribution companies' challenge to gas plant availability figures but remanded income tax recovery disputes to DERC for recomputation on a Return on Equity basis.
The Appellate Tribunal for Electricity, in a common judgment dated 29 May 2026, disposed of two appeals filed by BSES Rajdhani Power Limited and BSES Yamuna Power Limited against tariff orders passed by the Delhi Electricity Regulatory Commission on 29 September 2015. The DERC orders had dealt with the true-up for FY 2012–13 to FY 2014–15 and the Aggregate Revenue Requirement for FY 2015–16 for two Delhi generation companies — Indraprastha Power Generation Company Limited and Pragati Power Corporation Limited. The Tribunal, constituted by Officiating Chairperson Ms. Seema Gupta and Judicial Member Mr. Virender Bhat, upheld the DERC's approval of plant availability figures for both generators but remanded the income tax true-up question to the State Commission for fresh computation confined to Return on Equity.
The Dispute Before the Tribunal
BSES Rajdhani Power Limited and BSES Yamuna Power Limited are electricity distribution licensees operating in the South West and Central East circles of the National Capital Territory of Delhi respectively. They purchase power from IPGCL and PPCL, both generation companies registered under the Companies Act, 1956 and operating under Section 2(28) of the Electricity Act, 2003.
On 16 February 2015, IPGCL filed Petition No. 14 of 2015 and PPCL filed Petition No. 15 of 2015 before the DERC, seeking true-up of accounts for FY 2012–13 to FY 2014–15 and approval of tariff for FY 2015–16. A public hearing was held on 5 August 2015. The DERC issued its tariff orders on 29 September 2015. The BSES companies filed the present appeals on 13 January 2016.
Eight issues were originally raised across the two appeals. By the time of hearing, the appellants pressed only two categories: the correctness of the Plant Availability Factor approved for the gas-based stations, and the non-true-up of income tax recovered by IPGCL and PPCL from the distribution companies for the period FY 2006–07 to FY 2011–12.
Plant Availability Factor: What Each Side Argued
The DERC had approved a Plant Availability Factor of 84.22% for FY 2012–13 and 85.76% for FY 2013–14 for IPGCL's Gas Turbine Power Station, against a normative target of 80%. For PPCL, the approved figures were 90.50% and 92.62% for the same years, against a normative target of 85%. Projected availability for FY 2015–16 was approved at the respective normative levels as proposed by the generators.
The BSES companies contended that IPGCL and PPCL could not have legitimately declared such high availability because they lacked adequate gas supply even to meet normative levels. They pointed to an email dated 25 March 2014 in which PPCL sought beneficiary consent for swapping gas from GTPS and PPCL-I to PPCL-III, a letter dated 3 September 2015 from PPCL confirming that gas swapping had been permitted from February 2013 onwards, and minutes of a State Load Despatch Centre meeting dated 27 March 2015 directing diversion of gas from GTPS to PPCL-III.
IPGCL and PPCL responded that they had contracted sufficient quantities of gas from multiple sources — APM, PMT, non-APM, and R-LNG — to support the declared availability. They placed on record agreements establishing total contracted gas of 1.80 MMSCMD for GTPS and 2.25 MMSCMD for PPCL-I, both exceeding the normative requirements of 1.28 MMSCMD and 1.36 MMSCMD respectively.
How the Tribunal Reasoned on Availability
The Tribunal found that the appellants did not dispute the agreements and documents placed on record by IPGCL and PPCL. Given that contracted gas quantities exceeded normative requirements for both stations, the Tribunal held that the generators were in a position to declare availability above normative levels, and rejected the appellants' contention on this point.
On the communications relied upon by the BSES companies, the Tribunal found that they did not establish a shortage of fuel at the relevant stations. The SLDC minutes of 27 March 2015 pertained to closure of intra-state projects on grounds other than fuel shortage. The Tribunal observed that the same SLDC which participated in that meeting had separately confirmed the availability figures for the relevant period.
The Tribunal placed weight on the statutory role of the State Load Despatch Centre under Section 32(2) of the Electricity Act, 2003. It held that the SLDC's confirmation of availability is not a ministerial act but a substantive regulatory function involving scrutiny against technical parameters, transmission constraints, and grid security. The DERC had verified the PAF figures submitted by IPGCL and PPCL against SLDC data in both impugned orders and found them to match.
The Tribunal held that administrative communications cannot displace statutory confirmations issued by the SLDC, which is the designated authority for optimum scheduling and despatch. The appellants had produced no cogent material to show that the generators lacked adequate fuel. The DERC's reliance on SLDC certification was found consistent with the statutory scheme under Section 32 of the Electricity Act, 2003. The impugned orders were upheld on this issue.
Income Tax True-Up: The Regulatory Framework
The second issue concerned income tax recovered by IPGCL and PPCL from the BSES distribution companies for the period FY 2006–07 to FY 2011–12. The appellants argued that the DERC had not trued up income tax in the impugned orders, and that any income tax recovery should be limited to tax on Return on Equity, not actual tax paid.
There was no dispute between the parties on the applicable principle. Regulation 6.27 of the MYT Generation Tariff Regulations, 2007 and Regulation 6.37 of the MYT Generation Tariff Regulations, 2011 both provide that income tax liability recoverable from beneficiaries is limited to tax on the return on the equity component of capital employed. The DERC's own order dated 11 February 2015 in Petition No. 15/2013 had stated the same position.
The Tribunal also referred to its own judgment dated 21 July 2025 in Appeal Nos. 69–72 of 2018 (BRPL v. DERC), where it had directed that income tax be allowed on the basis of Return on Equity for distribution licensees under similar regulations for the same period.
IPGCL Income Tax: Remand With a Caveat on IPGCL's Counter-Claim
For IPGCL, the DERC had issued a letter dated 12 November 2015 approving additional income tax liability for FY 2007–08 to FY 2011–12 to be billed to beneficiaries, with amounts ranging from Rs. 2.79 crore to Rs. 11.58 crore per year. The appellants claimed IPGCL owed refunds of approximately Rs. 19.46 crore to BRPL and Rs. 12.71 crore to BYPL in respect of Rajghat Power Station, and Rs. 26.01 crore to BRPL and Rs. 16.97 crore to BYPL in respect of GTPS.
IPGCL countered that it had already refunded excess income tax through credit notes dated 10 February 2016 and 29 June 2017, and that if the matter were remanded and income tax recomputed on an RoE basis, the actual liability would be Rs. 53.38 crore against the Rs. 40.32 crore allowed by the DERC — meaning IPGCL would be entitled to recover more, not less.
The Tribunal rejected IPGCL's counter-claim. It held that IPGCL had neither challenged the DERC's refund order nor filed an independent appeal against it. Relying on the Supreme Court's judgment in Banarsi v. Ram Phal, (2003) 9 SCC 606, the Tribunal held that a party which has not assailed an adverse finding cannot seek a more advantageous position in an appeal filed by the opposite side. IPGCL's refund order had attained finality against it.
The Tribunal found no adverse finding against the appellants in Impugned Order 1 on the income tax issue, and therefore no basis to set it aside. However, both sides had consented to remand for limited recomputation. The matter was accordingly remanded to the DERC to work out income tax liability confined to Return on Equity for IPGCL for FY 2007–08 to FY 2011–12, taking into account refunds already effected by IPGCL.
PPCL Income Tax: Remand Despite Absence of Prior Application
For PPCL, the DERC had not undertaken any income tax true-up in Impugned Order 2, stating that PPCL had not filed a petition for refund. The appellants argued that non-filing by PPCL could not be a valid ground for omitting the true-up, and placed reliance on an APTEL judgment dated 11 November 2011 in O.P. No. 1 of 2011 [2011 SCC OnLine APTEL 173], which held that the State Commission is empowered to suo motu initiate tariff determination proceedings where petitions are not filed in time.
The DERC submitted that under Regulation 6.28 of the MYT Generation Tariff Regulations, 2007, income tax recovery is to be effected directly between the generating company and the beneficiaries without any application to the Commission, with the beneficiaries having the option to approach the Commission if they object. No such application had been filed by the appellants.
The Tribunal distinguished the 2011 APTEL judgment. That case concerned the obligation to initiate tariff determination proceedings where petitions were not filed at all. Here, the true-up for FY 2006–07 to FY 2011–12 had already been undertaken by the DERC vide its order dated 31 July 2013; only the income tax component had been left out. The ratio of the 2011 judgment did not apply.
The Tribunal found no adverse finding against the appellants in Impugned Order 2 on this issue either, and no basis to set it aside. The appellants claimed refunds of approximately Rs. 15.04 crore to BRPL and Rs. 14.10 crore to BYPL from PPCL. Both sides had consented to remand. The Tribunal remanded the income tax question to the DERC for determination confined to Return on Equity for PPCL for FY 2007–08 to FY 2011–12, with any excess recovery to be refunded along with carrying cost under applicable regulations.
Order
Both appeals were disposed of by the common judgment dated 29 May 2026. The DERC's tariff orders dated 29 September 2015 were upheld on the plant availability issue for IPGCL's Gas Turbine Power Station and PPCL's plant. On the income tax issue, the matter was remanded to the DERC for limited recomputation of income tax liability on a Return on Equity basis for both IPGCL and PPCL for the period FY 2006–07 to FY 2011–12. For IPGCL, refunds already effected are to be taken into account. Any excess recovery found upon recomputation is to be refunded with carrying cost in accordance with applicable regulations. Both appellants and Respondent No. 2 are to be given an opportunity to submit requisite details. The DERC was directed to pass appropriate orders preferably within three months of receipt of the judgment. All pending interlocutory applications were disposed of.