New Delhi, August 29, 2025: The Supreme Court has dismissed the appeal filed by M/s KKK Hydro Power Limited, which sought an enhanced tariff of ₹2.95 per kWh for its entire 4.90 MW Baragran Hydro Electric Project in Himachal Pradesh. The Court clarified that private agreements between power producers and distribution companies cannot decide tariffs without approval from the State Electricity Regulatory Commission.
Background of the Case
- KKK Hydro Power Limited entered into a Power Purchase Agreement (PPA) with the Himachal Pradesh State Electricity Board (HPSEB) on March 30, 2000 for its 3 MW project, fixing tariff at ₹2.50 per kWh.
- Later, the company expanded the project to 4.90 MW by adding another 1.90 MW unit in 2008.
- Disputes arose when the company demanded higher tariff based on the Himachal Pradesh Electricity Regulatory Commission’s (HPERC) 2007 Regulations and tariff orders.
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In October 2014, the Appellate Tribunal for Electricity (APTEL) partly allowed the company’s claim, holding that:
- The original 3 MW plant would remain at the old tariff of ₹2.50 per kWh.
- The additional 1.90 MW plant (commissioned in July 2008) would fall under HPERC’s 2007 Regulations.
- A common tariff was to be calculated using a weighted average, which was later fixed at ₹2.60 per kWh by HPERC in 2015.
KKK Hydro Power, however, approached the Supreme Court seeking extension of the higher tariff (₹2.95 per kWh) to the entire project.
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The bench of Justice Sanjay Kumar and Justice N.V. Anjaria upheld the APTEL’s order but clarified critical legal principles:
- Tariff approval is mandatory: “Fixing of the price for purchase of electricity is not a matter of private negotiation… It must be reviewed and approved by the State Commission under Section 86(1)(b) of the Electricity Act, 2003.”
- The supplementary PPA dated September 10, 2010, which increased tariff to ₹2.95 per kWh, was executed without HPERC’s approval and hence unenforceable.
- The Court noted that although APTEL erred in partly allowing benefit for the 1.90 MW unit, the HPSEB did not challenge it further. Since both parties had already acted on the revised weighted average tariff of ₹2.60 per kWh since 2015, the Supreme Court refused to disturb the arrangement.
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- The Supreme Court dismissed KKK Hydro Power’s appeal, confirming that the higher tariff of ₹2.95 per kWh cannot apply to the entire project.
- The company remains entitled only to the tariff as determined under HPERC regulations, already settled at ₹2.60 per kWh for the full 4.90 MW capacity.
Case Title: M/s KKK Hydro Power Limited vs Himachal Pradesh State Electricity Board Limited & Others
Date of Judgment: August 29, 2025
Citation: 2025 INSC 1057
Case Type: Civil Appeal No. 3005 of 2015
