A decade-old power tariff fight from Tamil Nadu finally reached closure on Tuesday, with the Supreme Court siding with Penna Electricity Limited and rejecting TANGEDCO’s challenge over payments for electricity supplied before full commissioning. Sitting in Delhi, the Bench made it clear that continuous power supplied after synchronization cannot be brushed aside as “infirm” merely because paperwork on commercial operation came later.
Background
The dispute goes back to 2005–06, when Penna Electricity supplied power from its gas turbine operating in open cycle mode to the Tamil Nadu Generation and Distribution Corporation (TANGEDCO). The power flowed steadily from 29 October 2005, but TANGEDCO treated it as “infirm power” and paid only fuel costs, refusing fixed charges.
Read also:- J&K High Court Declines Pension Relief to Sainik School Mansbal Staff, Says No Legal Right Without
Penna objected, arguing that once the turbine was synchronized with the grid and delivered power continuously, it qualified as “firm power”. The Tamil Nadu Electricity Regulatory Commission (TNERC) agreed, and so did the Appellate Tribunal for Electricity (APTEL). TANGEDCO then knocked on the Supreme Court’s door, insisting that under the Power Purchase Agreement (PPA), commercial operation began only on 1 July 2006.
Court’s Observations
The Bench, led by Justice K.V. Viswanathan, spent considerable time unpacking what “commercial operation” really means under electricity regulations. The judges noted that after the Electricity Act, 2003, tariff and payment terms are not just private contracts; they must align with regulatory rules.
Read also:- Delhi High Court Refuses to Revive Criminal Case by Company Director, Upholds Discharge of Ex
“The power supplied during the relevant period was continuous and on a firm basis,” the Bench observed, adding that regulations recognise commercial operation unit-wise, not merely project-wise.
Since the gas turbine had been synchronized and was running smoothly at around 30 MW, the electricity could not be downgraded to infirm power.
The Court also brushed aside TANGEDCO’s argument that letters exchanged in 2005 amounted to Penna accepting lower payments. Those letters, the judges said, only reflected uncertainty about the commercial operation date, not a permanent waiver of rights.
Importantly, the Bench underlined that denying fixed charges in such cases would be unfair. Fixed charges exist to recover capital and operational costs, and refusing them despite continuous supply would, in the Court’s words, be “unjust and contrary to law”.
Read also:- Allahabad High Court Refuses Maintenance to Woman After Decade-Long Live-In, Says Marriage
Decision
In the end, the Supreme Court found “no good ground to interfere” with the TNERC and APTEL rulings. It dismissed TANGEDCO’s appeal and confirmed that Penna Electricity is entitled to fixed charges for the power supplied from 29 October 2005 to 30 June 2006.
The Court also directed TANGEDCO to clear any remaining dues within 12 weeks, noting that ₹50 crore had already been paid earlier under interim orders. With that, the long-standing dispute was finally put to rest.
Case Title: Tamil Nadu Generation and Distribution Corporation Ltd. vs. M/s Penna Electricity Limited
Case No.: Civil Appeal No. 5700 of 2014
Case Type: Civil Appeal (Electricity Tariff / Power Purchase Agreement Dispute)
Decision Date: 16 December 2025
