In a significant ruling with wide implications for power management, the Karnataka High Court has decreed that embedded power generation companies are obligated to follow directives issued by the state government during periods of electricity crisis. This judgment reinforces the state's authority to ensure power supply stability for its residents and industries.
Court Upholds Government's Emergency Powers
The bench delivered its verdict while dismissing appeals filed by several embedded power producers. These companies had challenged a previous order from a single-judge bench of the same court. The single-judge bench, on March 11, 2024, had upheld the validity of a government order issued on October 16, 2023.
The contested government order was invoked under Section 11 of the Electricity Act, 2003. This section grants state governments extraordinary authority during extraordinary circumstances. It allows them to issue directions to any generation company for the operation of its power stations or for the sale of electricity to ensure grid stability and meet soaring demand.
The Legal Challenge and Its Dismissal
The embedded power firms, which typically generate electricity for captive use within industrial parks or specific areas, had argued against the government's order. They contended that the state's use of Section 11 powers to compel them to supply power to the grid was overreach and adversely affected their commercial operations and commitments.
However, the High Court found the government's actions justified given the context of a power crisis. The court emphasized that the provision under Section 11 is a critical tool for the state to manage public emergencies related to electricity supply. The ruling effectively states that during declared crises, the public interest in maintaining a stable power supply overrides other commercial considerations for all generating entities, including embedded ones.
Implications for Power Sector and State Policy
This judgment sets a clear precedent for how Karnataka, and potentially other states, can manage future electricity shortages. It clarifies that embedded generators are not exempt from contributing to grid stability when the state faces a critical shortfall.
The decision strengthens the regulatory hand of the state government and its electricity authorities. It ensures they have a broader pool of generation resources to tap into during emergencies, beyond just the conventional power purchase agreements with large utilities. For consumers, this ruling is aimed at providing a more robust safety net against prolonged and severe power cuts during periods of high demand or low generation.
The court's firm stance underscores a principle of shared responsibility during public utility crises, mandating that all players in the power ecosystem must cooperate under state guidance to prevent widespread disruption.
