The Appellate Tribunal for Electricity (APTEL) has confirmed that transmission systems built, owned, and operated by the Central Transmission Utility (CTU) qualify as an interstate transmission system (ISTS) even if located within a single state.

The ruling came while dismissing the Tamil Nadu Generation and Distribution Corporation’s (TANGEDCO) appeal, which challenged the Central Electricity Regulatory Commission’s (CERC) classification of transmission assets developed by Power Grid Corporation of India (PGCIL) for evacuating power from the NP Kunta Solar Park as part of the ISTS.

The Tribunal ruled that the tariff for these assets must be recovered through the point of connection (PoC) mechanism, as per the CERC Sharing Regulations, 2010.

Background

The dispute arose from CERC’s order which approved the transmission tariff for assets built by PGCIL to evacuate power from the NP Kunta Solar Park, located in Andhra Pradesh. These assets included a 400/220 kV substation at NP Kunta and a LILO (Line-In-Line-Out) of the 400 kV Kadapa-Kolar transmission line.

The power evacuated from this solar park, developed by Andhra Pradesh Solar Power Corporation, was almost entirely consumed within Andhra Pradesh, with 90% of the power contracted to state distribution companies.

TANGEDCO objected to the inclusion of these transmission assets in the ISTS network, arguing that the infrastructure served only a state-specific project and did not facilitate interstate power flow. It contended that since the project was meant exclusively for Andhra Pradesh and was partially funded under the Ministry of New and Renewable Energy (MNRE) programs, its cost should not be socialized among all PoC payers across India.

The appellant argued that the system should be classified as a dedicated transmission line, and such systems are to be built and financed by the generating entity. It also claimed that PGCIL, which had executed the project, had not entered into any transmission service agreement with the Andhra Pradesh utilities and had failed to secure funding under the MNRE’s Green Energy Corridor or National Clean Energy Fund programs.

PGCIL maintained that the project was planned and executed after receiving regulatory approval from CERC under its 2010 Regulations. It submitted that the assets were developed in its capacity as CTU and thus formed part of the ISTS. It argued that the asset’s location within a single state did not disqualify it from ISTS classification.

PGCIL also clarified that partial MNRE grants had been received and adjusted against the capital cost, with the remaining cost subjected to tariff determination.

CERC’s impugned order had approved the tariff and directed that the cost be shared under the PoC mechanism. TANGEDCO challenged this because there was no interstate power flow, and that socializing the tariff unfairly burdened other State utilities that did not benefit from the assets.

Tribunal’s Analysis

APTEL identifying two central questions: i) first, whether the transmission system built by PGCIL for evacuating power from the NP Kunta Solar Park can be classified as an ISTS, despite the power being consumed entirely within Andhra Pradesh and ii) second, whether TANGEDCO could challenge the classification and tariff order after having failed to contest the regulatory approval earlier granted by CERC.

On the first question, the Tribunal referred to Section 2(36)(iii) of the Electricity Act, 2003, which explicitly includes within ISTS any system built, owned, operated, maintained, or controlled by a CTU, even if the system is located entirely within a single State. The Tribunal rejected TANGEDCO’s argument that actual cross-border power flow was necessary for ISTS classification. It found that the statutory provision confers ISTS status on CTU-built infrastructure, regardless of geographical boundaries or usage patterns.

The Tribunal also dismissed the claim that the NP Kunta system was a dedicated line. It clarified that dedicated lines, as defined under the Act, are constructed by the generating company or captive generator to connect directly to the grid, and not by a CTU like PGCIL. The infrastructure in question was developed by a licensed transmission utility with regulatory approval, and thus did not qualify as a dedicated line.

In response to the absence of a transmission service agreement between PGCIL and Andhra Pradesh utilities, APTEL held that the regulatory framework does not mandate a transmission service agreement as a condition for tariff recovery under the PoC regime. The CERC Sharing Regulations outline procedures for billing and payment, but do not limit cost recovery from designated ISTS customers if the asset is an ISTS.

Regarding funding, APTEL noted that while the MNRE guidelines encourage partial funding of evacuation infrastructure, PGCIL had received a grant and adjusted it against the project cost. The remaining cost was appropriately submitted for regulatory approval and tariff determination, which was done through the impugned order.

The Tribunal acknowledged that the transmission system, being interconnected to the Kolar-Kadapa 400 kV line, contributed to grid strengthening and potential interstate transfers in the future, even if the present power flow was unidirectional and confined to Andhra Pradesh.

Recently, the Central Electricity Regulatory Commission issued a time frame for waiving ISTS charges for renewable energy, energy storage projects, green hydrogen, and green ammonia.

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