LAWS OF ‘POWER’ vis-à-vis POWER OF ‘LAW’

Curious Case of Writ Petition 22665 Of 2024 In Mumbai High Court

I have always been curious about the law, its impact, and its potential to influence society, business, sector, and country.

Now it may sound to many that I will start a talk show/podcast on famous judgments passed by courts but it is not like that. I am on a quest to understand the fundamentals of laws from the perspective of their ongoing application in the power sector.

I understand the definition of law as

“The system of rules embodied under the constitution recognised and accepted by any particular country or community, which defines the legal rights and obligation of its members and can be enforced by penal mechanism”

Law under the Constitution of India includes ‘‘Ordinances, order, bye-laws, rule, regulation, notification, custom or usage having in the territory of India the force of law”. This means thereby the instruments mentioned above by different government instrumentalities are part of the law, whether such government agencies are operating in tandem or series in the value chain of the power sector.

The power sector value chain with input material source to its consumption end. Government agencies, naming few those who dictate coal, railways, environment, port, finance, trade & commerce, and external affairs, have sufficient influence to impact the value chain of the power sector irrespective of the fact that they are not directly governing the value chain entities. For instance, notification of railway freight revision by the Ministry of Railways, or increase in loading charges by the Ministry of Coal, or an application of Safeguard Duty or Basic Custom Duty by the Ministry of Finance can seriously impact the cost of generation which eventually impacts the end consumers handled by DISCOMs.

Now there is a difference between ‘law being on the statute book’ and ‘law in force’. While Parliament and Legislature have powers to enact the law and it comes into action as it is ascended by the appropriate authority in the state and president at the center, however, the actual enforcement begins with notification of provisions. For instance, the IBC code was notified in the official gazette and got the president's assent on 28.05.2016, however, the act was first notified on 21.08.2016 with subsequent notification on different dates. Still, provisions of Part III of the IBC Code have not been notified. Similarly, even though the CERC (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022, was published on 19.7.2022 but certain provisions of GNA Regulations were made effective from 15.10.2022.

Now this must be boring you, what I am trying to comprehend, have patience and read further, as nothing happens without reason.

The context to discuss the above background is the regulation issued by Hon’ble MERC on November 23 and to be more precise the MERC (Grid Interactive Rooftop Renewable Energy Generating Systems) (First Amendment) Regulations, 2023 and MERC (Distribution Open Access) (Second Amendment) Regulations 2023, which according to my understanding is the ‘Law’ because it is defined under the Constitution of India and establishes the legal rights and obligation of its members and can be enforced by penal mechanism. Now what are the legal rights and obligations and the members under the purview of this regulations?

• Consumers, Captive Users
• Renewable Energy Generating Stations operating under Net Metering, Net Billing, Gross Metering, and Grid Interactive Renewable Generating Stations.
• DISCOMs
• MERC
• Government of Maharashtra

The abovementioned regulation to me is the befitting case for highlighting the ‘law being on the statute book’ and ‘law in force’. Should we be calling the regulation truly a law when the legal obligations by implementation agencies are not honored to give legal rights to beneficiaries defined in it? That’s my question to anyone who can answer, myself pondering for so long it, yet to find the answer.

Further to the above, laws are defined as ‘Substantive Laws’ and ‘Procedural Laws’. Substantive laws deal with the legal relationship between people and people & state. Procedural Laws provide for a set of rules governing the procedure by which the substantive laws can be enforced through due process.

On the question of whether the aforementioned Regulations issued by the Hon’ble MERC qualify for the Substantive Law category or the Procedural Law category, I would say that almost every regulation issued by MERC has both substantive and procedural law provisions defined in it. The regulations have the stature of ‘law’, the legal obligations are must be complied with, and the legal rights of members under this must be honored as defined in it. For instance, in the aforementioned regulation, Hon’ble MERC has defined the legal rights as net-metering/net-billing for the ‘eligible consumers’, and legal obligations for MSEDCL were to accord approval as per the procedure defined as part of the regulations. The Regulation also had a provision of compensation for delay in compliance of procedure, except the penal provision for prolonged non-compliance, however, I believe that the discretion of Hon’ble MERC might have been kept if members raised grievance for redressal.

A few months back, I read a book named Laws of Power by Robert Greene (though couldn’t complete it) and while working on this regulation challenges, I recalled the insights this book has to offer and attempted to evaluate how the actions of such power centers in the state unknowingly apply.

SERC and Laws of Power

Here is how I feel Hon’ble SERC uses or should exercise its Laws of Power.

1. Never Outshine the Master – The regulations issued by the Hon’ble SERC are the rule of the Master and the entities regulated under it must not try to outshine its master. For instance, Hon’ble MERC in its recent judgment under the aforementioned Regulation has categorically stated that MSEDCL has to ensure the compliance of regulations else contempt and penal provisions may be exercised.
2. So much depends on reputations, guard it with your Life – The regulations issued by SERCs set the pathway for the energy sector in the state. Any provisions of substantive and procedural law if not implemented as it has been intended, by the obligated entities therein then I believe it is the reputation of SERCs which are at stake and SERCs must take all possible steps necessary to guard their reputation by ensuring the implementation of the regulation issued by them. For instance, in the aforementioned case, when MSEDCL challenged the regulation in the Mumbai High Court, the Hon’ble MERC ought to fight it tooth and nail to ensure that it is not set aside as precedence of being challenged and set aside will severe the trust of investors, stakeholders, and beneficiaries on the regulation issued.
3. Win through your Actions, Never through Arguments – No matter whether we are in personal life or professional lives, it is the action that matters more than words. Actions develop trust, words create mere Hope. In the power sector regulatory framework, it is the action taken under the regulation that builds the trust of its beneficiaries, rather than just provisions of the regulations. Regulation if not implemented is of no use, thus SERCs must take exemplary action to go any length necessary to make their regulation into action no matter if it needs taking penal action against the beneficiary or implementing agencies. For instance, the Hon’ble MERC in the aforementioned regulation grievance gave strict timelines to MSEDCL to comply with.
4. Don’t Commit to Anyone – Regulations issued by SERCs are a commitment to their ethos of equity, transparency, and sector development. SERCs have been bestowed the responsibility of balancing the interests of both consumers and the implementing agencies whose interests might be involved. For instance, the Hon’ble MERC has always been impartial in formulating the regulations and it has always heard the stakeholders and always issued judgments with great application of mind and detailed due diligence. This is what builds the credence of Hon’ble MERC across other regulatory bodies in the country.

DISCOM and Laws of Power

Here is how I feel DISCOM uses the same to exercise its Laws of Power for its clout.

1. Conceal your intentions- DISCOMs always keep their intentions concealed till their implementation. Many times, the DISCOMs don’t reveal their intentions to implement their regulations as there is no requirement to update SERCs for periodic implementation status of regulations. For instance, in the aforementioned matter, MSEDCL kept its intention of not getting the regulation implemented, concealed till Aug’24, for the regulation issued in Nov’23 by not issuing the implementation circular and finally challenged the same in Mumbai High Court. Now everyone in the state would wait and read the circular issued by MSEDCL with higher priority than the regulation itself.
2. Learn to keep people dependent on You – DISCOMs are the implementing agency of the benefits or actions intended by the regulations of SERCs. Unless DISCOM allows, the regulations can’t be implemented. For instance, in the aforementioned regulation, MSEDCL by not approving the net-metering/net-billing applications of consumers exercises the power to keep people dependent on them.
3. Stir Up Waters to Catch Fish – DISCOMs often resort to stirring the calm waters to weed out beneficiaries who try to make undue benefit of regulations. Nothing wrong in it to contain the misuse, if perceived or anticipated, however, this jeopardizes and discourages even the genuine beneficiaries; this is one such way DISCOM yields its Laws of power. For instance, MSEDCL by way of not issuing the circular for compliance with MERC RREGS Regulations 2023 and challenging the same in Mumbai High Court, has created a stir. On one hand, this will discourage even the eligible and genuine consumers having obligations under Net Zero not to even thinking of using the benefit of 5 MW under Net metering/net billing, and/or Group Net Metering, etc, I am yet to figure out by stirring the calm water of regulation, whom DISCOM think as Fish and how to catch it.
4. Preach the Need for Change, but Never Reform Too Much at Once – DISCOMs are the mouthpiece of communicating to end beneficiaries on govt initiatives, and often DISCOMs spearhead the discussion to promoting renewable energy. However, when it comes to its implementation, they resort to either defer the implementation or challenge the regulation. For instance, the MSEDCL unequivocally advocates for MSKVY 2.0 and Procuring RE in bulk quantum, but resorts to challenge the regulations when its embedded consumers wish to go green using the benefit under the regulation.

Like every war, the effect of war is widely spread and can have short-term or long-term impacts. Although the soldiers of Opponents suffer, even if they view it differently, however, the greater suffering is caused to the beneficiaries of peace.

To me, the Case of Writ Petition 22665 Of 2024 In Mumbai High Court pending for listing is the case of ‘WAR of POWERS’. I have my reservations on the success of the writ petition even on merits, and only time will tell whether Courts wish to see the Power of ‘Laws’ prevail or Laws of ‘Power’.

Let’s see how it unfolds….