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Powergrid Corporation of India Ltd. v. Central Electricity Regulatory Commission

Civil Appeal · 2025 INSC 626Decided 5 May 2025
C.A. No.-005857-005858 of 2011
Justice Abhay S. Oka · Justice Ujjal Bhuyan

Background

Powergrid Corporation of India, a public sector transmission utility, operated Inter-State Transmission System assets including Interconnecting Transformers (ICTs) at Rihand. Several ICTs were damaged by an internal fire/explosion and had to be replaced. Powergrid sought to recover the replacement cost by "decapitalizing" the damaged ICTs and "additionally capitalizing" the new ones (which would have let it earn a return on the new assets), separately from its existing self-insurance fund. The Central Electricity Regulatory Commission rejected this claim, and the Appellate Tribunal for Electricity upheld the rejection, prompting Powergrid's appeal to the Supreme Court.

Decision Breakdown

The Court held that the fire, and the resulting damage, was squarely covered by Powergrid's own self-insurance policy, which it maintained precisely for this kind of loss as part of its operation and maintenance charges. Since the self-insurance fund reserve was found to already cover the net replacement cost of the damaged ICTs, allowing a separate decapitalization/additional-capitalization claim on top of that would have meant double recovery for the same loss. The Court found the Appellate Tribunal's reasoning cogent and saw no ground to interfere, dismissing both appeals with no order as to costs.

Lesson Learnt

A regulated utility that maintains a self-insurance reserve for asset damage cannot separately claim additional capitalization for replacing the same damaged equipment: the self-insurance fund is meant to absorb exactly that cost, and claiming both would amount to recovering the same expense twice from consumers/tariff.

Official source (sci.gov.in)View Judgment (PDF)

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