CCI quashes complaint against NTPC on PPA issue

30 October 2017

The Competition Commission has dismissed allegations of unfair business practices made against State-owned NTPC by power distribution firm TPDDL with regard to electricity purchase pacts.

The complainant — Tata Power Delhi Distribution Ltd (TPDDL) — is a joint venture of Tata Power Company Ltd and Delhi Power Company Ltd and into the distribution of electricity in North and North-West circles of the National Capital Territory of Delhi.

Terms and clause

Among others, it was alleged that NTPC was imposing unfair conditions and onerous clauses in the power purchase agreements (PPAs), including absence of exit clause for TPDDL and 15-25-year long duration of the contract.

Rejecting the complaint, the Competition Commission of India (CCI) said, in an order dated October 12, that a prima facie case of abuse of dominance in terms of Section 4 of the Competition Act is not made out against the State-owned power producer.

Section 4 pertains to abuse of dominant market position.

The regulator said TPDDL has entered into the PPAs with NTPC “being fully aware of the terms of the PPAs”, including the long-term obligation stipulated thereunder.

“There is a rational basis for binding the informant (TPDDL) and other procurers in the long-term PPAs as the generating companies invest in establishing the generating stations based on allocation and the PPAs entered into with the parties (which are to be served through period agreed upon),” the CCI said.

TPDDL and other procurers have the option to approach the Centre for reallocation of power allocated to them, it added.

Competition law clarity

According to the regulator, in terms of competition law, in cases of abuse of dominant position, the seminal issue is what harm is caused to the end consumer due to the behaviour of the dominant player.

In the facts and circumstances of the case, the primary harm that can be envisaged is increased tariffs of electricity for the consumer, it added.

“Notably, in the electricity sector, the mandate of determination and regulation of tariff is within the domain of the sectoral regulator i.e. central/State Electricity Regulatory Commission; a function that the sectoral regulator performs in accordance with the statutory power vested in it by the Electricity Act, 2003, and applicable rules and regulations,” the CCI said.

Further, the order said there is nothing left in the matter that needs to be looked into by the Commission.

Source: Hindu Business Line