Examining the performance of ERCs at APTEL

by Chitrakshi Jain, Bhavin Patel, and Renuka Sane.

Introduction

The efficiency of the State Electricity Regulatory Commissions (SERC)s, the Central Electricity Regulatory Commission (CERC) and the Joint Electricity Regulatory Commission (JERC) influence investability and growth of the electricity sector. For example, it costs regulated entities time and resources to petition the relevant ERC for decisions and potentially, to challenge decisions taken by the ERC at the appellate tribunal (APTEL), which exercises supervisory control over the ERCs and reviews their decision-making.

This article studies how ERC decisions perform at APTEL. We collect information about aspects of the ERCs’ functioning from the text of orders passed by APTEL. This helps us (a) identify the most-litigious areas across ERCs and (b) examine how the ERCs’ decisions perform in appeal. We use sub-national comparative analysis to understand the variation in the functioning of the different ERCs and the litigiousness of issues in different states.

We ask the following questions:

1. Which ERCs contribute the most appeals at APTEL?
2. What are the most litigious issues at APTEL?
3. In how many appeals was the ERC’s decision:
   1. Upheld, i.e. appeal was dismissed by APTEL?
   2. Partially upheld, i.e. appeal was partly allowed at APTEL?
   3. Overturned, i.e. appeal was fully allowed at APTEL?
4. How often were the ERCs ordered to reconsider their decisions, i.e. the matter was remanded?

Our results suggest that issues related to tariff determination and restructuring are the most litigated issues at APTEL across ERCs, with the exception of Maharashtra. ERCs are differently situated in their ability to defend their decisions at APTEL and in the quality and clarity of their orders. We argue that such assessments, if regularised, can assist ERCs in improving the quality and form of their decision-making by creating a feedback loop, and can also assist in identifying areas for policy reform at the sub-national level.

Methods: Data

We obtained the orders passed by APTEL between the years 2013-2022 where the ERCs are a party to the challenge before APTEL. We excluded interim orders given that they do not include the outcome of the case. We focused on ten states, including Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal. These were selected keeping in mind geographical coverage, size of the state, and installed renewable energy (RE) capacity in the state.

We collected information on 26 indicators from the orders, related to the following categories:

1. Time-related: e.g., date of orders, date of impugned order
2. Party-related: names of appellants, respondents
3. Bench-related: e.g., quorum, members’ names
4. Subject-matter related: e.g., prayers, issues
5. Outcome-related: e.g., disposition and remand

We processed the text of the orders through LLMs, which we prompted to collect the information by placing reliance on explicit language in the text. After collecting the information for the relevant indicators, we ran verifications based on rules of legal consistency and logic to ensure that the collected information is accurate and reliable. For indicators related to outcome, we have made subjective inferences when the explicit information regarding its outcome was not articulated in the order. We have relied on individual appeals as the unit of analysis, given that outcomes are typically uniform for all parties in an order. We have integrated human verification at every stage of data collection to ensure reliability. Our final dataset consists of 513 orders and 919 appeals. The data is available here.

Methods: Issue categorisation

In order to study the issues that were being agitated before APTEL, we identified themes from the statement of issues in appeals which explicitly articulated them. There were 318 appeals (out of 919) that did not include a statement of issues. After classifying the issues thematically, we decided upon the final categories presented in Table 1 in consultation with practitioners. We ran keyword searches to sort the statement of issues into identified categories and verified the classification by reading the statements when they yielded unclear results for accuracy and reliability.

Issue Category	Coverage
Tariff determination and restructuring	Challenges to tariff determination and adoption under Sections 62 and 63; inadequate attention to principles in arriving at tariff; revision of tariff and truing up.
Contractual disputes	Liquidated damages, outstanding payments, renegotiation or termination of contracts, excluding change in law and force majeure.
Change in law and force majeure	Subset of contractual disputes, relating to change in law and force majeure clauses in the contracts.
Procedural and jurisdictional	Procedural lapses, violation of principles of natural justice, challenges to ERC’s jurisdiction.
Open access consumers	Wheeling and banking charges, and issues relevant to open access consumers.
Transmission and grid-related	Connectivity, ISTS and grid-related issues, including compliance with grid code.
Specific compliance with regulations	Mandatory non-tariff-related requirements for obligated entities, such as RPOs and RECs.
Captive status	Captive status of power plants or group captive power plants.
Others	Issues not falling under previous categories, e.g., distribution licensing.

Methods: Limitations

For the categorisation of issues we have relied on the statement of issues as determined by APTEL, in the instances it was explicitly identified in the order. Understandably, analysing the full text of the order will give deeper insights on the litigated questions. The outcomes, such as appeal allowed or dismissed, also do not provide information about outcomes on specific issues. This would entail reading the full orders and making subjective inferences. While the outcomes at APTEL have been used to assess the performance of ERCs, they do not measure the functioning of ERCs holistically, especially because studying the performance of APTEL is beyond the scope of this research.

Results

1. Distribution of litigation

Between the ERCs under study, Maharashtra followed by Karnataka, contribute to the most litigation at APTEL, as represented in Figure 1. These results indicate that the two states have a relatively larger private industry. However our analysis excludes writ proceedings, which are also used as a way to challenge ERC decisions. The total number of orders passed by ERCs is also not available uniformly across the ERCs to accurately calculate the rate of appeal.

2. Most litigious issues

ERCs are empowered to decide a wide range of issues. As a consequence, the issues dealt with by the APTEL in appeals are also varied. An appeal may involve more than one issue, and hence the number of issues involved is more than the number of appeals. As represented in Table 2, tariff determination and restructuring are the most litigated upon issues at APTEL across ERCs with the exception of Maharashtra. In Maharashtra, procedural and jurisdictional issues emerge as the most litigious. While the high incidence of such issues is concerning, issues of the procedural and jurisdictional variety can be resolved easily if ERCs invest in capacity building and follow the procedure under the law faithfully.

Our results corroborate the findings of an earlier study (Prayas 2018) which had found that a third of the issues being litigated before APTEL were concerned with tariff. Pertinently, the ERCs have enacted specific regulations related to tariff determination and made the calculation of tariff an exercise which is assisted by detailed delegated legislation. In this context, it is worrying that tariff continues to be the predominant category with regard to appellate litigation.

State	Total Issues	Tariff related	Procedural & Jurisdictional	Contractual disputes	Specific Compliance	Change in law & force majeure	Open access	Trans-mission & grid	Captive status	Other
Maharashtra	248	26.61	32.66	2.82	3.63	3.63	6.85	4.44	16.53	2.82
Karnataka	171	30.41	26.90	22.81	1.75	2.34	6.43	6.43	0.00	2.92
Tamil Nadu	138	28.99	12.32	7.25	20.29	0.72	5.80	7.25	10.87	6.52
Punjab	96	33.33	11.46	15.62	14.58	8.33	7.29	4.17	1.04	4.17
Rajasthan	76	25.00	11.84	19.74	10.53	13.16	5.26	7.89	1.32	5.26
Madhya Pradesh	75	41.33	17.33	13.33	0.00	1.33	9.33	4.00	9.33	4.00
Andhra Pradesh	65	47.69	26.15	9.23	3.08	1.54	1.54	7.69	0.00	3.08
Uttar Pradesh	59	33.90	16.95	20.34	8.47	5.08	1.69	13.56	0.00	0.00
Odisha	49	34.69	16.33	6.12	16.33	0.00	8.16	10.20	6.12	2.04
West Bengal	29	62.07	13.79	3.45	13.79	3.45	0.00	3.45	0.00	0.00

In addition to the most litigated issues, we could also identify the states which contributed most to the litigation of a particular issue at APTEL. Maharashtra contributes the most to issues related to tariff, and procedure and jurisdiction. This outcome is also a function of Maharashtra being involved in the highest number of appeals in our dataset. The findings are presented in Table 3 below.

ERC	Issue	Contribution (%)
Maharashtra	Tariff related	20.1
Maharashtra	Procedural and jurisdictional	37.5
Karnataka	Contractual disputes	33
Tamil Nadu	Specific compliance with regulations	34.5

3. Outcomes

We focus on indicators related to the ‘disposition’ of the appeal from the information we had collected. We scored the performance of the ERCs relative to each other by making the number of decisions that were upheld, overturned or modified by APTEL as the basis of comparison. The results have been compiled in Table 4.

At an outcome level, if an ERC succeeds in defending its decisions, then it would indicate that the orders are well-reasoned, and the ERC follows the procedure under the law. A high overturn rate would indicate weak decision-making capacity.

ERC	Allowed	Dismissed	Partly Allowed	Other	Remanded	Total
Andhra Pradesh	27	32	7	4	11	70
Karnataka	103	49	14	4	67	171
Maharashtra	92	61	31	62	35	246
Madhya Pradesh	22	17	11	8	13	58
Odisha	17	15	17	2	6	51
Punjab	18	28	22	6	13	74
Rajasthan	32	45	7	3	20	87
Tamil Nadu	22	33	19	9	20	83
Uttar Pradesh	15	26	11	5	10	57
West Bengal	4	8	6	4	5	22
Total	352	314	145	108	200	919

We find that ERCs are differently situated in their ability to defend their decisions at APTEL and the quality and clarity of their orders. Rajasthan found the most success at APTEL, Maharashtra had the least.

Typically, matters are remanded when APTEL is of the opinion that the relevant ERC did not, amongst other things, follow the procedure or frame the issues or determine question of facts sufficiently well. A high remand rate is worrying since it implies that either the ERCs in question are ill-equipped to resolve disputes in the first instance or that APTEL, unless it has insufficient evidence to make the decision, is abdicating its mandate.

Remands lengthen the resolution of disputes and burden regulated entities with legal and compliance costs. This can stymie the growth of the electricity sector, especially in states like Karnataka, for KERC has been asked to reconsider most number of its decisions when compared to other ERCs.

Recommendations

Both APTEL and ERCs are empowered to implement these recommendations.

1. Regularise assessments through use of emerging technologies

We recommend that such comparative assessment exercises be regularised through the use of emerging technologies. The composition of ERCs is constantly changing, and members would benefit from information about the performance of their decisions at APTEL closer to the date of the decisions. This can be made possible by creating a customised tool that leverages LLMs and the competence of researchers and practitioners familiar with the sector.

2. Publish granular statistics

APTEL can improve upon the collection and publication of litigation statistics and include the subject matter of litigation and the relevant laws that are under litigation, amongst other categories, in this exercise. Similarly, while some ERCs publish the number of orders they hear and decide annually, they can include more relevant details in this publication and also publish these at shorter intervals. Collecting this data at source would make the identification of litigious issues, which are often proxies for policy problems, easier.

3. Identify areas for policy reform

ERCs should study the precise reasons for disputes that correspond with the litigious issue categories in their states and respond by changing and adapting their regulations to minimise them. The persistence of tariff as the most litigious category is concerning, given that detailed regulations on calculation and imposition of tariff have been enacted by the regulators.

Conclusion

In summary, we find that:

• Between the ERCs under study, Maharashtra, followed by Karnataka, together contribute to the most litigation at APTEL.
• Issues related to tariff determination and restructuring are the most litigated issues at APTEL across ERCs. This is worrisome given the detailed subordinate legislation that govern the regulation of retail and other categories of tariff.
• ERCs are differently situated in their ability to defend their decisions at APTEL and the quality and clarity of their orders. We find that Rajasthan found the most success at APTEL, while Maharashtra had the least.
• Remands lengthen the resolution of disputes and burden regulated entities with legal and compliance costs. This can stymie the growth of the electricity sector, especially in states like Karnataka, since KERC has been asked to reconsider the most number of its decisions when compared to other ERCs.

References

Amicus Populi? A public interest review of the Appellate Tribunal for Electricity , by Vaishnava S, Chitnis A and Dixit S, 2018, Prayas Energy Group

The authors are researchers at TrustBridge Rule of Law Foundation. They would like to acknowledge and thank Natasha Aggarwal, Madhav Goel, Abhinav Hansaraman, Amol Kulkarni, Praduta Singh, Aparna Jha, Varun Soni, and Gaurav Aswani for compiling, collecting, and verifying the data used in our analysis. We would also like to thank Upasa Borah for helping with verifying, cleaning, and consolidating the dataset.

The authors are researchers at the TrustBridge Rule of Law Foundation.

Source: https://blog.theleapjournal.org/2025/07/examining-performance-of-ercs-at-aptel.html