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?S...This led to the Grid Frequency to vasilate from 48.5 Hz to 51.5 Hz, whereas Grid Frequency was required to be maintained ideally at 50 Hz and at the most, it should be within optimum variations. The frequency exceeding the optimum variation was causing grid collapse and blackouts in the entire region besides affecting the equipments of all generations, other electricity utilities and also the consumers. This has been a serious prejudice to public interest.??

The Supreme Court of India, in the above judgment has discussed that issue of variation in grid frequency and its consequences. Fluctuation may lead to serious damages at both the ends, i.e. generation and load ends. It is not possible to quantify and evaluate such damages. It is not possible even to speculate such damage. In parallel operation, there is free flow of electricity. Electricity in grid and facilities connected including CPP flows freely. Use of electricity by every person will have an impact on the maintenance of frequency at 50 Hz. This aspect has been judicially recognized by the Supreme Court in the case of State of Andhra Pradesh Vs. NTPC, reported in [2000] 2 Supreme Court Cases, 203. This decision of the Apex Court refers to one another decision of the Apex Court in the case of Indian Aluminum Company Vs. State of Kerala, reported in [1996] 7 Supreme Court Cases, 737. It would be beneficial to reproduce relevant part relied upon by the learned counsel for the respondent. The same is reproduced hereunder:

By the impugned order, the GERC has held that POC is payable by CPPs to GEB. Undisputedly, there is no formal determination of actual charges payable. GERC has directed the erstwhile GEB to file separate petition after conducting proper study in regard to exact quantum of POC to be determined as payable by CPPs, meaning thereby, proposition placed by the erstwhile GEB that such CPPs running in parallel operation may be asked to pay 50% on the demand charge was not accepted. The ground for justification was placed before the GERC that CPPs synchronized with the grid raise unlimited instantaneous demand for power. Further the operation of the synchronized CPPs creates adverse quality variations in supply of power to other consumers. It is also contended that because of reduction of contract demand by the consumers who install captive power synchronized with the grid, the Board suffers a shortfall in recovering the investment already made for meeting their original contract demand. In the order under challenge, GERC has given basic summary of proposal placed by the erstwhile GEB and this summary contains 2 different tables. Table 2 shows that if proposal is accepted, then, erstwhile GEB would be generating revenue of more than Rs. 299.90 crores against the capacity of CPPs in 1666.13 MVA. Table 3 of summary shows different figure and this figure is in pursuance to the clarifications made on 18th May, 2004 pending the petition. As per these updated details, the Board estimated the revenue from the proposed formula at Rs. 249.77 crores. On that day, about 13 CPPs were operating parallel to grid. On merit, the erstwhile GEB, petitioner before the GERC was not able to satisfy the GERC that the proposal on merit is acceptable. GERC, it is clear from the order under challenge, was not even convinced to accept the proposal partially. Therefore, the petitioners have not argued any point on merit in reference to justification of the proposal made by erstwhile GEB. It is also submitted by all the three Senior Advocates appearing for the respective petitioners that in view of the pendency of the second petition filed by the erstwhile GEB before the GERC on the strength of alleged data and material as to cost that is allegedly incurred for maintaining infrastructure for benefit of CPPs running in parallel, no submission on merit has been made, because, discussion, if made by this Court or any comment is made in this behalf, is likely to result into serious prejudice to either party when it is jointly submitted that this Court may decide the petitions in reference to the prayer made in the petitions only. It is not necessary to discuss and record the finding in reference to the alleged justification placed by the erstwhile GEB in the petition submitted to the GERC. True it is that whether this Court can deal with the point that by way of parallel operation, whether the CPPs are enjoying any service for which any amount can be levied. If the answer is in the affirmative, then, the CPPs running parallel to grid are at some advantage than the CPPs operating in total isolation and therefore, such CPPs can be subjected to such levy. Crucial question is also required to be decided that whether GERC has jurisdiction to decide and/or impose levy of POC in absence of specific provision in the relevant Statute, that is, Central or State Act. The Court also can examine that whether GERC has committed any jurisdictional error by passing declaratory order without taking decision on the quantum even though proposed specifically by the erstwhile GEB. From the arguments made by the learned counsel for the parties, one question that has emerged is that if the proposal is found contrary or at least not in accordance with the policy of the government, can the declaration of the nature that has been made by the GERC by passing the impugned order be said to be proper and justified or not. It is referred in detail in the foregoing paragraphs that what is the parallel operation and how according to the erstwhile GEB this parallel operation is a service. Undisputedly, there are certain peculiar characteristics of electricity and frequency is required to be maintained at or around 50 Hz. Grievance of the petitioners and as practically accepted even by the learned counsel for the respondents is that it is not possible always to maintain standards of frequency for various reasons and CPPs running parallel to grid are also supposed to generate power in the frequency, so, frequency of both, that is, grid as well as CPP can work harmoniously. Fluctuation in frequency tends to cause serious damages both to generation and load ends and it is not possible to perceive or to quantify or evaluate the fluctuation in frequency is worldly accepted situation. In India, various efforts have been made to bring frequency fluctuation under control. The petitioner erstwhile GEB has attempted to seek justification that unless CPPs running parallel to grid pays any cost of maintenance contribution through POC, the goal to control frequency fluctuation may not be achieved. When electricity in grid and in facilities connected to the grid are getting advantage of free flow of electricity and CPPs running in parallel to grid is a facility created by the petitioner companies, then, they can be subjected to contribute in the costs of maintenance. In view of the decision in the case of State of Andhra Pradesh Vs. NTPC [[2002] 5 SCC 203], this aspect can be said to have been accepted and would help the respondents. It is not a matter of dispute that it is difficult to maintain constant level of frequency where generation is by CPP and therefore, a very large volume of electricity energy generated and handled through grid is helpful in maintaining frequency, practically for all. There is force in the argument of Mr. Ramachandran that the State Utilities pay heavy penalty if they cause variation into the grid frequency and this payment is being made by way of unscheduled interchange charges.