In the landmark case of Municipal Corporation of Delhi v. Gagan Narang & Ors., decided on January 2, 2025, the Supreme Court of India upheld the authority of the Municipal Corporation of Delhi (MCD) to issue tariff-based bids for a Waste-to-Energy (WTE) project in Narela Bawana, Delhi. The Court also affirmed the Delhi Electricity Regulatory Commission's (DERC) approval of the bid tariff, emphasizing the project's alignment with public interest in effective waste management.

Background:
The MCD, aiming to address Delhi's escalating waste disposal challenges, proposed a WTE project at Narela Bawana. On May 14, 2022, a meeting with Delhi's Distribution Licensees and other stakeholders resulted in a consensus to adopt a tariff-based bidding model for the project. The MCD was authorized to conduct the bidding process under Section 63 of the Electricity Act, 2003. Subsequently, on July 15, 2022, the MCD issued a Notice Inviting Tender (NIT) and a Request for Proposal (RfP) for a solid waste processing facility with a minimum capacity of 28 MW, designed to handle 3,000 tonnes per day of municipal solid waste.

The DERC, in a letter dated August 24, 2022, directed the MCD to file a petition for approval of the Power Purchase Agreement (PPA) and RfP. Following this, the MCD reissued the NIT on October 21, 2022, maintaining the original terms. During this period, the Waste to Energy Research & Technology Council (WTERT) filed a petition challenging the MCD's authority to issue the tariff-based bid and RfP.

Despite the pending petition, the bidding process proceeded, and on November 14, 2022, two companies—M/s JITF Urban Infrastructure Ltd. and M/s JBM Renewables Pvt. Ltd.—submitted bids. Both were deemed technically qualified. M/s JITF Urban Infrastructure Ltd. emerged as the lowest bidder with a levelized tariff of ₹7.380 per kWh. The MCD then filed a petition seeking approval for the bidding process.

In March 2023, the DERC dismissed WTERT's petition and approved the bid tariff of ₹7.38 per kWh, directing the negotiation of PPA terms. In response, Gagan Narang and others filed appeals with the Appellate Tribunal for Electricity (APTEL), which subsequently set aside the DERC's orders, stating that the DERC lacked jurisdiction to entertain the MCD's petition. The MCD then appealed to the Supreme Court under Section 125 of the Electricity Act, 2003.
 

Supreme Court's Analysis and Judgment:
The Supreme Court examined whether the MCD, as a "local authority" under Section 2(41) of the Electricity Act, 2003, could invoke Section 63 of the Act for tariff adoption. The Court emphasized that Section 63 allows the Appropriate Commission to adopt tariffs determined through a transparent bidding process, without restricting applicants to distribution licensees or generating companies. The Court stated that interpreting Section 63 narrowly would add unwarranted limitations not intended by the legislature.

The Court also highlighted the MCD's statutory obligations under the Solid Waste Management Rules, 2016, particularly Rule 15, which mandates local authorities to facilitate the construction, operation, and maintenance of solid waste processing facilities, including WTE processes. The Court noted that the MCD's initiative was in line with these obligations and served the larger public interest by addressing Delhi's significant waste disposal needs.

Furthermore, the Court referred to the National Tariff Policy, 2016, which mandates distribution licensees to procure 100% of the power produced from WTE plants. This policy underscores the importance of promoting renewable energy sources and supports the MCD's actions in establishing the WTE project.

The Supreme Court concluded that the Appellate Tribunal for Electricity had erred in its judgment by not considering the broader public interest and the MCD's statutory role. The Court allowed the MCD's appeal, set aside APTEL's order, and reinstated the DERC's orders from March 2023, thereby affirming the MCD's authority to proceed with the WTE project.

This judgment reinforces the role of municipal bodies in implementing environmentally sustainable projects and clarifies the application of the Electricity Act, 2003, in the context of local authorities' initiatives in renewable energy.