Continuous Open-Cycle Supply and the Classification of Firm Power: A Critical Analysis of TANGEDCO v. Penna Electricity Limited

Abstract

In TANGEDCO v. M/s Penna Electricity Limited (2025 INSC 1439), the Supreme Court of India held that electricity generated continuously by a gas turbine operating in open-cycle mode qualifies as ‘firm power’, entitling the generator to fixed charges even before the combined-cycle project achieves its Commercial Operation Date (COD). Applying the IRAC methodology, this paper critically examines the interaction between the provisions of the Power Purchase Agreement (PPA), the Electricity Act, 2003, and the tariff regulations of the Central Electricity Regulatory Commission (CERC) and the Tamil Nadu Electricity Regulatory Commission (TNERC). It argues that while the judgment correctly affirms the primacy of unit-wise, statutorily governed COD determination over unapproved private contractual arrangements, it leaves unresolved a significant regulatory lacuna — the absence of a uniform national test for the transition from infirm to firm power. The paper proposes a five-criterion framework, addressing commissioning completion, minimum sustained operation, availability thresholds, grid-code compliance, and formal COD declaration, intended to convert the judgment’s fact-specific indicators into a predictable regulatory standard for multi-unit thermal and gas-based generation projects in India.