Judgment :- 1. South Indian Sugar Mills Association, a representative body representing the Sugar Mills in South India and two other sugar mills viz., The Davangere Sugar Company Pvt. Ltd., and Sri Renuka Sugar Mills, Bangalore, have filed these writ petitions. 2. The relief sought in these writ petitions is, for a declaration that the Karnataka Electricity Regulatory Commission (Power Procurement from Renewable Sources by Distribution Licensee and Renewable Energy Certificate Framework) Regulations, 2011, as amended on 16.03.2011 and 20.12.2011 (for short, 'Regulations') are without jurisdiction. Petitioners have requested to set aside the same. A direction is also sought against the 2nd respondent - State Load Dispatch Centre, Karnataka Power Transmission Corporation Limited, Bangalore, to grant accreditation and recognize the petitioner- Company as eligible for trading Renewable Energy Certificates (for short, 'REC') as per the application presented on 02.03.2012 vide Annexure-D. 3. Though petitioners have made grievance against the entire Regulations framed by the Karnataka Electricity Regulatory Commission (for short, 'KERC), principal grievance made in the writ petition pertains to Clause 7(c) of the Regulations, which requires that a generating company opting for REC Scheme shall sell the electricity generated by it to Electricity Supply Companies (for short, 'ESCOMs') of the State at the pooled cost of power purchase as notified from time to time. This Clause in the Regulations is challenged contending inter alia that it is contrary to the Regulations framed by the Central Electricity Regulatory Commission (for short. CERC), without jurisdiction and violative of the fundamental rights guaranteed under Articles 14 & 19(l)(g) of the Constitution of India. 4. Facts leading to this petition stated in nutshell are that petitioners are Societies registered under the provisions of the Karnataka Societies Registration Act, 1960. Petitioners are engaged in manufacturing sugar. They are running sugar mills in the State of Karnataka. Petitioner in W.P.No.7605/2012 claims to have established four sugar mills. It has got co- generation facility and does not have any Power Purchase Agreement (for short, 'PPA') with any of the State Distribution Licensees. The 1st petitioner in W.P.No.7603-04/2012 is a representative body of sugar mills and the 2nd petitioner is having co-generation facility. All these petitioners claim that they are affected by the Regulations impugned in the writ petition. 5. The KERC has framed Regulations during the year 2011 providing for power procurement from renewable sources by distribution licensee and also providing RECs. The 1st petitioner in W.P.No.7603-04/2012 is a representative body of sugar mills and the 2nd petitioner is having co-generation facility. All these petitioners claim that they are affected by the Regulations impugned in the writ petition. 5. The KERC has framed Regulations during the year 2011 providing for power procurement from renewable sources by distribution licensee and also providing RECs. As the petitioners in their capacity as generating companies are obligated to sell electricity generated by co-generation or from renewable energy sources to any of the distribution companies of the State only that too at the pooled cost of power purchase, they are aggrieved by the regulation framed in this regard by the KERC. 6. The CERC has framed regulations vide notification dated 14.01.2010 produced at Annexure-A. These regulations are framed in exercise of power under Section 178(1) and Section 66 read with Clause (y) of Section 178(2) of the Act and the State Regulations framed by the KERC are in exercise of power under Section 86(l)(e) read with Section 181 of the Act. 7. The Central Regulations are framed for the purpose of development of market in power from non-conventional energy sources by issuance of transferable and saleable credit certificates. Regulation 5 of the Central Regulations provides for eligibility and registration for certificates. It states that a generating company engaged in generation of electricity from renewable energy sources shall be eligible to apply for registration for issuance of and dealing in certificates if it fulfills certain conditions. The conditions are enumerated in sub-clauses (a) to (c) of Regulation 5(1). They arc as under: "(a) it has obtained accreditation from the State Agency; (b) it does not have any power purchase agreement for the capacity related to such generation to sell electricity at a preferential tariff determined by the Appropriate Commission; and (c) it sells the electricity generated either (i) to the distribution licensee of the area in which the eligible entity is located, at a price not exceeding the pooled cost of power purchase of such distribution licensee, or (ii) to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at market determined price. Explanation.- for the purpose of these regulations 'Pooled Cost of Purchase' means the weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self generation, if any, in the previous year from all the energy suppliers long-term and short- term, but excluding those based on renewable energy sources, as the case may be." 8. These Regulations are amended by the CERC by notification dated 29.09.2010 produced as Annexure-E along with the writ petition. 9. The case of the petitioners is, that the main aim of renewable energy mechanism introduced by CERC by the regulations framed by it in the year 2010 is, to promote investment in renewable energy projects and to provide an alternative mode to the renewable energy generators for recovery of their costs. It is urged by Mr. Prabhuling Navadgi, learned Counsel appearing for the petitioners that CERC has emphasized the object and purpose of the renewable energy mechanism in the Statement of Objects and Reasons furnished to the 1st Amendment carried out to the regulations, which is aimed at reducing the mismatch between the availability of renewable energy sources in the States and the requirement of obligated entities to meet the Renewable Purchase Obligations (for short. 'RPO') by providing alternative mode to the renewable energy generators for recovery of their costs. Reliance is placed in this regard on the Statement of Objects and Reasons vide Annexure-D to the draft notification issued by the CERC. 10. It is urged by him that fixation of eligibility criteria as per Regulation 7(c) by the KERC for participation in REC scheme is wholly outside the jurisdiction of KERC as the role of State Regulatory Commission is to recognize REC as a valid instrument for meeting RPO. 11. Placing reliance on Section 86(l)(e) of the Act, he has contended that the function and obligation of the State Commission is to promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person and also specify for purchase of electricity from such sources a percentage of total consumption of electricity in the area of distribution licensee. He has further urged that the Regulations now framed by the KERC run counter to the object and purpose behind REC scheme as laid down by the CERC, in as much as, the renewable energy generators in Karnataka are not eligible for REC for sale of energy to third parties or for sale in power exchange. This condition, Mr. Navadgi urges, is contrary to the Regulations of CERC that allows third party sale or for sale in power exchange. 12. He points out that almost all other States have followed the Regulations of CERC and have promoted sale of energy through RECs to third parties. It is further contended by him that because of such obligation fastened on the renewal energy generators in Karnataka requiring them to sell the energy only to ESCOMs in Karnataka, so far, none 01 the co-generators in Karnataka have entered into any agreement with the State Distribution Companies even after lapse of one year from the date of notification of the Regulations on RECs. This, according to the learned Counsel, has resumed in several renewable energy generating companies moving away from the State for making investments and have indeed opted for such investments in other States where such restrictions are not found. Learned Counsel Mr. Navadgi juxt-opposes Regulation 7 (c) of the Regulations of KERC with Regulation 5 of the Regulations of CERC as amended vide notification dated 29.09.2010, to urge that the State Regulations are inconsistent with the intention expressed in the CERC and practically make all generators in the State ineligible from subscription for REC. 13. He has further urged that the Regulations framed by the CERC create a national market for trading in RECs. The KERC does not have such power because it derives its power from Section 86(l)(e) of the Act, which provides for regulation of generation of electricity including non-conventional energy in the State. The REC scheme being a national framework, the State Commission cannot exercise any power over the same. Ht has placed reliance on the judgment in the case of PTC INDIA LIMITED VS CENTRAL ELECTRICITY REGULATORY COMMISSION, THROUGH SECRETARY - (2010) 4 SCC 603 , to urge that one of the most important features of the 2003 Act is introduction of open access under Section 42 of the Act. Ht has placed reliance on the judgment in the case of PTC INDIA LIMITED VS CENTRAL ELECTRICITY REGULATORY COMMISSION, THROUGH SECRETARY - (2010) 4 SCC 603 , to urge that one of the most important features of the 2003 Act is introduction of open access under Section 42 of the Act. Under the open access regime, distribution companies and eligible consumers have the freedom to buy electricity directly from generating companies or trading licensees of their choice and correspondingly the generating companies have the freedom to sell. 14. Sri Navadgi has also urged that the State Commission cannot iay down regulations which has the tendency of impinging on 3ubstantive provision relating to (a) development of market in power as provided under Section 178(2)(y), (b) inter-state electricity trading (c) non-discriminate open access under Section 42 (inter state transmission of electricity). 15. Per contra, Mr. Udaya Holla, learned Senior Counsel appearing for the respondent, has defended the regulations framed by the KERC. He has, urged that functions of the Central Commission are enumerated under Section 79 of the Act, whereas functions of the State Commission art enumerated under Section 86 of the Act. Both of them discharge their functions in different spheres altogether. As per Section 86(l)(e) of the Act, it is only the State Commissions which has the mandate of promoting co-generation and generation of electricity from renewable sources of energy, whereas under Section 79 of the Act, the Central Commission has no such function or mandate assigned to it. Therefore, it is only the State Commission which can make Regulations with regard to renewable sources of energy and in discharge of this function, the impugned regulations have been framed by the State Commission, and therefore, the same cannot be termed as illegal or outside its jurisdiction. 16. It is also urged by him that as per the impugned regulations, the distribution licensees functioning in the State of Karnataka are required to purchase power from generating companies in the State. He points out that the RPO in this regard which is required to be fulfilled by the State Distribution Licensees ranges from 7 to 10% and in actual performance, the overall renewable energy purchased by the distribution entities in Karnataka has been more than 10% of the total energy purchased by them during the year 2011-12. He points out that the RPO in this regard which is required to be fulfilled by the State Distribution Licensees ranges from 7 to 10% and in actual performance, the overall renewable energy purchased by the distribution entities in Karnataka has been more than 10% of the total energy purchased by them during the year 2011-12. He farther urges that some of the States in the country do not have the potential to generate electricity by renewable sources to fulfill the RPOs prescribed under Section 86 of the Act. It is in this background, the CERC has framed general regulations for issuance of an instrument by name Renewable Energy Certificate which can be purchased in fulfillment of the RPO m the market. But, the said regulation cannot be made applicable to the State of Karnataka as the State Commission after considering the Central Regulations and the needs of the State of Karnataka has framed KERC Regulations in exercise of the power under Section 181, keeping in mind its obligations and functions as provided under Section 86(1)(e) of the Act. He takes me through the relevant provisions of the State Regulations and the Central Regulations, to contend that conditions of accreditation in the State Regulations are just and legal and are based on rational nexus apart from traceable to the legal competence and authority to proscribe such conditions of eligibility for accreditation to get RECs. 17. Mr. Holla refers to Annexure-R4 filed along with statement of objections and contends that tariff policy has been amended by the Union Government in exercise of powers conferred under Section 3 of the Act as per amendment dated 20.01.2011, wherein it is stipulated that the REC mechanism applies only in the event of sale of power by the generator to the State Distribution Licensees. Therefore, the KERC Regulations which have been notified on 16 03.2011 are very much in conformity with the tariff policy that binds the State Commission. He has further contended that Renewable Energy Generator who sells electricity generated to the State distribution entities is fully compensated for the energy sold providing a fair amount of profit. Therefore, there was no justification for the petitioners to make any grievance regarding the price. He has further contended that Renewable Energy Generator who sells electricity generated to the State distribution entities is fully compensated for the energy sold providing a fair amount of profit. Therefore, there was no justification for the petitioners to make any grievance regarding the price. He urges that grant of REC benefit to such generator will only amount to an unjust enrichment and windfall gains at the cost of consumers of the public utilities which will be forced to buy RECs to fulfill their RPO. He also urges that REC benefit is not intended as a measure to promote Renewable Energy Generation by conferring super-normal profits on the Renewable Energy Generators. It is only meant to enable the States with higher potential for Renewable Energy Generation to transfer the extra cost involved in procuring renewable energy to States with lower potential for Renewable Energy Generation, because it is apparent that the environmental benefits of renewable energy accrue to all States. Mr. Holla further urges that if such super-normal profit is assured to the generators of renewable energy, they will not sell the electricity to the ESCOMs and they would not be in a position to fulfill their RPOs. This will force the ESCOMs to purchase such RECs in open market and they will also be forced to purchase power to meet the shortfall, which would ultimately result in increase in the cost of energy supplied to the consumers and would not be in public interest. 18. Having considered the contentions urged by the learned Counsel for both parties, the following questions fall for consideration in this case are, (i) Whether Regulation 7(c) framed of the KERC Regulations is illegal and without authority of law? (ii) Whether there is any inconsistency between Regulation 7(c) framed by the KERC and Regulation 5(c) framed by the CERC? If so, what is the effect of such inconsistency? (iii) What order? 19. The Electricity Act, 2003, has been enacted to consolidate laws relating to generation, transmission, distribution, trading and use of electricity and for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas. If so, what is the effect of such inconsistency? (iii) What order? 19. The Electricity Act, 2003, has been enacted to consolidate laws relating to generation, transmission, distribution, trading and use of electricity and for taking measures conducive to development of electricity industry, promoting competition therein, protecting interest of consumers and supply of electricity to all areas. The other objects being rationalization of electricity tariff; ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies and also for constitution of Central Electricity Authority, Regulatory Commissions and establishment of Appellate Tribunal and for matters connected therewith. It is apparent from the Statement of Objects and Reasons of the Act that distribution licensees would be free to undertake generation of electricity and generating companies would be free to take up distribution licenses. Apart from promoting efficient and environmental benign policy, coupled with promoting competition in electricity industry, protection of interest of consumers and supply of electricity to all areas and also rationalization of electricity tariff are some of the main objects. 20. The CERC is constituted as per Section 76 of the Act to exercise powers conferred and to discharge the functions assigned to it under the Act. Similarly, Section 82 of the Act provides for constitution of State Electricity Regulatory Commission by every State for the purposes of the Act. 21. Section 79 deals with functions of Central Commission. Section 79(1) lists the functions that shall be discharged by the Central Commission. Section 79(1)(c) to (e) which are relevant for the present purpose may be usefully referred. "79. Functions of Central Commission.- (1) The Central Commission shall discharge the following functions, namely:- (a) (b) (c) to regulate the inter-State transmission of electricity; (d) to determine tariff for inter-State transmission of electricity; (e) to issue licenses to persons to function as transmission licensee and electricity trader with respect to their inter-State operations; (f) (g)(h)(i) (j) (k) Section 79(4) reads as under: "(4) In discharge of its functions, the Central Commission shall be guided by National Electricity Policy, National Electricity Plan and Tariff Policy published under Section 3." 22. Section 3 of the Act deals with National Electricity Policy and Plan, Section 3(1) enjoins the Central Government with a duty to prepare National Electricity Policy and Tariff Policy from time to time in consultation with the State Governments and the authority for development of the power system based on optimal utilization of resources, such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy. Section 3(2) requires the Central Government to publish the National Electricity Policy and Tariff Policy from time to time. As per sub-clause (3), the Central Government in consultation with the State Governments and can review or revise the National Electricity Policy and Tariff Policy. 23. Section 178 of the Act deals with the powers of Central Commission to make regulations. In exercise of the power conferred under Section 178(1), the Central Commission has framed Regulations by issuing notification dated 14.01.2010 consistent with the objects of the Act and the Rules to carry out the provisions of the Act. These regulations are known as CERC (Terms and Conditions for recognition and issuance of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010. 24. It is clear from Regulation 5 that it provides eligibility criteria and also registration for the purpose of issue of certificates in favour of generating companies engaged in generation of electricity from renewable energy sources. The certificates to be issued to the eligible entity is by the central agency after the applicant satisfies all the conditions and each certificate issued shall represent one MW hour of electricity generated from Renewable Energy Source and injected into the grid. There is a provision under Regulation 8 for dealing with certificate, in that, the certificate could be dealt only through the power exchange. The Regulations further provide for pricing of certificate and other incidental matters. Suffice to observe that a generating company which generates electricity from renewable energy sources is entitled to nave its name registered for issuance of RECs and in dealing with such certificates. The Regulations framed by the Central Commission disclose that it purports to create a national market for trading in RECs. This power and function of the Central Commission is traceable to Section 79 of the Act. 25. The Regulations framed by the Central Commission disclose that it purports to create a national market for trading in RECs. This power and function of the Central Commission is traceable to Section 79 of the Act. 25. One of the eligibility conditions for registration and for issuance of certificates as is clear from Regulation 5(1) (a) is that the generating company ought to have obtained accreditation from the State Agency. Another condition imposed vide Section 5(l)(c) is that, the company generating electricity from renewable energy has to sell the electricity generated either (i) to the Distribution Licensee of the area in which the eligible entity is located, at the a price not exceeding the pooled cost of power purchase of such distribution licensee, or (ii) to any other licensees or to an open access consumer at a mutually agreed price, or through power exchange at market determined price. 26. The jurisdiction of CERC is essentially to regulate the RECs in the realm of national framework whereas the State Commissions are essentially rested with power to regulate anything within the State and that if there is any inconsistency in the regulations framed by the State and the Central Commissions, the same has to be resolved by adopting harmonious construction. 27. The State Commission has power to make Regulations as per Section 181 to carry out the provisions of the Act. Section 86 of the Act deals with functions of State Commission. Section 86(1)(e) provides as one of the functions of State Commission to promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person and also specify for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee. In order to discharge this function and in exercise of the powers and functions conferred under Section 86(l)(e) read with Section 181, and also to provide for a mechanism towards implementation of CERC Regulations, 2010, the State Commission has framed the KERC Regulations of 2011. The KERC regulation provides for a State agency which is defined under Section 2(1) (1)- to mean the agency as designated by the Commission to give accreditation to the projects based on renewable energy sources of energy and to undertake such functions as may be specified or directed by the Commission. The KERC regulation provides for a State agency which is defined under Section 2(1) (1)- to mean the agency as designated by the Commission to give accreditation to the projects based on renewable energy sources of energy and to undertake such functions as may be specified or directed by the Commission. Regulation 6 enjoins the State Agency with a duty to formulate and notify procedures and terms and conditions for accreditation, with prior approval of the Commission and that in formulating such procedures the State Agency shall be generally guided by the procedures/rules stipulated by the Central Agency under the CERC Regulations, 2010. 28. Regulation 7 provides for conditions for accreditation. It reads as under. "7. Conditions for Accreditation.- Renewable Energy Generators in the State applying for accreditation to the State Agency for securing REC shall satisfy the following conditions:- (a) The Generating Companies shall not have any subsisting power purchase agreements related to such generation with any of the distribution licensees of the State; (b) A Generating Company shall not, in case of premature termination of a power purchase agreement, be eligible in respect of the generation capacity covered by such PPA, for participating in REC Scheme for a period of one year from the date of termination of such agreement or till the scheduled date of expiry of PPA, whichever is earlier. (c) A Generating Company opting for REC Scheme shall sell the electricity generated by it to ESCOMs of the State at the pooled coot of power purchase as approved by the Commission for the previous your in its tariff orders escalated for inflation. (d) Captive Power Producers (CPP) based on renewable sources of energy shall be eligible to get accredited for obtaining RE certificates for the entire energy generated from their plants including the energy used for captive commission. (e) If any Generating Company obtains accreditation contrary to these Regulations, the Commission may either suo motu or otherwise cancel the accreditation after giving notice to such Generating Company." 29. The offending clause, as far as the petitioners is sub-clause (c) of Regulation 7. If one juxt-opposes the condition mentioned in Clause 7(c) in the State Regulations with the conditions mentioned in Clause 5(l)(c) of the Central Regulations, the inconsistency between the two becomes clear. Both these provisions are extracted hereunder for better appreciation in a tabular form. The offending clause, as far as the petitioners is sub-clause (c) of Regulation 7. If one juxt-opposes the condition mentioned in Clause 7(c) in the State Regulations with the conditions mentioned in Clause 5(l)(c) of the Central Regulations, the inconsistency between the two becomes clear. Both these provisions are extracted hereunder for better appreciation in a tabular form. Clause 5(l)(c) Clause 7(c) The Generating Company sells the electricity generated either (i) to the distribution licensee of the area in which the eligible entity is located; at a price net exceeding the pooled cost of power purchase of such distribution licensee, or (ii) to any other licensee or to an open access consumer at a mutually agreed price, or through power exchange at market determined price. Explanation.- for the purpose of these regulations 'Pooled Cost of Purchase' means the weighted average pooled price at which the distribution licensee has purchased the electricity including cost of self generation, if any, in the previous year from all the energy suppliers long-term and short-term, but excluding those based on renewable energy sources, as the case may be." A Generating Company opting for REC Scheme shall sell the electricity generated by it to ESCOMs of the State at the pooled cost of power purchase as approved by the Commission for the previous year in its tariff orders escalated for inflation. 30. It is thus clear from a comparison of the regulations extracted above, that the Central Regulations which deals with eligibility and registration provide option to the generating company generating electricity from renewable energy to sell the electricity generated either to the distribution licensee of the area at a price not exceeding the pooled cost of such distribution licensee or to any other licensee or to an open access consumer at a mutually agreed price or through power exchange at market determined price. But, as per the State Regulation 7(c), the only option for the generating company for REC scheme is to sell the electricity generated by them to ESCOMs of the State at the pooled cost of power purchase as approved by the Commission in its tariff orders. 31. It is thus apparent that a generating company engaged in generation of electricity from renewable energy sources in the State has no access to any other licensees or to any other consumer to sell the electricity generated through REC mechanism. 31. It is thus apparent that a generating company engaged in generation of electricity from renewable energy sources in the State has no access to any other licensees or to any other consumer to sell the electricity generated through REC mechanism. Such generating company is also bound to sell the electricity generated by it at a fixed rate. 32. As rightly contended by the learned Senior Counsel Mr. Holla, where a renewable energy generator chooses to sell power in the open market, he realizes all his costs and also a return of his investment through the price he realizes in the open market. This price realized in the market is generally higher than the power purchase agreement in vogue in the State. Thus, the renewable energy generator who chooses to sell his power in open access to consumers in preference to power purchase agreement makes a fair amount of profit. 33. It is important to notice that there is no mandate in the regulation that the renewable energy generator has to supply electricity generated by him only to the State entity for the purpose of getting accreditation for the REC scheme. They have the freedom to either opt for it or go for open access. Therefore, the contention urged by the Counsel for the petitioners that there has been an unreasonable restriction placed on their right and their fundamental right under Articles 14 and 19(i)(g) are violated, cannot be accepted. Had it been that the renewable energy generators had no right to trade in the energy generated by them by selling it to other licensees thing would have been different. Though Regulation 7(c) framed by the State Commission uses the expression 'shall sell the electricity generated by it to ESCOMs in the State at the pooled cost', in the additional statement of objections, the 1st respondent has made it clear that REC mechanism is an option provided to the generators and there is no embargo for the generator to sell the energy generated through open access in terms of the provisions of the Act. 34. In paragraph 3 of the additional statement of objections, the 1st respondent has specifically contended that they have not, through the regulations framed, in any manner prohibited the sale of energy produced by the generators through open access or through the power exchange. 34. In paragraph 3 of the additional statement of objections, the 1st respondent has specifically contended that they have not, through the regulations framed, in any manner prohibited the sale of energy produced by the generators through open access or through the power exchange. The generators are free to sell through open access or through the power exchange. However, if the generator sells energy through open access or the power exchange, the generator is not entitled to the additional benefit of REC, which can be traded separately. In other words, if the generators choose to sell the renewable energy generated by them to ESCOMs at the pooled cost of power purchase, they will have certain incentives and the said incentives is in addition to the pooled cost of power purchase paid by the local distribution licensee. The generator is also issued a renewable energy 'certificate which he can separately trade for value. 35. In paragraph 7 of the additional statement of objections, this aspect is further made clear by the stand taken by the 1st respondent contending that as regards the language of Regulation 7(c) of the KERC Regulations 2011, though it states that generator shall sell all the energy produced by him to the ESCOMs at the pooled cost of power purchase for the generator to avail the REC, the said clause if read in conjunction with the rest of the regulations and the object of the Act, the interpretation would be that REC scheme would be applicable to the extent of energy sold to the ESCOMs at the pooled cost of power purchase and there is no compulsion to sell the entire energy produced by the generator to the ESCOMs to avail the benefit of REC mechanism to the state entities. 36. 36. As I have already held that both the Central and State Commission have independent power to make regulations in respect of the schemes assigned to them arid that there cannot be a water tight compartment in discharge of their functions pertaining to renewable energy sources and further that there is no provision in the Act assigning primacy to the regulations farmed by the Central Commission in case there is any inconsistency between the State and the Central Regulations, I am of the view that even the-ugh there is some inconsistency in both the regulations in so far as REC scheme is concerned, that cannot be a ground to set aside or declare that the regulation framed by the State is unreasonable being opposed to the scheme framed by the Central Commission. As long as the KERC has exercised its powers in framing Regulation 7(c) within the frame work of the functions assigned to it under Section 86 and as long as it does not in any manner contravene the tariff policy of the Central Government, I do not find any illegality in the requirement of Regulation 7(c) demanding sale of renewable energy produced by a generator for the purpose of issue of REC. 37. It cannot also be stated that Regulation 7(c) framed by the KERC runs counter to the object and purpose of the Act. The purpose and object of the Act being to ensure development of electricity industry and environmentally benign policies apart from protecting the interest of the consumer s, this object is not in any manner sacrificed by requiring the generators of renewable energy to sell the energy generated to the state entities, if they intended to avail the benefit of REC scheme without in any manner coming in the way of their option to sell the energy generated in open access as well. Therefore, the contention urged in this regard by the petitioners that the regulation runs counter to the object and purpose of the Act and does not promote and protect the interest of renewable energy generators cannot be accepted. 38. Therefore, the contention urged in this regard by the petitioners that the regulation runs counter to the object and purpose of the Act and does not promote and protect the interest of renewable energy generators cannot be accepted. 38. In the tariff policy notified under Section 3 of the Act, vide Annexure-R4 in paragraph 6.4 which pertains to non- conventional and renewable sources of energy generation including co-generation, while referring to Section 86(l)(e) of the Act, it is stated that a proper mechanism such as REC will have to be evolved and through such a mechanism, the renewable energy based generation companies can sell the electricity to local distribution licensee at the rates for conventional power and can recover the balance cost by selling certificates to other distribution companies and obligated entities enabling the latter to meet their renewable power purchase obligations. This tariff policy spelt out above also does not in any manner run counter to the regulation in Regulation 7(c) of the KERC Regulations, as it fulfills the twin needs of the generator of renewable energy to sell the energy to local distribution licensees at the pooled cost without placing any embargo on them to recover the balance cost of selling the certificates to other distribution companies apart from resorting to have open access sale of the energy produced. 39. Thus, looked from any angle, the challenge laid to the regulation cannot be sustained. Hence, these writ petitions are dismissed.