APTEL Asks DISCOM to Restore Tariff and Pay Late Payment Surcharge to Solar Developers

The Appellate Tribunal for Electricity (APTEL) has set aside the Karnataka Electricity Regulatory Commission’s (KERC) earlier order reducing the tariff for five solar projects. APTEL ruled that the solar developers were entitled to ?8.40 (~$0.113)/kWh as per the power purchase agreement (PPA).
The Tribunal also directed the Hubli Electricity Supply Company (HESCOM) to pay the difference in tariff from the commissioning date along with the late payment surcharge within one month. It also said that the developers were not liable to pay any liquidated damages.
Kurugunda Solar Power, Hukkeri Solar Power, Yarganavi Solar Power, Madamageri Solar Power, and Basaragi KM Solar Power had challenged the Commission’s order and sought extension of the commercial operation date of the projects. The five limited liability partnerships are set up by Ravindra Energy Limited, a company promoted by the Murkumbi family of Shree Renuka Group.
Background
The Karnataka Renewable Energy Development Limited (KREDL) issued a tender for facilitating the development of renewable energy in Karnataka. The program was meant to benefit small land-holding farmers who could set up solar projects between 1 MW and 3 MW.
The state commission passed a generic order setting the tariff at ?8.40 (~$0.113)/kWh for solar power generators entering the PPA on or after April 01, 2013, and up to March 31, 2018. On May 22, 2014, the Karnataka government introduced the second solar policy for 2014-2021. Under this policy, the state government envisaged a program relating to utility-scale grid-connected solar and concentrated solar power projects.
The solar developers entered into PPAs with HESCOM on June 30, 2015. They argued that there was a delay in implementing the projects because of the time taken by the government to give approvals. Later, HESCOM gave an extension of six months from the scheduled commission date and asked the developers to seek the Commission’s approval.
The KERC issued a notice on March 16, 2017, to all electricity supply companies (ESCOMs), stating that they could not extend the time beyond the scheduled commercial operation date without obtaining approval.
The developers argued that the projects would have been completed on time without the ‘force majeure’ events. They also clarified that HESCOM gave the final evacuation approval on February 2, 2017, and the bay estimate intimation was issued on March 1, 2017, two months after the original scheduled commercial operation date.
The developers said that KERC had erred in holding that the developers were not entitled to an extension of time granted by HESCOM and reducing the tariff from ?8.40 (~$0.113)/kWh to ?4.36 (~$0.059)/kWh.
Tribunal’s analysis
The Tribunal observed that the delay in commissioning the projects was due to the delay in securing approvals from various government agencies. Since HESCOM had recommended the extension of time, it cannot take a contrary stand later.
The Tribunal noted that the effective date was the date of approval of PPA, i.e., July 20, 2015, and the developers had to commission their projects by January 20, 2017.
The State Commission should have considered the facts put forth by the developers for the delay in a prudent manner. Still, as it was clear from the impugned order, it had ignored the developers’ difficulties, the Tribunal said.
The Tribunal added that the officials were responsible for the delay in the appellants securing the approvals.
“Also, as per the PPA, if the amounts are due, not paid in time, the developers are entitled to late payment surcharge. Since the delay was not on account of the developers and they did commission the solar projects within the extended scheduled commercial operation date, they are entitled to late payment surcharge,” the Tribunal said.
The Tribunal ruled that the developers were entitled to a tariff of ?8.40 (~$0.113)/kWh as per the provisions of the PPA from the date of commissioning the solar project. It also directed HESCOM to pay the difference of the tariff paid per unit from the date of commissioning of the projects and a late payment surcharge from the date of the issuance of the order.
HESCOM however has an option to appeal against the judgment at the Supreme Court with 30 days.
In another case, KERC approved a tariff of ?8.40 (~$0.115)/kWh as per the PPA signed between Bangalore Electricity Supply Company Limited (BESCOM) and the project developer, Cambria Solar. The Commission also approved the extension of six months granted by BESCOM for the solar project’s commissioning date.
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