Farmer Wins Partial Victory as APTEL Sets Aside Penalties in Solar Project Delay

In an interesting case, a woman farmer-developer has received partial relief from the Appellate Tribunal for Electricity (APTEL). The petitioner, a farmer from Karnataka, had approached APTEL against an impugned order of the Karnataka Electricity Regulatory Commission (KERC). The state power regulator had earlier reduced the tariff for her project and imposed penalties for the delayed commissioning of her solar plant.

The case pertained to the establishment of a 1 MW solar power plant under the Karnataka Solar Power Policy (2014–2021). The project was scheduled to begin operations on January 1, 2017, but it was commissioned on April 29, 2017 — within a six-month extension granted by the local discom, GESCOM. However, this extension was later rejected by KERC, which held the petitioner responsible for the delay and imposed penalties and other financial burdens.

While the farmer was entitled to a contracted tariff of Rs 8.40/kWh, the state regulator held that she was eligible only for a tariff of Rs 4.36/kWh, in addition to penalties.

What the petitioner said

The petitioner argued that the delays were caused solely by government department bottlenecks and bureaucratic red tape, which were beyond her control. She urged APTEL to declare these delays a ‘force majeure’ event. She stated that there was a 14-month delay in the issuance of the land conversion order. She also said she had applied for land conversion soon after signing the PPA on July 17, 2015. According to her, this delay further affected the sanctioning of bank loans due to an alleged shortage of documents.

GESCOM, in its response, argued that the petitioner had filed an incorrect land conversion application in 2015 and submitted the correct one only in March 2016. It also submitted that developers were allowed to proceed with project execution immediately after filing the conversion application, which meant the delay was avoidable.

What APTEL said

APTEL, in its ruling, did not rule on the tariff reduction issue and directed KERC to examine the matter afresh. However, it held that government departments were responsible for the delays, granted the petitioner relief from payment of penalties, and upheld the extension of the project commissioning period.

APTEL said, “For the foregoing reasons as stated above, the Appeal is allowed partially and the Impugned order to the extent of disallowing the extension granted by the Respondent No. 1 and direction on the Appellant to pay damages, is set aside.”

“From the above-mentioned submissions of the Appellant, it is difficult to conclude as to whether the capital cost got crystallised before SCD i.e. 01.01.2017. We therefore consider it appropriate to remand the matter to KERC to ascertain this aspect. We make it clear that the only aim of this exercise by KERC shall be to establish if capital cost got crystallised before 01.01.2017. If that turns out to be the case, the tariff shall be fixed at ₹ 8.40 per kWh, else the tariff applicable as per actual date of commissioning will be applicable,” the written order of APTEL said.

It also added, “We make it clear that if in this process, actual capital cost gets discovered, it will have no bearing on tariff as this is not intended to be an exercise for tariff determination on cost plus basis in a strict sense. The KERC will be free to call for all the necessary documents and this exercise will be done uninfluenced by previous proceedings in the matter and observations, if any of this Tribunal.”