APTEL Clears Way For BSES Discoms to exit NTPC’s Dadri-I PPAs

Highlights :

  • the Appellate Tribunal for Electricity (APTEL) said that the appellant DISCOMS have a right to end the PPAs and SPPAs as the COD of the Dadri plant comes concludes its life.
  • NTPC was selling power at a much costlier price compared with its other plants and much costlier price when compared to renewables.
APTEL Clears Way For BSES Discoms to exit NTPC’s Dadri-I PPAs West Bengal Thermal Power Plant To Produce Solar From Multiple Sources

In a major relief to BSES Yamuna and BSES Rajdhani, the Appellate Tribunal for Electricity (APTEL) has upheld the appeal by the two DISCOMS and allowed them to withdraw from the power purchase agreements (PPA) and supplementary PPA with NTPC’s Dadri I plant. The key reason behind the order is that the power generating plant of NTPC has already completed its COD as it is 25 years old now and the DISCOMS can exercise their right to exit.

APTEL also directed the NTPC not to raise any further invoices to the DISCOMS and also remit the payments made by the DISCOMS under protest along with the interest.

Justice RK Gauba, Officiating Chairperson, and Sandesh Kumar Sharma, Technical Member delivered the order by reasoning that the Power Ministry’s power allocation letter and the guidelines cannot be considered as Executive Orders under Article 73 of the Constitution as the powers for determination of tariff and framing the Tariff Regulations, 2019 are vested with the Central Commission for Central Generating Stations and therefore, are non-statutory documents.

“The provisions of the Tariff Regulations, 2019 have overriding effect on the Contractual Agreements, the PPA and SPPA signed between the Respondent-Generating Station and the Appellants- Delhi DISCOMS,” the tribunal held.

APTEL also said that the Allocation / De-allocation of power from CGS by the Central Government cannot restrict or infringe the provisions contained under the Tariff Regulations, 2019, especially Regulation 17 which provide an option to the beneficiary Discom to exit the PPA/SPPA on completion of 25 years of operation from the Commercial Operating Date (COD) for the Generating Station.

“Once the provision under Regulation 17(2) is exercised by the Appellant to exit from the agreement, the scheduling of power to the Appellant from the Generating Station deemed to terminated,” APTEL opined.

Reasons for the Exit

The reasons for ending the PPA and SPA by the BSES and other DISCOMS are linked to their their efforts to optimise their power purchase costs. Including a higher share of renewable power which was at a lower cost. The three DISCOMS decided to stop purchasing power from the NTPC’s Dadri I plant which has completed 25 years of its COD and due to which it has been generating power at costlier rates and selling it at that rate to its customers.

DISCOMS stopped scheduling power from Dadri I plant from November 2020 but the NTPC had denied them the exit. Discoms complained that the tariff of these stations is comparatively higher than the market sources as well as renewable power procured by the DISCOMS. Average power purchase price from Dadri-I to Delhi consumers is around Rs 6.50 per unit against the average price of Rs 3.50 a unit power sold by the NTPC to consumers in the rest of the country.

During fiscal 2019-20, Delhi DISCOMS had purchased power worth more than Rs 1,150 crore from Dadri I plant. Replacing this expensive power with substantially cheaper green power from SECI available at around Rs 2.50 per unit would cost only Rs 438 crore annually. THE CEA itself has predicted that retiring old thermal plants would open up a significant opportunity for Renewable energy capacity creation for the future.

Recently, BSES, BRPL and BYPL have entered into a PPA agreement with SECI to purchase 510 MW of solar plus wind power. It costs way lesser than what NTPC’s thermal plant is offering.

In Delhi, during 2020-21, of the 3227 crores proposed for energy in the state budget, almost 96% went towards power subsidies for consumers. A significant reduction in power costs, and hence government subsidies will cheer the state government too, no doubt. Mopney that will hopefully be used for larger battery projects to prepare for a higher share of renewables.

"Want to be featured here or have news to share? Write to info[at]saurenergy.com