APTEL Orders MP DISCOM to Pay Solar Generator for 'Free Power'

In a significant ruling, the Appellate Tribunal for Electricity (APTEL) has directed a Madhya Pradesh power distribution company to compensate a solar power generator for electricity injected into the grid without payment for nearly two years. It also termed the utility’s conduct as unjustly beneficial.

In its order, the apex body allowed an appeal filed by JK Minerals, which operates a 1 MW solar power plant in the Shajapur district of Madhya Pradesh. APTEL held that the denial of long-term open access (LTOA) by state transmission and distribution entities was erroneous.

Dispute Over Open Access

The dispute dates back to 2016, when JK Minerals entered into a power purchase agreement (PPA) with Indore Treasure Island Pvt. Ltd. to sell 100 percent of the electricity generated from its solar plant. To enable the sale, the company applied for long-term open access, which was rejected by state utilities on grounds of “technical feasibility” and “network congestion”.

However, during proceedings, it emerged that the consumer had confirmed it would consume the solar power within its existing contracted demand, without seeking any additional load—undermining the utilities’ congestion-related objections.

Despite the rejection, JK Minerals commissioned the project on September 20, 2016, and began injecting electricity into the grid.

Power Supplied Without Compensation

Based on a communication from the holding company of the state discoms, the generator was permitted to inject electricity into the grid “free of cost” until open access approval was granted. After prolonged litigation, JK Minerals eventually signed a new PPA with a company (Deepak Fastener) and was granted LTOA on May 11, 2018.

This resulted in a prolonged period—from August 2016 to May 2018—during which electricity was supplied to the grid without any payment to the generator.

Tribunal Finds ‘Unjust Enrichment’

APTEL observed that the distribution company had consumed and benefited from the solar power while denying compensation, amounting to unjust enrichment. The Tribunal also criticised the Madhya Pradesh Electricity Regulatory Commission’s earlier orders, noting that the initial rejection of LTOA was inconsistent with conditions that were later found acceptable.

Citing principles under Section 70 of the Indian Contract Act, 1872, the Tribunal held that when electricity is accepted and utilised without an express contract, a legal obligation to pay arises.

Compensation and Interest Awarded

APTEL directed that JK Minerals be compensated for power injected into the grid from September 15, 2017—the date of the first erroneous regulatory order—until May 10, 2018. The compensation is to be paid at the Average Power Purchase Cost (APPC) of the distribution company.

Recognising that the generator was deprived of its dues for nearly eight years, the Tribunal also awarded carrying costs at SBI’s prime lending rate plus 2 percent. The state commission has been directed to compute the payable amount within one month, with the discom required to make payment within four weeks thereafter.