APTEL Sets Aside KERC Order, Restores Benefit To Solar Developer

Highlights :

  • The order seeks to clarify the role of state commissions in deciding on issues that are already part of the PPA between contracting parties.
  • It also urges commissions to take a view that also captures the spirit of legislation, considering that the party involved as a developer here is a farmer.
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The Appellate Tribunal for Electricity (APTEL) has ruled in favour of a small solar power developer, Hunsankodilli Solar Power Project LL.P (developer) that has set up a 3 MW solar plant in Karnataka. The ruling follows a similar one declared early in August where the apex authority had taken a similar view.

The developer had filed an appeal against an order (9.2018) passed by the Karnataka Electricity Regulatory Commission (KERC) where KERC had declared that the developer was not entitled to extension of time for commissioning of the solar power project in terms of Article 2.5 (Extension of Time) read with Article 8 (Force Majeure) of the Power Purchase Agreement dated 07.2015 read with Supplementary PPA dated 11.2016 without considering several relevant facts pertaining to Force Majeure event.

BESCOM has not alleged any loss or damage but in fact has supported the extension of time till 02.07.2017 granted vide letter dated 03.02.2017. The Government of Karnataka had also vide letter dated 23.06.2017 advised the State Commission of such extension to be granted. In these circumstances mentioned above, the impugned order requires to be set aside.

The project had suffered multiple delays, almost all owing to factors beyond the control of the developer, as these involved government backed agencies taking time over permissions and even BESCOM had , using its own discretion as per the PPA, allowed the developer an extra six months to achieve scheduled commissioning.

The developers Solar Power project, is at Hunsankodilli Village, Kanakapura taluka, Ramanagara District, State of Karnataka. The project was actually promoted by a farmer, to benefit from the government’s 2014 policy on solar plants. In October 2014, the Karnataka Renewable Energy Development Limited (KREDL) invited applications from interested parties for facilitating the development of renewable energy in Karnataka, under which Hunsankodilli Solar Power Project LL.P and Ms. Pallavi S, a farmer owning land in Hunsankodilli village, submitted their applications and entered into PPAs with Bangalore Electricity Supply Company Limited (BESCOM).

The issue rose when the KERC issued a communication to BESCOM in March 2017 informing it that the extension of time should not be considered as a routine exercise except under extraordinary conditions faced by the Project Developer within the scope of the original PPA and directed BESCOM not to issue any extension of time beyond the Scheduled Commercial Operation Date without obtaining the prior permission of the State Commission.

Subsequently, the commission advised developers to file a petition with it for extensions, a message that BESCOM duly passed on to the developer, AFTER giving the project the six moths extension earlier. As it turns out, the KERC rejected the said extension and also imposed liquidated damages for the relevant period on the ground that it was a matter of dispute between the Appellant and first Respondent.

APTEL has disagreed, making it clear that the decision of BESCOM was well within the PPA terms and valid. Moreover, it has declared that the state commission had no business getting involved at the stage that it did.

Thus, the KERC was set aside. The developer has also been considered entitled for the rate of Rs.8.40 per unit in terms of PPA, and not the lower rate as KERC had sought to impose.

APTEL therefore directed BESCOM to pay the difference of the tariffs paid per unit from the date of commissioning of the plant along with late payment surcharge in terms of PPA.

Appellants are not liable to pay any liquidated damages.

Conclusion: We don’t know if this is a case of judicial overreach on the part of the KERC, or a suo moto action on some apprehensions regarding the processes at BESCOM. Bottom line is, no-one comes out looking good from the experience.

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Soumya Duggal

Soumya is a master's degree holder in English, with a passion for writing. It's an interest she has directed towards environmental writing recently, with a special emphasis on the progress being made in renewable energy.