CERC Terms SC Order On GIB As ‘Change Of Law’, Awards Compensation To Azure

CERC Terms SC Order On GIB As 'Change Of Law', Awards Compensation To Azure. Photo Credit-Wirestock/Freepik

The Central Electricity Regulatory Commission (CERC) in a significant judgment termed the 2021 Supreme Court order on the Great Indian Bustards (GIB) as a ‘Change of Law’ event. It also granted compensation to Azure Power Maple Private Limited on account of its alleged additional expenditures. 

The case came to light after the petitioner Azure Power moved to the CERC, seeking compensation due to the alleged increase in their expenditures after the SC order. The apex court issued the order (MK Ranjitsinh Vs Union of India) on April 19, 2021.  

The Supreme Court in its 2021 order asked the power developers in their areas to to keep all their existing and future overhead low and high-voltage power lines in the priority and potential habitats of GIB under-ground. This was meant to safeguard the vulnerable bird species from threats due to these high-voltage electricity lines. 

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Azure Power had developed two projects near the Bhadla Solar Park region in Bap Tehsil. These included one project of 300 MW at Bandhari and Kesarpura in Bapo Teshil and another 300 MW solar project at Nooree Ki Burj and nearby areas in the same Tehsil. 

As per the established norms, any major deviation from the agreement provisions of the Power Purchase Agreements (PPAs) could be termed as a ‘Change of Law’ by the concerned Commissions like state commissions or CERC. This empowers the concerned firms for compensation in cases of increased expenditure or exemptions in delayed commissioning of the projects. Azure developed these projects after winning the tenders, issued by the Solar Energy Corporation of India (SECI). The power produced from these solar plants was scheduled to be sent to the discoms in  Delhi, Odisha and Madhya Pradesh. 

The chronology of the events indicated that the tender for these projects was issued in 2019. While for the first project, the bid was submitted on April 30, 2019,  for the other project it was submitted on February 25, 2019. PPAs for both projects were also signed before the end of 209. The tariffs were also adopted before February 2021 for both projects. However, the SC order came on April 19, 2021. 

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Final CERC order 

“We observe that the Petitioner has already incurred the additional expenditure qua SC GIB Order dated 19.04.2021 (post the bid submission date, i.e., 20.11.2018). Accordingly, we find and hold that the Petitioner is entitled to the additional expenditure in compliance with the SC GIB Order dated 19.04.2021 as a Change in Law event under Article 12 of the PPAs,” the order from CERC said.

“Accordingly, the Commission hereby directs the contracting parties to carry out reconciliation of additional expenditure as per Article 12 of the PPAs by exhibiting clear and one-to-one correlation with the projects and the invoices raised supported with auditor certificate from 19.04.2021 up to 21.03.2024 qua SC GIB Order dated 19.04.2021,” the written CERC order read.