DERC Rules in Favour of Rays Power on PPA dispute With NDMC, Orders Payment of Arrears

Highlights :

  • The order, that ensures payment of dues to Rays Power, even if after years, is a positive for the firm.
  • NDMC’s role has been rightly blamed for the issue coming up in the first place, indicating the unexpected hurdles developers can face when dealing with municipalities with low accountability.
DERC Rules in Favour of Rays Power on PPA dispute With NDMC, Orders Payment of Arrears

The Delhi Electricity Regulatory Commission (DERC) has finally approved the PPAs signed between Rays Power and NDMC, following a 7-year delay attributable to the latter.

In March 2015, the New Delhi Municipal Council (NDMC) entered into 23 solar Power Purchase Agreements with Rays Power Experts Pvt. Ltd. In November 2016, NDMC approached DERC to request the approval of these PPAs at a tariff of Rs. 6.35/kWh.

Following a meeting at the Commission in May 2017, it was agreed by both the parties i.e., NDMC and Rays Power, that NDMC may explore the possibility to bring such solar installations under net-metering arrangement, but these could not fructify.

The Commission was of the view that NDMC wronfully tried to shift its responsibility of taking approval of the PPA upon the private generator by virtue of a clause in the PPA.

“The Regulations being Subordinate Legislation are superior to the provisions of the Contract and the Regulations will override. It was the sole responsibility of the Petitioner [NDMC] to file a Petition seeking approval of the Long Term Power Purchase Agreement. The delay in filing Petition for approval of the PPA has caused grave financial constraints to the Respondent [Rays Power]. The Commission hence vide its Order dated 07.10.2021 in Petition No. 29 of 2021, directed…NDMC to file a fresh application for approval of the PPA already entered into with the generator,” stated DERC.

The commission notes that Rays Power commissioned total 1134 kWp capacity during 2015-2016. In view of this, the Commission after deliberation approved the following:

  • Grants approval to the 23 PPAs dated 11.03.2015 executed between NDMC and Rays Power.
  • Adoption of the tariff discovered by bidding process, i.e., Rs. 6.35/kWh from the date of actual commercial operation of the project.

The attitude of NDMC, considered one of the better run municipalities in the country, if one goes through the whole documentation, smacks of a body that has no accountability, and believed it could get away with such a brazen delay. That is truly not unique to this particular municipal body, and one reason quality developers still try and avoid dealing with such bodies.

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