KERC favours BESCOM in Tariff Dispute With Emmvee Solar

In an order that was published yesterday, the Karnataka Electricity Regulatory Commission  has ruled to dismiss a petition by Emmvee Solar Systems, against BESCOM (Bangaloire Electricity Supply Company Limited).

The key issue was Emmvee Solar’s contention that by denying it a tariff of Rs  9.56 as per the PPA it signed with BESCOM on 27.02.2016, it had been subjected to a financial loss, at the proposed tariff of Rs 5.20 per unit.

The new tariff of Rs 5.20 was invoked by BESCOM on discovering that the petitioner (Emmvee Solar) had taken more than the 6 months allowed at the time of signing the PPA to have the system up and running. Emmvee on the other hand had contended that the original letter from BESCOM  had mentioned a time period of 12 months for execution, within which it did complete the project. The bone of contention? The fact that the one year allowance was a mistake by BESCOM, which it had subsequently corrected on its website as well as all other agreements it entered into.

Importantly, BESCOM , it seems agreed to a one year time frame on the assumption that the building was under construction, and not a functioning building with a ready rooftop. Its a point the commission stressed on, and even stated that Emmvee could have got corrected at the signing stage itself.

The commission noted that the petitioner could not have been unaware of the mistake, and their contention that BESCOM never contacted them or informed them during the course of construction about the change, could not be considered.

It also used a very interesting piece of information to put down the contention of financial losses.

The IREDA Loan Workings

As can be seen by the workings above, the commission declared that the loan amount, and the actual disbursal prove that the actual loss to Emmvee was not significant, further weakening their case of financial losses.

While this order lays to rest this small case for 1 MW, it also highlights the criticality of correct paperwork, and an understanding of specific issues like what is actually considered a completed project. For example, till formal inspection and certification by the Chief Electrical Inspector, the work completion report is not considered complete.

Industry insiders will also look back with some nostalgia at the rates that existed just 5 years ago, and their current state. To think that even Rs 5.20 was a rate being offered as recently as 4 years  ago for net metering will always make people wonder just what could have been. Of course, it also serves to remind us that in India, the benefits of government support have been pulled back with incredible alacrity, just when the industry was scaling up rapidly, with consequences that are all too visible. Of course, the interest of consumers has been quoted ad nauseum by everyone to justify this,  but the fact remains, as compared to markets in China and Europe, acchhe din came and went too fast for the sector.

For Emmvee, clearly the deal that got away