K’taka Solar Case: APTEL Grants Relief To Hero Future Energies

K'taka Solar Case: APTEL Grants Relief To Hero Future Energies

In a significant development for renewable energy developers, the Appellate Tribunal for Electricity (APTEL) has partially set aside an order of the Karnataka Electricity Regulatory Commission (KERC) and granted key reliefs to Hero Future Energies Private Limited in a dispute involving project delays, liquidated damages, and tariff entitlements.

The case originated from an appeal filed by Hero Future Energies (formerly Clean Solar Power (Hiriyur) Pvt. Ltd.) challenging KERC’s 2017 decision in OP No. 2 of 2017. The dispute centered around delays in the commissioning of a solar power project under a Power Purchase Agreement (PPA) with Hubli Electricity Supply Company Limited (HESCOM), and the validity of a supplementary agreement dated October 20, 2015, which recorded an extension and a change in project location.

While KERC had denied any extension beyond a 22-day period, APTEL held that the developer was entitled to extensions for two specific periods: from February 19 to April 4, 2014 (the time between PPA execution and receipt of KERC’s approval), and from July 12 to August 13, 2014 (delay in receiving a signed addendum from HESCOM). The tribunal concluded that the delays in both periods were due to HESCOM’s lapses, constituting a “HESCOM Event of Default” under the PPA, and hence justifying an extension.

The tribunal ruled that liquidated damages imposed by HESCOM for these periods—amounting to ₹12.05 crore—were illegal. APTEL directed HESCOM to refund the amount within 30 days and held that Hero Future Energies is entitled to restitution, including interest on the refunded sum. However, APTEL refrained from specifying the interest rate or whether it should be simple or compound, remanding the matter to KERC to make that determination based on the actual loss suffered by the Appellant.

For the intervening period from April 5 to May 3, 2014, APTEL upheld KERC’s finding that the delay was solely attributable to the Appellant, which had not communicated its issues or requests for modification in time. Hence, no extension or refund was granted for this period.

Regarding the time between May 4 and July 11, 2014, APTEL observed that KERC had denied extension without adequately hearing the Appellant or considering newly presented documentation. Citing principles of natural justice, APTEL remanded this part of the case back to KERC for fresh consideration. KERC has been directed to allow the developer to file additional documents and evidence and decide the issue afresh.

The tribunal reiterated that a PPA becomes effective only upon regulatory approval, a settled legal principle, and criticized KERC for ignoring this while denying time extension. It also dismissed the notion that developers could proceed on the basis of a photocopy or conditional PPA approval, stressing that financial institutions require original signed documents for funding and land acquisition.

In conclusion, APTEL set aside the impugned KERC order, upheld the Appellant’s entitlement to partial extensions and refund, and remanded key issues back to KERC for re-evaluation. The order provides clarity on regulatory approval timelines and sets a precedent on restitution in electricity sector disputes.

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