Lack Of Study: APTEL Strikes Down Hike in Wind Energy Charges

The Appellate Tribunal for Electricity (APTEL) has overturned key orders by the Tamil Nadu Electricity Regulatory Commission (TNERC) that had imposed increased charges on wind power producers, ruling the changes arbitrary and unsupported by data.

In a judgment, the tribunal ruled in favour of a batch of appeals filed by the Tamil Nadu Spinning Mills Association (TNSMA) and the Indian Wind Power Association (IWPA), setting aside TNERC’s orders dated March 31 and December 9, 2016. The orders had introduced steeper banking charges and altered cost structures for wind generators in the southern state.

The appeals also included a challenge by Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO), the state-run power distributor, which argued for higher banking charges on grounds of revenue loss.

"No study, no justification"

APTEL found TNERC’s move to raise banking charges—from 5% to 10% of banked energy—was “without any justifiable reason, perverse and arbitrary.” The tribunal noted that the regulator had not conducted any substantial or scientific study to back the tariff hike, in violation of its earlier remand order from 2013, which required stakeholder consultations and data-based reasoning.

“Despite acknowledging the complexity of calculating the cost of banking and the absence of data, TNERC unilaterally increased the charges,” the order stated.

Banking—whereby wind energy producers store surplus electricity in the grid for later use—has been a longstanding incentive for renewable developers in Tamil Nadu. APTEL reiterated that such incentives are backed by India’s Electricity Act, 2003, which obliges regulators to promote renewable energy.

Impact on wind sector viability

The tribunal warned that arbitrary increases in costs could undermine the financial viability of wind projects, especially those commissioned under earlier incentive structures.

APTEL also criticized TNERC for attempting to phase out promotional benefits without legal backing. “Such withdrawals go against statutory policy mandates,” it ruled, calling the changes contrary to national renewable energy goals.

In its decision, APTEL reinstated the pre-2016 provisions on key issues, including banking charges and deemed demand charges, and remanded the matter to TNERC. The regulator has been ordered to conduct a detailed technical study, publish its findings, and seek stakeholder comments before issuing any fresh decision.

Case reflects broader tensions

The case underscores a growing tension between state regulators and renewable energy developers over the financial terms for clean energy integration. While state utilities like TANGEDCO argue that incentives such as banking lead to revenue losses, developers contend that such frameworks are essential for sector growth.

In a broader move, the tribunal also directed that a copy of its judgment be sent to the Union Ministry of Power for necessary action. The ruling is likely to set a precedent for other states, reinforcing the need for data-backed policymaking in India’s energy transition.