CERC Rejects CESC’s ₹3.81/kWh Tariff Bid for 300 MW Hybrid Project

The Central Electricity Regulatory Commission (CERC) has dismissed a petition filed by CESC Limited seeking approval for a tariff of ₹3.81 per kWh for the long-term procurement of power from a 300 MW wind-solar hybrid project. CESC, the primary distribution company (DISCOM) serving Kolkata in West Bengal, is owned by the RP-Sanjiv Goenka Group. The tender had been awarded by CESC to Purvah Green Power Private Limited, a wholly owned subsidiary of the company.

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The Commission ruled that the bidding process did not comply with the Ministry of Power’s competitive bidding guidelines, especially regarding procedural requirements and jurisdictional approvals. The decision is a rare instance of the central regulator rejecting tariff adoption despite backing from the state government. 

Background 

CESC had floated a tender in August 2024 to procure 150 MW of wind-solar hybrid power with an option to acquire an additional 150 MW under the greenshoe clause. The project was proposed to be located in Mandsaur, Madhya Pradesh, and connected to the Inter-State Transmission System (ISTS). 

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The tender process attracted three bids totalling 250 MW. After an e-reverse auction on December 27, 2024, the entire 300 MW capacity was awarded to Purvah Green Power Private Limited, a wholly owned subsidiary of CESC.  A Letter of Award was issued on January 7, 2025, at a discovered tariff of INR 3.81/kWh.

Interestingly, CESC deviated from the standard eligibility criteria and secured approval for the same from the West Bengal government, despite the project being classified as an ISTS (Inter-State Transmission System) project. The alleged effort to leverage state-level approvals for deviations for an ISTS project, including attempts to 'conceal its ISTS status,' raised concerns with the central authority. Besides these, there were other flaws too which baffled the central agency. 

CESC’s Justification

CESC justified the higher-than-average tariff by highlighting two major advantages in the winning bid. 

Firstly, the project offered a high Capacity Utilisation Factor (CUF) of 50 percent, significantly above the typical 30 percent for similar hybrid projects. Furthermore, the bidder committed to a shorter commissioning timeline of 20 months, instead of the standard 24 months, which could potentially save ₹0.02/kWh.

These factors, according to CESC, warranted the premium tariff. The bid evaluation committee certified the tariff as reasonable and market-aligned, a claim further supported by a report from the Administrative Staff College of India. However, the CERC said that such claims lacked a scientific analysis and were based on 'speculations' by CESC. 

Regulatory Concerns and Observations

CERC identified multiple procedural violations during its review. 

One of the key issues was that CESC obtained tariff approval for deviations from the bidding guidelines from the Government of West Bengal, even though the renewable energy project is connected to the interstate grid. 

According to the Commission, such deviations must be approved by the Central Government, not a state authority. The Commission pointed out that CESC had already been cautioned about this requirement in a previous case (Petition No. 365/AT/2024), yet failed to rectify the mistake before issuing the tender.

The Commission also expressed concern over the transparency and competitiveness of the bidding process. Notably, similar to the previous petition, the winning bidder was a wholly owned subsidiary of CESC. As per the Commission, this raises questions about the fairness of the procurement. 

Additionally, CESC’s comparison of the discovered tariff with short-term rates in the Green Day-Ahead Market (G-DAM) was deemed inappropriate. CERC clarified that such comparisons are irrelevant under the guidelines, which call for benchmarking with long-term tariffs discovered through competitive bidding.

Final Order and Way Forward

Concluding that the process violated the mandatory competitive bidding guidelines outlined under Section 63 of the Electricity Act, 2003, CERC refused to adopt the INR 3.81/kWh tariff. 

The Commission formally rejected the petition and directed CESC to conduct a fresh bidding process, ensuring full compliance with the guidelines and obtaining necessary approvals from the Central Government.

With the petition dismissed, CESC will now be required to restart the procurement process if it intends to move forward with the proposed hybrid project.

Same Party Gets UPERC Clearance 

In another interesting case, Purvah Green Power Private Limited, the wholly owned subsidiary of CESC, got approval from the Uttar Pradesh Electricity Regulatory Commission (UPERC) for a 300 MW wind-solar hybrid project. The tender for the same was floated by Noida Power Company Ltd. (NPCL). In this case, the firm was able to get the project at a relatively higher quoted price of Rs 3.84/kWh. However, in this case, UPERC also found some procedural issues, like the constitution of the Bid Evaluation Committee (BEC) without formal approval of the Board of Directors. However, UPERC approved the adoption of the tariff based on the competitive bidding process and the procedure followed here.