APTEL Backs Sanctity of PPA For Wind Developer In Andhra

In an order that should serve as a marker of PPA sanctity, the Appellate Tribunal For Electricity (APTEL) has ruled against any tinkering with the tariffs committed to in PPAs between generators and discoms. In doing so, APTEL set aside an order of the APERC that allowed the same for Andhra discoms. Green Infra Wind Solutions, the aggrieved party at the end of the order.

Background:

Green Infra Wind Solutions Limited, a wind power generator, entered into PPAs with Andhra Pradesh DISCOMs to supply wind power at a levelized firm tariff of ₹4.84 per unit for a period of 25 years, as determined by APERC’s Generic Tariff Orders . These orders by APERC were  passed through two suo-motu generic tariff orders, the first on 01.08.2015 and the second on 26.03.2016 determining a levelized tariff of Rs.4.84 per unit for the entire useful life of the project of 25 years. The stipulated tariff, in the PPA dated 18.02.2017 of Rs. 4.84/kWh, was in terms of the tariff fixed by the generic preferential tariff order passed by the APERC in OP No. 13 of 2016 dated 26.03.2016. The PPAs included a Generation Based Incentive of Rs 0.50 per unit provided by the Government of India to promote wind energy, which was over and above the tariff fixed by APERC. However, on 28.07.2018, APERC passed an order directing deduction of GBI of Rs.0.50 per unit from the generic levelized tariff of Rs.4.84 per unit.

APTEL View
The APTEL bench made it clear that APERC, when passing the generic tariff orders, was aware of the GBI incentive a well. The PPA, once signed cannot be breached under any but the most extenuating circumstances, and the present case did not qualify for any such situation. The GBI scheme makes it clear that it is meant for generators, and comes from the centre, taking it outside the purview of the state regulator.

Therefore, whilst disallowing the deduction, the bench also ordered that the Respondents (AP discoms) shall refund the amounts representing the GBI benefit, illegally recovered from the Appellant, along with simple interest at 12 percent per annum, at the earliest and, in any event, within four months from the date of receipt of a copy of this order.

We believe the APTEL stand, while obvious in retrospect, is critical to underline the sanctity of PPAs, something many state regulators, and discoms, particularly in Andhra Pradesh oddly, have been prone to try and question if history is any guide.

 

Read the full order here.