APTEL Censures MP Regulator for Condoning Discom Payment Delays

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The Appellate Tribunal for Electricity (APTEL) has reprimanded the Madhya Pradesh Electricity Regulatory Commission (MPERC) for showing reluctance in penalising the state discoms’ wilful non-compliance of its orders in cases of outstanding energy bills.

In a recent judgement, APTEL ruled in favour of small wind energy generator CLP Wind Farms (India) Pvt. Limited (newly renamed as Apraava Renewable Energy Private Limited), which had sought action against M.P. Power Management Company Limited (MPPMCL) for non-payment of bills as well as MPERC for ineffective resolution of the dispute.

CLP Wind Farms first petitioned MPERC in 2016, requesting the commission to direct MPPMCL to pay outstanding bills in respect of its long-term PPA with the discom. Despite MPERC repetitive orders towards the same directive, however, MPPMCL consistently remained in default in timely or full payments of the energy bills raised by CLP Wind Farms, as a result of which the latter found itself in financial distress. Additionally, the wind developer was also aggrieved by MPERC’s disposition of its prayers, which repeatedly failed to impose on MPPMCL definite timelines for the clearance of outstanding dues, allowing the discom to evade compliance with the commission’s orders.

Seeking relief on account of the same, CLP Wind Farms then approached APTEL. Validating the wind developer’s grievances, the tribunal noted that it was almost a pattern among state commissions to hesitate enforcing their directives on discoms under their governance in cases of outstanding bills, thereby failing to maintain judicial discipline through taking recourse to appropriate jurisdiction granted by the Electricity Act 2003.

“This invariably has the fall out of compelling the parties seeking enforcement to approach this tribunal by appeals or applications for execution unnecessarily adding to the work at this level…such involvement of this tribunal would not be required if the Commissions were to start showing better control,” stated APTEL, adding, “There is no reason why the Commissions should shy away from deciding the underlying issues of wilful non-compliance reflecting anarchy.”

Strongly criticising MPERC for being “silent” on CLP Wind Farms’s prayers, APTEL said, “It appears that in the PPA there is possibility of the generator to invoke the relevant clause on account of event of default of this kind by denying the supply of electricity to the procurer. But then, given the small level at which it operates, such recourse would undoubtedly be counter-productive for the appellant since there is strong probability of it being stranded.”

The tribunal further commented, “We cannot approve of such evasive disposition as has been rendered in the matter at hand. Mere lip service will not produce results in disputes of this kind, it being the obligation of the Commission to adopt further measures to ensure due compliance.”

APTEL then directed MPERC to pass necessary orders requiring strict compliance by MPPMCL towards the payment of energy charges due to CLP Wind Farms within a period of four weeks from the order’s passing.

“We make it clear that given the track record of the parties before us, the Commission will put in position requisite mechanism not only for the past dues but also for the future responsibility for the procurer for the remainder of the duration of the PPA,” the tribunal said in its verdict.